WAITING FOR THE BUY SIGNAL: What's Going On With Silver Investment

By the SRSrocco Report,

The Silver Market is setting up for one heck of a move higher as investors are waiting for the signal to start buying.  While the silver price has shot up due recently, it still isn't clear if this is the beginning of a longer-term uptrend.  The reason for the quick spike in silver was likely due to a small short-covering rally by the Large Speculators trading on the Comex.

For the first time in a quite a while, the Large Speculators (Specs) were net short silver.  For example, the Large Specs were net long by more than 100,000 contracts last year when the silver price was $18.50.  However, the last COT Report showed that the Large Specs were net short silver by 17,000 contracts:

The Large Specs are shown in the Light Blue bars. Typically, the Large Specs are long, not short silver.  You can see the Large Specs going short three weeks ago as their light blue bars turned down.  On the other hand, the Commercials (in Red) are usually net short.  However, the Commercials had the lowest net short position in years.  So, to see the price of silver shoot by nearly $1.00 in a few days isn't surprising when I have seen this setup for a few weeks.

However, it's difficult to know if this is the start of a long uptrend in the silver price.  It's coming, but I just don't know if this is it yet.  We will know when the Silver price is making a big move when it finally gets above $20 as the broader markets crash.  Now, many silver investors might be a bit frustrated because silver sentiment and investment demand dropped to a low last year.

In 2017, demand for silver declined as investors were lured into the stock and crypto market bubbles.  According to the data put out by the 2018 World Silver Survey, total Global Silver Bar & Coin demand declined from 207.8 million oz (Moz) in 2016 to 151.1 Moz last year.  As we can see in the chart below, global silver bar and coin demand fell by 27% compared to 2% for physical gold investment:

The World Gold Council reports that global gold bar and coin demand fell to 30.8 Moz last year versus 31.6 Moz in 2016.  However, the decline in physical gold investment would have been even more substantial if it wasn't for gains China, Turkey, and the Middle East to offset significant reductions in the United States.  Gold bar and coin demand fell by 58% in the United States last year.  And we saw the same trend take place in the silver market.

The majority of the decline in silver bar and coin demand took place in the U.S. and Canadian markets.  As the chart below shows, U.S. and Canadian silver bar and coin demand fell by 52% from 105.5 Moz in 2016 to 50.8 Moz last year.  However, global physical silver investment only declined by two million ounces:

While silver investment demand decreased significantly in the west, India's silver bullion imports increased by 17% in 2017.  So, silver investment demand wasn't down across all countries or regions.  However, the majority of the decline in the west was due to the 36 Moz decrease in U.S. silver bar and coin demand (2018 World Silver Survey).

According to my analysis, demand for physical silver and gold investment declined last year in the United States due to three reasons:

  1. Election of Trump as President changed the psychology of the Alt-Media community in that there was less motivation to purchase precious metals, prepping-survival goods, firearms, and ammo.
  2. The continued bubbly rally in the broader equity markets and tech stocks
  3. The massive increase in Bitcoin and Crypto-currencies in 2017.

Unfortunately, 99% of investors continue to pile into extremely overvalued and highly leveraged-margined assets in history.  The value of stocks, bonds, and real estate are at the highest levels ever while the world's oil industry is coming under a great deal of pressure that few are aware.

The U.S. Shale Oil and Gas Industry is a $250+ billion Ponzi Scheme that Bernie Madoff would be jealous.  So, the BIG MOVE in silver is likely to occur right when the broader markets and the oil price collapse in unison.

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

Check back for new articles and updates at the SRSrocco Report.

 

 

Comments

Der Libertäre joego1 Sun, 04/22/2018 - 16:46 Permalink

I am looking forward to the bust. I am a late boomer and I need to know, where I want to settle down for my "retirement" and what kind of life I then can have. Right now I am in 100% limbo. I do not invest. I do not spend. I keep all flexible for a decision, which lies in the future. My home nation (Germany) is no place to live anymore since Merkel's politicians said "if you are against our politics, you should leave the country".

So I cannot await the implosion to have reality reinstalled. Then I will be finally able (again) to invest and decide with a longer term view. Or shorter: I will have my life back.

How can you really prefer to keep this boiling cooking pot on the fire? And twelve guys voted you up. I find this utterly unbelievable.

