Welcome to illuminati silver, we tell you the truth about silver.
Today is Saturday 4th August 2018 and this is the first part of 2 videos where we highlight
what we believe will be the influences on the Silver price for the remainder of 2018
and where we predict prices will end up at the end of the year.
At the time of publishing, silver prices currently stand at $15.42 some 8% or $1.34 down on exactly
a year ago and down some 9.5% or $1.64 since the start of 2018.
So without doubt 2018 has so far proven to be a lacklustre year.
In 2018, prices have oscillated between about $15.20 and $17.55 per ounce.
Experts are not necessarily surprised, but of course many are hoping for a better performance
before the year ends.
There are a number of factors which could affect the price from hereon and we have consolidated
them into 5 major influences.
They are as follows: 1.
Geopolitical issues Like gold, silver prices often increase when
geopolitical issues are at play.
When Donald Trump won the US Presidential election in late 2016, many believed safe-haven
demand for precious metals would spur higher silver and gold prices, especially as Trump
was seen as a most controversial and unpredictable figure.
However, that instability hasn’t yet translated into higher silver prices.
However, Trump continues to cause concern, having formerly been described as “flirting”
with war with North Korea and Iran, and now clashing with China and Russia (the latter
by his administration if not directly by the President himself).
The President is locked in a trade war with the Asian nations, with both the US and China
imposing tariffs on each other.
He has also threatened tariffs with our European Partners, though recently this may have been
resolved and we must not forget the ongoing battle with Canada.
So far however what we have witnessed has run contrary to conventional wisdom that political
unrest favours safe-haven assets.
Investors will have to see if this trend changes as these and other geopolitical issues continue
to develop.
2.
Interest rates In general, higher interest rates tend to
put pressure on non-interest-bearing assets like gold and silver; conversely, when interest
rates are lower, precious metals tend to perform better.
However, last year there were three rate hikes, and gold prices rose instead of falling, while
silver was relatively flat.
The US Federal Reserve has raised rates on the back of an economy that has been growing
at a steady pace but it could slow the pace of rate increases if there is a change.
Currently there is no consensus on how many hikes there will be in 2018, although the
Central Bank is expected to keep raising rates.
The rate hike in June was the 7th in the past 3 years despite the comments of Investor Guru
Peter Schiff stating at the time and we quote “There is no way the FED can raise rates”.
We believe that at least another rate rise is on the cards and possibly 2 before 2018
is out.
Despite this, it’s worth noting that precious metal prices could rise even if rates continue
to increase.
According to Investopedia, despite the widely held belief that there is a negative correlation
between rates and precious metals prices, “a long-term review of the respective paths
and trends of interest rates and gold prices reveals that no such relationship actually
exists.”
However please notice that it mentions ‘long term review’.
3.
Price manipulation Some silver market watchers and a number of
our subscribers believe that the reason prices have seen little momentum in recent years
is that a small group of institutions have been shorting silver.
Ed Steer of Gold and Silver Digest and the Gold Anti-Trust Action Committee has explained
the idea in the past, noting that JPMorgan and a handful of others are involved.
In early November 2010, US law firm Kaplan Fox & Kilsheimer filed a class action complaint
on behalf of an individual investor, Eric Nalven.
The suit named JP Morgan and HSBC in connection with an alleged conspiracy and manipulation
of the market for silver futures and options contracts traded on the Comex exchange in
New York.
The complaint alleges that around June 2008, when JP Morgan acquired Bear Stearns and its
short positions in silver futures, JP Morgan and HSBC started a conspiracy to manipulate
the market for silver futures and options contracts for their own benefit.
Despite this, charges against the firm were dismissed in 2014 and again in 2016, although
the 2016 charges have since been appealed.
Our own view is that there is price manipulation.
Not particularly by the FED or the US Government as some believe, but by greedy institutions
attempting to make a ‘quick buck’.
Now we know some disagree with this, but to be frank, our next point will highlight why
we believe this.
After all such manipulations can only be achieved short term and it is extremely difficult to
believe that they can achieve price suppression for the past 7 years.
After all, it took no time at all to identify those institutions including Deutsche Bank
who were guilty of manipulating LIBOR Rates – did it?
4.
Traditional Supply and Demand.
Perhaps the most reliable document we can go to, though it is historic in nature is
the Silver Institute’s World Silver Survey which is produced for the Silver Institute
by the GFMS team at Thomson Reuters.
Now before anyone dismisses this Survey, the major sponsors include and we wish you take
note of these: • Coeur Mining Inc (a precious metals producer
with 5 mines in North America employing 2,000 people)
• Fresnillo Plc (the world’s largest silver producer and Mexico’s second largest gold
producer • Industrias Penoles S.A.B de C.V which
is the world’s top producer of refined silver and the leading Latin American producer of
refined gold and lead.
• Pan American Silver, the world’s second largest primary silver producer;
• Wheaton Precious Metals the world’s largest pure silver and gold streaming company
• and a host of other numerous gold and silver and precious metal mining companies.
