Why Silver? Why Now?
J.P. Morgan, I think, said it best. Gold and silver are money. Everything else is credit. The best opportunity right now by silver equities, silver could go parabolic here. Well, the world has been in lockdown. Financial markets have continued to operate often with spectacular results. For investors, some of the greatest opportunities of our lifetime will unfold in the coming months and years. This is no time to shy away from investments ideas. This is the time to embrace them and investigate that potential for our portfolios. We've asked experts from across a range of different markets about why we should invest in them. And why now? In this episode, we're taking a look at silver and in particular, silver miners. The precious metals complex is in sharp focus and silver is sometimes the overlooked relative of gold. But it has often had a supercharged return during times of stress. I wanted to understand how the macro backdrop will unfold. Why this is good for silver and why these conditions could be particularly attractive for silver miners. The first question was the obvious one. Why should I care about Silva? And why now? What makes this moment in time so special for Silva? People should buy silver now because Silver's under-priced with respect to other precious metals. So over the last several years, we've seen runs in the platinum group metals, particularly palladium, radium. Over the last month, we've seen massive runs in gold, both physical gold and gold equities, but we've also seen a gold bull market for the last year, even pre corona virus. What has lagged behind here is silver or core position at KRASKE at right now is being long goatee, short stocks. So we look for the most asymmetric battle in terms of being long, precious battles and that would be silver. We think silver is perhaps the cheapest macro asset in financial markets today. Silver has been one of the poorest performing precious metals really of the last decade, but particularly over the last months in the last year. Just think about the times that we're in right now. Think about the unprecedented amount of spending that the government must do. And of course, when you print money, the price of gold and silver goes up. Given all the monetary innovation that we're seeing today and the Federal Reserve being essentially trapped to do more and more and what we call the liquidity trap problem of more monetary stimulus to get the economy going. Silver does move a lot. And when he gets going, he could easily go parabolic for investors that are looking to get in and get exposure to precious metals, to diversify their portfolio, to hedge the risk of fiat currencies. Silver remains an extremely good option. I think I'd say, you know, spend tastic time for precious metals, particularly gold and silver as as we're seeing, you know, the gold price climb. Silver typically lags in the last four gold bull markets. Silver lagged behind and then exceeded gold. And I think this is going to be a fantastic time for for the metal, fiat currency, monetary and fiscal policy. That's going to extremes. Here's a macro backdrop developing that makes silver compelling. We saw this in 2008 to 2011. We saw about 1.3 trillion dollars in October of a way of money printing in about 60 days. And that actually got silver going. We were seeing wheat and precious metals, a silver streaming company that was up over a thousand percent. We were seen first majestic silver, a silver miner, up nearly 3000 percent. SITUATION like this, a global financial crisis, the price of silver, the metal goes five hundred. A basket of the miners who got ten times a thousand percent up. And that's that's the average. More recently, we had about 2.4 trillion dollars, almost double that amount in the way of money printing in the last 50, 60 days or so, which puts you in a similar position of thinking, are we going parabolic with silver? We think it's very possible. The stock market has been performing so well over the last decade. People haven't had to divert attention into gold or silver or mining equities, and they haven't gotten the love that they would traditionally see in a market where there's old rising gold price or in the future a rising silver price. Look at silver relative to other things like equities. Look at silver versus the Russell 3000. It's forming a perfect double bottom, which I think it's a it's an interesting thesis of being loved silver and short stocks. So investors really have a chance right now to get into the right silver equities and potentially get a very, very big lift on their investment. When you look at the dilution of money by central banks in general, by not just losing money itself, by suppressing long term rates and deficits of governments are rising significantly. We have unsustainable levels of debt. I think there's an explosive makes for precious metals in general. It's a fantastic opportunity right now to buy these these silver silver miners. I also wanted to understand how the supply and demand dynamics are shaping up. And if they would provide additional tailwinds in the supply demand dynamic. About sixty six percent of silver supply has been affected by these konbit shutdowns. And, you know, already we were starting to see an increase in the investment applications. Now we're starting to see the supply erosion. We're going to be seeing supply crunches in the silver space mines are shutting down. Silver as a byproduct. Metal is gonna be affected all over the world. That's also due to due to the biproduct nature of silver as well and copper mines and other mines across the world. So that's lessening the value of silver. With respect to gold, which has been getting value as a as a currency. Now, another thing that people may not think about as well as the infrastructure expenditure is that governments are going to be making as well, whether it's 5G networks, whether it's even solar farms