In reply to by joego1

joego1 Der Libertäre Sun, 04/22/2018 - 17:43 Permalink

I think you assume that the transition will be short and painless. Many of us may not survive the turmoil. The deep state does not care if you or I live or die as they will retire to their bunkers and wait it out. I think that in the long run our children may be the biggest benefactors should good come eventually from the change. I don't expect the world to look the same.

In reply to by Der Libertäre

bshirley1968 centipede Sat, 04/21/2018 - 21:10 Permalink

Screw "investors"! You can't "invest" in markets that are not free of constant manipulation.....controlled by endless pieces of worthless paper.

That has been the problem all along. If anyone is buying silver or gold to get more dollars then they are no different than foolish stawk investors. There is no difference between investing and playing roulette. All you dollar whores that can only think of getting more dollars are THE problem in this country. You bunch of whores have no code or honor.....all you can think is moar, moar dollars and would sell your mama's soul to get some. God knows you have no trouble selling your neighbor, your children, your honor, or yourself into slavery to get moar.

This is war, bitches! This I not an investment.

In reply to by centipede

centipede bshirley1968 Sat, 04/21/2018 - 21:51 Permalink

Well, in principle you are correct, but ultimately in real world you will have eventually pay for food, water, energy, shelter and other daily bills. How are you going to do that if they accept only dollars? So it is sometimes (acctually quite often) useful to mange your investment and spending according to the ratio between gold and dollar, don't you think?

In reply to by bshirley1968

bshirley1968 centipede Sun, 04/22/2018 - 07:36 Permalink

My reply was not intended directly at you, but since you asked.

Gold and silver are insurance against fiat currency devaluation. Since the bastards at the Fed can devalue our currency.....at will....for their benefit and the benefit of their "chosen", the average guy has to have a way to offset that devaluing. They are devaluing your money, money = time, time = life.

Trying to keep up with their incessant greed by figuring out ways to make more dollars is destroying the lives of millions of Americans and their families. If gold and silver were allowed to operate in a manipulation free market, the average guy would be insulated from the devaluations. The reason the fed artificially suppresses gold and silver priced in dollars is to:

1. Make the dollar seem more valuable than it is. Gold should be around $8,000 - $10,000 right now and silver around $150. Simply based on actual inflation (dollar devaluation), supply/demand, and the trillions of dollars floating around in the financial world.

2. To keep everyone on the hamster wheel running as fast as they can looking for more "yield" and playing their game. You can NEVER get out. Retirement was a joke that only one generation will ever really see.....unless your a goobermint employee.

You want to invest. Go have a ball, but people should be buying gold and silver, taking delivery, and putting it away for posterity. "Gold (and silver) is money, everything else is just debt." -J.P. Morgan

In reply to by centipede

Antifaschistische bshirley1968 Sun, 04/22/2018 - 13:51 Permalink

I'm not going to be "bullish" on silver or gold until the weak players get washed out.   The market is full of guys today that are mad that they bought gold/silver and they have underperformed Tesla, Facebook and Amazon.  I think these guys will eventually get choked out and dump their eggs...the TV adds will disappear and their will be a lull.   That's when I turn bullish.   Of course, I think people should be buying consistently through it all and not attempting to time a "jump" like a fake day trader. 

In reply to by bshirley1968

Der Libertäre Antifaschistische Sun, 04/22/2018 - 17:07 Permalink

Bullish in terms of what? A dying western fiat system? This is not about which boat is faster, its about which brings you ashore. I feel unable to trust anything western.

Weak players - who is that? When I buy PM I must pay over spot. To make it easy here: 3% with gold, 5% with platinum, 7% with silver. So if someone does that, you think his hands could be weak? I admit that I am under water, but so I want buy more. My hands are totally "unweak" as I build my retirement fund.

I understand you of course, but I do not share the philosophy of your view. People who stack are really into it as it is simply too expensive to go to and fro.

In reply to by Antifaschistische

Anonymous_Bene… Tarzan Sun, 04/22/2018 - 12:01 Permalink

I remember my first silver purchase at $17 an ounce in 2008. Now 10 years later it round tripped right back to where I began.

Luckily I wised up and sold it all around 2010 and began investing in myself...tools, knowledge, that sort of thing. Now I have grown from nothing (working a $12 an hour job as an electrician) to doing a little under half a million in sales each year for the past 3 years (custom metal fabrication). Never once since I parted ways with my hoard have I regretted it.

