Silver Is Just Getting Warmed Up

The comments below are an edited and abridged synopsis of an article by Goldfix

The emerging industrial silver problem is due to years of neglect. Combined with a financialized market structure that dissuades investment and healthy bull speculation, it resulted in more money funneled to Wall Street than should have been. This financialized market structure problem becomes a tail wagging the physical dog.

Silver Is Just Getting Warmed Up - BullionBuzz - Nick's Top Six
Minted silver bars weighing one troy ounce in plastic packaging and unpacked. Selective focus.

Financial market structure has demoralized metals bulls and stock bears alike for decades, but it is ending. Don’t blame the bullion banks for playing the short side to make money; they recognize what is happening and will be long bullion (and likely short paper) when the tide turns. And the tide is turning.

It will probably start with something like a meme-stock style SLV short squeeze. The Regs will step in, directly or through proxies, to get rampant speculation under control. After this, the market returns to normal due to cooler heads taking control. But silver is not a meme stock that its CEO can merely issue more shares of. This is a physical commodity in structural deficit. That’s when the multi-year long term bull market begins. That’s when the real rally starts.

When silver rallies, those with much to lose will push back. After the first move higher, weak longs will be shaken out and there will be a counter move back down. A more orderly bull market moves in until the fundamental problem is solved.

Right now, the global bank and regulatory community have more important fish to fry than the silver market. Ultimately leaders do not care about price, they care about speed of rise and headline risk that conveys they are losing control of financial markets. Therefore true price will be the last thing to reflect value as it will not happen overnight, and shorts will use all their considerable power to slow it. Ultimately the smart banks (and people) will be long. Structural problems can’t be spirited away. The only thing that can stop this eventuality of repriced silver is another great depression.

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