Now we mention these because it is in these companies best interests to obtain and promote
as bullish a report as is possible and yet despite this, the Annual report portrays sobering
reading.
The 2018 report published just over three months ago and which we produced a video on
5th May (https://www.youtube.com/watch?v=Xv5nWrnq6q0&t=6s) highlighted the following points:
• 2017 saw the 5th recorded silver market deficit in a row.
A deficit of some 26 million ounces was recorded with mine supply falling by 4%.
To put this mine supply fall in context though, it follows 13 consecutive years of annual
increases – up to 2016.
• Physical demand contracted by 2% in 2017 due to a fall of some 27% in coin and bar
demand – a fall of some 27% in coin and bar demand - falling from 207.8 million ounces
to 151.1 million ounces.
This is now the second consecutive annual decline in coin and bar demand falling from
292.1 million ounces in 2015 to 151.1 million ounces in 2017.
• On a positive note, jewellery demand rose by 2%, silverware by 12% and industrial fabrication
by 4%.
In fact, the interesting factor here is the ever-increasing use of silver for industrial
purposes.
In 2017 demand for Industrial fabrication represented some 70% of mine supply and 60%
of total silver supply.
This compares with 2016 of 65% and 56% respectively.
So 70% in 2017 vs 655 in 2016 of mine supply and 60% in 2017 compared with 56% in 2016
of total supply.
One of the main reasons for this is that photovoltaic demand rose by 19% driven particularly by
solar panel usage, mainly by Chinese households.
• So Mine supply is down 4%, with total supply down 3.7%, coin and bar demand is down
27% with total physical demand down by 2.3% resulting in a physical deficit of 26 million
ounces, and once factoring in ETP and Exchange Inventory build, a total deficit of 35.2 million
ounces.
There are a lot of figures there but basically what it is highlighting is that demand is
down although supply is also down.
• The average price of silver fell from $17.14 in 2016 to $17.05 in 2017.
So we should not be surprised to have seen little change in the average silver price.
Now for years people have been screaming manipulation, and whilst we have some sympathy here, as
mentioned earlier, basic economics tells us that if supply = demand then price is likely
to remains constant.
A deficit of 35.2 million ounces is tiny, if one considers that even the most conservative
assessor values above ground stocks of silver with almost immediate access at around 1 billion
ounces, with a fair number quoting closer to 2 billion ounces.
So, a continuous 35 million oz deficit can be arguably catered for over the next 30 years
before supply becomes imperilled.
Now we are not advocating that because of course any continuous deficit will of course
cause prices to gradually increase but with Industrial usage now accounting for 60% of
total supply and frankly little on the immediate horizon for this to increase significantly
further (unless of course you believe that the world economies are going to grow well
above its current 2% -3%) then the only factor likely to affect supply in any great numbers
is a rise in demand for investment purposes, and we have seen these figures actually falling
recently.
It’s worth bearing in mind that any major impact on Industrial demand is more likely
to be negative especially if the tariff situation gets out of hand – as global demand will
inevitably fall.
Equally if world economies pick up, then although this may be advantageous for silver producers
it is likely to mean that demand for silver as a monetary metal will fall further, thereby
cancelling one another out, as funds will be even more avidly directed towards the stockmarkets.
5.
Internal US Politics.
On Tuesday, November 6th, 2018, midterm elections will take place.
All 435 seats in the United States House of Representatives and 35 of the 100 seats in
the United States Senate will be contested.
Currently The House of Representatives stands as follows:
• 236 Republicans • 193 Democrats
• 6 vacancies due to resignations, planned resignations and death.
In the Senate there are: • 51 Republicans
• 47 Democrats • 2 Independents.
The Democrats have to defend 10 seats in States that Donald Trump won — and on top of that,
if they want to reclaim control of the Senate, they have precious few opportunities to take
seats from Republicans.
But there is a path for Democrats to win the Senate.
It starts with winning eight or nine or all 10 of those seats they’re defending — and
then winning two or three or four of the Republican-held seats in the following States:
• Nevada • Arizona
• Tennessee • Mississippi
• Texas • Nebraska
So although at the moment, the Democrats feel moderately confident that they may indeed
win the House of Representatives, they are far less certain about the Senate.
We are of the opinion that if the Democrats win both Houses and the Mueller report is
negative towards the President, then impeachment proceedings will most certainly begin.
But even before the election takes place, if the polls show that a ‘Blue Wave’ is
likely to sweep over the elections, then we can certainly predict that markets will become
more turbulent (providing they haven’t moved dramatically before then) and until the election
is over we would expect to see monies leaving the stock market and moving into gold and
silver.
However, the more dramatic moves, we believe will occur post the election and perhaps early
into the New Year.
On Monday, we shall highlight the highs and lows we expect the silver markets to reach
before 2018 is out and our reasons for it.
So please look out for our next video.
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Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics.
Having now retired from these worlds we are not qualified to give investment advice.
Therefore, this and other productions must not be deemed to be giving such advice and
merely represent the personal views of its owners.