Is Silver Going Extinct? Exploring the Silver Deficit and its Impact on Prices

TLDRWith a silver deficit of nearly a quarter of a billion ounces in 2022, concerns about a potential silver shortage arise. Factors such as a high industrial demand and limited primary silver mines contribute to the deficit. While some fear silver may go extinct, the market dynamics suggest a potential breakout in silver prices. The silver-gold ratio is also expected to normalize, which could double the price of silver. With the current bullish thesis and various catalysts, a silver breakout to $50 in the next 12 months seems plausible.

Key insights

🔍Silver market faces a significant deficit of nearly a quarter of a billion ounces in 2022.

💡Silver's industrial demand is high and accounts for around 70-80% of its consumption.

🔄Historically, gold leads and silver outperforms, making it an attractive investment.

💰The silver-gold ratio is expected to normalize, potentially doubling the price of silver.

📈Various catalysts, including record debt levels and systemic risks, contribute to a bullish thesis for silver.

Q&A

Will silver actually go extinct?

—While concerns about silver going extinct persist, it is more likely that silver will experience a significant rise in demand and prices due to its limited primary production and high industrial consumption.

What is the silver-gold ratio and how does it affect silver prices?

—The silver-gold ratio represents the number of ounces of silver it takes to buy one ounce of gold. Historically, this ratio has averaged around 16:1 based on the natural abundance in the Earth's crust. However, the current paper market ratio is much higher at around 80:1. If this ratio normalizes, the price of silver could potentially double.

What are some catalysts for a silver breakout?

—Factors such as record debt levels, systemic risks in the banking system, and a potential increase in industrial demand (e.g., solar panels) contribute to a bullish thesis for silver and could lead to a breakout in prices.

Is silver a good investment?

—Silver has historically been seen as a store of wealth and a hedge against inflation and monetary debasement. With the current market dynamics and bullish thesis, investing in silver has the potential for significant returns.

How soon could silver reach $50?

—While it is difficult to predict exact timelines, some analysts believe that with the current market conditions and catalysts, silver could potentially reach $50 within the next 12 months.

Timestamped Summary

00:00Introduction to the silver deficit and concerns about silver shortage.

04:45Differences between gold and silver as investments and their interplay.

07:59Factors contributing to concerns about silver going extinct.

11:59The silver-gold ratio and its potential impact on silver prices.

15:42Exploring catalysts for a potential silver breakout.

17:56The attractiveness of silver as an investment and its potential returns.

19:43Potential timeline for silver reaching $50.

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