Silver on Fire

Is Silver about to totally explode? A few thoughts via Gold SIlver Worlds.

We are a long-time fan of John Embry, as we consider him one of the most experienced people in the precious metals world. In his latest interview on King World News, he confirmed once again what is happening particularly with silver: manipulation of silver prices is still going on but signs of shortage in physical silver are increasing by the day and hence a silver price explosion is almost unavoidable.

Manipulation vs opportunity

Just like several other precious metals experts, John Embry is confirming the ongoing suppression of the gold and silver prices. This is what he had to say on King World News in yesterday’s interview: “Two days before the QE announcement they dropped the price of silver about $1.50 in a nanosecond. It’s the same games being played by the same people, and it’s going to end horribly because all the manipulation is doing is creating wonderful buying opportunities for the Chinese, the Russians, and the rest of the central banks that know full well what’s going on. “

Yes indeed, we have reported on this website numerous times how manipulation has created buying opportunities and who the ones were that  made use of these opportunities. The Eastern countries and non-G6 Central Banks have been accumulating tons of gold. Besides we reported recently that smart money has been accumulating gold on the dips down at the $1,500 level. On an even more fundamental level, we reported that China could be considering to back its currency up by gold.

These are all fundamental evolutions in the gold & silver markets that shouldn’t go unnoticed for anybody, as they are extremely meaningful.

Sentiment vs fundamentals

The fundamentals have never been better for gold and silver. Our own analysis on the gold & silver price influencers shows that almost all indicators are “in green” since this week. After the most important Central Banks announced monetary easing on a global scale, even the chart technicals turned bullish. Only sentiment remains bearish for the time being.

Now the irony here is that sentiment towards gold and silver is not at all reflecting the incredibly strong fundamentals. Below chart shows on the upper part the spot silver price and the silver sentiment index. On the lower part of the chart, you’ll see the ratio of sentiment index vs the silver price. As you see, over the 12 years of this precious metals bull market, the sentiment hasn’t been so low. Chart courtesy: Sharelynx.com

Physical shortage in silver

How all of this is possible? Very simple, the aim of manipulating the gold and silver price is in the first place to prevent rapid price increases. The powers to be don’t like high gold or silver prices, as it reveals the weakness of their currencies. The mechanic of manipulation is based on sudden price drops in the paper market. Demand for the physical metals is increasing however as investors and individuals are (slowly) starting to understand that the result of easy monetary policies is in reality a wealth destruction. Physical gold and silver are the only safe havens in today’s environment.

Most people tend to overestimate the physical gold and silver market. The reality is that the market is already tight. With an increasing investment demand, the level of tightness keeps on increasing, especially in silver. As central planners keep on flooding the markets with easy money, they stimulate at the same time the demand for precious metals … which results in higher gold and silver prices AND in an increasing physical shortage.

This is what John Embry had to say about the (coming) physical silver shortage: “I’m wildly bullish on silver.  I don’t think the physical market has ever been this tight.  I see ever greater demand for precious metals, and more and more of it will go to silver because gold will become increasingly expensive … I couldn’t be much more bullish.”