Should I have just sat on my hoard and waited for it to yield me a couple hundred grand in free and clear income per year?

In reply to by Tarzan

bshirley1968 StychoKiller Sun, 04/22/2018 - 09:31 Permalink

Not these goobers. They want to trade "precious" metals for "shit" paper.....paper that immediately starts devaluing so you have to hurry up and spend it on something while you still can......so you can go out and work your ass off trying to get more shitty paper.

A hundred years ago, if you handed someone a piece of paper that was called money, they looked at it to see how much gold or silver they could go to the bank and get with that paper. Today people rush to the bank with gold and silver in the hopes to get more paper. Yeah, things have gotten so much better for the people. \sar

In the last 100 years the banks have taken over the world while the people have been screwed. How's that paper working for you? Banker bitches!

In reply to by StychoKiller

Chandos Sat, 04/21/2018 - 15:10 Permalink

Stagnation in silver & gold prices means I had to sell my boat  to cover daily expenses...

Now if the price finally goes up, I won't be able to get at it.....;)

 

(full disclosure: I never had a boat...)

Jungle Jim Sat, 04/21/2018 - 15:59 Permalink

People are waiting for some kind of sign that they might possibly get some kind of return on their investment in this lifetime. And, yeah, it's an investment, not "insurance."

I'm so sick of that saying: "It's insurance, not an investment." It reminds me of the ritual chant, "Driving is a privilege, not a right." And of course they are now openly saying they want to make gun ownership a privilege, not a right.

DuckDog Sat, 04/21/2018 - 17:48 Permalink

These articles kill me, there could be no physical silver or even gold available and the price will still go down, nothing is going to happen until the whole financial situation crashes and then it will be too  late to buy PMs.

You might be able to trade hard assets for some PMs but no one is going to accept any paper price at the point.

So the bottom line is either you're too early or you're too late

Pearson365 Silver Savior Sun, 04/22/2018 - 03:33 Permalink

Ok lets look at this logically.  You've been told that way more silver gets used than is mined for many years.  Also there are no above ground stocks like gold has.  If these two situations seem impossible at the same time then they probably are and you and I have been duped.  I own plenty of silver so I wish that this didn't make sense.

Even back a few years ago when there was a huge demand for silver rounds, Rick Rule and others said that there was no shortage of 1000 ounce bars.  The shortage of coins was simply due to  limitations in coin blank fabrication.  This author keeps promoting primary silver miner reduced production which may be true however the majority of silver is mined as a secondary product so srsrocco looks like a shameless liar to me.

I would like to be proven wrong by decoupling of the gold and silver prices like last week for the first time.  A steady reduction in the gold/silver ratio would prove me wrong.  Let's see how this plays out.

I'm not some know it all who claims deep insight and knowledge of these markets.  I just read and observe for many years and begin to see inconsistencies.

In reply to by Silver Savior

Chaotix Sat, 04/21/2018 - 18:55 Permalink

Had I been wiser about investments when I was 15, I could have bought silver for $4/oz and gold at $250/oz. Such are the days of hindsight, especially in a grossly manipulated commodity. But back then there was no 'paper gold' except gold and silver certificates (folding fiat money). Silver is like gold is like diamonds. Supply and demand dictates the set price. Hell, platinum is high dollar, and there is less of it than gold. All 3 are valuable for industrial applications. Kings like it, bankers like it, but according to Bernanke, it isn't money /s/

Bemused Observer Chaotix Sun, 04/22/2018 - 01:59 Permalink

Who knows what silver and gold are 'worth' in fiat these days? I'm so glad I actually have a bit of a 'collecting jones' for the metals, so I don't really pay attention to numerical 'price' unless something noteworthy happens. What I DO know is that either I am the luckiest gold-finding sob in town, or else a lot of people just don't know or care what their gold is worth either, and I'm ok with either of these, so it's all good.

Thank you God, for garage sales! Today I got 2 bracelets (10 and 14k) about 7-8 grams each, and a 4.5 gram necklace, 14k. I paid a total of 4 dollars. This is by no means unusual, and frequently I do better once the sale season gets cranking. I'm not sure what that works out to as my purchase price for the gold, and doing the math makes my brain hurt, but I think I got that $250/oz thing beat...:-)

In reply to by Chaotix