or anything like that. And and Sobre has, you know, an industrial role to play in that as well. Look at lower energy prices. What do you think that does with margins? He improves their margins, the precious metals companies. That's a big part of their production. Historically, over the last 10 years, we've seen significant industrial use, but we're starting to see that move as silver gets more credit as a precious metal. There's every reason to think investors are going to be piling into the space. I don't think people really understand the the impact of this. This lag in production, I think that's going to be really, really something that impacts the price here, Charlie. And when you look at the money market funds, for instance, in terms of a lot of retirement funds and so forth, there's about 4.5 trillion dollars actually parked in the sidelines right now, which is actually relative to equity markets. That's about, you know, 60 percent or so back in that very bottom of a way. We got to up to 50 percent of that proportion. So the important thing here is that only about 4.4 percent of that 4.5 trillion with would buy the entire precious metals industry in the U.S. and Canada. You can't just shut down a mine and then tomorrow started up again. There's going to be a lag in the production. And so there's going to be, you know, this this imbalance between demand and supply, and that's going to rocket silver. I believe the demand for silver is going to be growing and growing and growing over the coming months. You don't need a lot of flows of inflows in that industry to get it going. But many people who are thinking about investing in silver, the big question is whether they should go for the physical metal or head for the miners. What are the key relationships of work and how do we evaluate the mining companies? It's almost impossible to actually buy physical silver bullion right now. So bullion exchanges and pawnshops and where the normal places you'd go to buy these things, they're actually getting sold out. And with the ones you can buy. So the sort of silver coins with nice prints on them and that sort of thing, they're actually trading at a premium right now. So you're paying more than silver price to get these things. We've actually seen the actual physical price of silver upwards of $20. Now, when when you take delivery of a coin, of course, the spot is near fifteen. So the actual price of buying real silver has been moving upwards. Equities are trading at a discount. So a discount to their competitors in other metals. Discount silver price silver equities have always been a better way to play the silver price increase in a silver bull market. We might see silver go up by 100 percent by 300 percent. But in this same situation, we're seeing equities go up by a thousand percent or three thousand percent. Back in 2008, when when Silver started its its climb up, silver went up almost five times. Some of the the gold and silver equities pretty clear the silver equities went up even 10 times or 20 times in that time space. The leverage that you get on a silver equity far, far exceeds that you would ever get in silver bullion. Silver equities provide a significant leverage to the price of the underlying metal. However, there is a catch here and that means you have to choose the right equity. You need to invest in the right company, you know, group that's that has access to capital, group that that has the engineering abilities and technical abilities to find and develop and produce the metals. You need to think very, very carefully and looked very hard at our managements incentives aligned with you as an investor. What price did they get into the company at? What value is their stock, how much do they own? But also a group that has the capital markets experience to tell the story and and be in the forefront of a group of miners that are going to explode higher when the share price when the silver price moves. Think about that before ever making any sort of investment in the mining space, particularly silver right now. Strong team with a proven track record of great assets in a well-structured company. There are many powerful trends coming together across the silver mining sector. So the summary I asked a few of the favorite highlights from across this space. Name one industry would actually benefit from all this monetary experiment that we've seen. There's still trades in 1980s or so levels. The only one that I can think of is the precious metals industry. I think that, you know, the biggest risk here is that, you know, you wake up one day and silver is gone to 20 or 25 and the miners have already broken out. I think investors can expect to see the gap between silver and gold close very quickly over the coming months. The best way to take advantage of the ability to make money in this is to be positioned early. I think if we're only in the beginning, we're going to have some pullbacks. We're going to have some bad months, some bad weeks. But I think that's only going to continue to the upside. Again, it's only industry and the only asset class that probably truly benefits from all this monetary intervention we're seeing. It's almost too late. When you see it move in the first place, because they have such a parabolic rise in the gap up so quickly that the only real way to to lock in, you know, the potential gains right now is to enter the stories that you like, enter the silver miners, like the developers, explorers, producers, and take a look at these resources. Well. Central banks on steroids. Supply lines that are constrained by Cauvin and demand that is rapidly moving beyond just a niche player and into the mainstream. That could soon be a large amount of capital chasing a relatively small market. But the silver miners as the supercharged way to play this space. If you haven't investigated silver miners before, it looks like now could be a very good time to start.