Silver Is Backed Up For Months. Here's Why
Silver sold off during Josh Phair's September 23 interview, but the Scottsdale Mint CEO said the physical market's immediate constraint was at the refinery.
"Silver is backed up at the refineries... in many cases about 3-4 months," depending on the material, while finished refined metal remained amply available in the United States.
In his Mining.com Top of Mine interview, Phair said banks have been redirecting mined material toward refineries in countries friendly to the United States.
Those plants have been backed up for roughly a year. He was describing a delay in processing incoming material, alongside available stocks of finished metal.
Why silver moves between markets
Phair traced last year's large inflow of silver into the United States to tariff concerns. The inflow left the U.S. relatively well supplied compared with some overseas markets.
"Metal will go where it's treated best."
Banks and trading houses could then ship metal to a market offering a higher exchange-for-physical premium.
Even an extra 10 or 20 cents an ounce can justify the move when the trade is large enough.
He said that movement has continued, though it appears to have slowed as the U.S. market has become more balanced.
He did not give a current destination or tonnage for silver leaving the country.
Are governments buying silver?
Asked directly for evidence that governments are buying physical silver for reserves, Phair pointed to the former U.S. strategic silver stockpile, the government's designation of silver as a critical mineral, U.S. reliance on imports, and a stockpile program he called Project Vault.
He also argued that governments can work through banks to obtain materials without announcing every transaction.
Phair believes official silver buying may be occurring. He did not identify a current government silver purchase or give a reserve figure in the interview.
His stockpiling argument is an inference from policy and past practice.
The next constraint
Refining is the bottleneck Phair sees now.
Over a longer horizon, he expects mine supply to become harder to expand.
He cited years of limited investment in exploration and development, long permitting timelines, and the risks.
Gold math
Finally, Phair explains the 'gold math': take US foreign debt against stated gold holdings, solve for the gold price that balances them, and you get the 'Fair Sinclair' number.
"The Fair Sinclair ratio… is 35,000 on gold. So external debt, the status of gold holdings, and 35,000 is the balancing factor."
Phair treats it as a crisis-era valuation - not a next-month price target - adding that if he’s only partly right, holders still come out fine.