When the global financial crisis, hit the stock market's drug silver
and gold down with them temporarily, for a short period of time.
They bounced right out of it.
The stock market's didn't start Rising until many months later.
It was March of 09 that the stock, market's finally bottom.
How long can silver stay cheap and the miners, share a clue.
And this is based on an analysis done by a bank of the primary silver
producers and how much free cash flow they're going to generate this
year.
2022 and the bank's analysis is that they're not really generating
that much there for silver has a floor under it.
Now I saw
Thing, this was very similar to when I wrote my book, back in, two,
thousand five, six and seven.
I was writing my book and the cost of digging up the silver and
getting that poured into a bar, was approaching the value of that bar.
So, the I said in my book, The, you know, where can you find an
investment that has a floor under it, that is so close to the current
price.
And we're back in that same position.
All these years later, we're back to where it's the price of silver is
very close to the cost of digging up.
Silver and so it can't stay there forever.
And there's one more big setup right now that will get to toward the
end of this article.
So, he first, he wants to set the stage and silver is a tiny, tiny
Market.
So at 20 dollars per ounce that roughly the entire estimated Supply
this year is worth about 20 billion star but the the market cap of
Starbucks is 112 billion or about five and a half times.
The entire silver supply of this strategic metal in the world, cannot
get by without silver.
It's not possible, especially as we move into a
More and more of a technological Society solar panels have quite a bit
of silver in them and such.
And so, a modern clean green efficient world can't happen without
silver.
And so, the primary silver market is also small, primary is, those are
the guys that are out there.
Their mission is to dig up silver and sell silver and roughly 75%.
Percent comes from non Silver Mines, so these are copper.
Ten lead, zinc, mines, and gold mines.
Where silver is a byproduct.
They're not looking for silver.
They're not trying to dig up silver, but about four out of every three
out of every four ounces of silver that come to Market, three of them
come from a non primary producer.
So somebody that is mining copper or zinc or something like that.
This is very important for the point that I'm going to get to
Toward the end of this, then he looks at the size of the market, cap
of the companies that produce a primary silver producers.
And these are Diversified minors that are producing something else.
Some of them may have a byproduct of silver, but you look at this,
here's gold.
Here's silver over here, and silver is about one less than a tenth of
what gold market cap is.
So the Diversified
Miners is 441 billion.
Gold is 225 silver is 118 little bit more than uranium and I think of
uranium as you know it's that's a Mite on a flea on a dog, you know.
It is a tiny, tiny market cap.
So the primary silver producers have a market cap of
Point nine billion, Apple has cash of 179 billion.
So Apple can buy all of the primary silver producers more than eight
times over with their cash on hand and that shows you how small this
sector really is, and that smallness means that it can't withstand
very much Capital flowing into it.
If it does it justice
Explodes.
So
When you take a look at the, the cost of the all-in cost of production
and then you take a look at the free cash flow, the free cash flow
here of all of these silver producers.
They're almost all in the - and then the couple that are producing a
little bit of free cash flow per share is very small.
So this is how much cash, how many dollars of cash flow, they produce
per share,
There.
And one of the largest miners here of of silver is - one dollar per
share that they, you know, so they're going backwards, meaning that
they either have to cut back on production.
They have to do high grading where they focus on just like the the
core of the vein, the highest grades instead of getting all of the
silver,
Which means all of the silver that they're skipping while they're
focusing on that.
Core vein is very very low grade and not worth going back to until you
have silver.
And that is is priced in many, many multiples of what it is currently.
And so what you're going to see is something playing out all of those
non-primary silver, producers the ones that are digging up copper.
The lead tin zinc.
Now all of those Metals, the demand for those Metals is for copper
plumbing pipe in housing, copper wiring and housing, castings for, for
automobiles, lead-acid batteries.
That's the secondary silver producers, the non-primary solar
producers.
They're digging up those other metals now, right now.
Demand ever since the pandemic actually demand for housing has fallen
and in like China, there's this there's this enormous housing bubble
that is popping right now.
I think they are in for the greatest real estate crisis in world
history.
But what you see here in this chart, that I made on stock charts, just
now, this blue square is very similar to what we're going through
today.
My book came,
I'm out right here and I had said that silver has this floor under.
It can't go down and stay down.
And what we had was the market crash of 08, when the global financial
crisis, hit the stock market's drug silver and gold down with them
temporarily, for a short period of time.
They bounced right out of it.
The stock market's didn't start Rising until many months later.
It was March of 09 that the stock market's finally, by
Them the metals turned around and started Rising before then and a
shortage developed in the medals.
This is the spot price for futures contracts.
If you were trying to buy hundred ounce bars, they were still way up
here.
If you were trying to buy silver eagles they were way up here.
While silver was down here below 10 bucks, but it came back up to the
cost of Mining and started started staying there.
But at the
The same time demand for new housing and new cars fell.
There was an end and so the demand for new supply of copper zinc, lead
tin, all of those things fell dramatically and then suddenly the price
exceeded its old high and it took off and we had this rise in
multiples.
Well, you look at what happened here and we had this pandemic crash,
that took silver into negative territory, where it was
Low, the primary silver, producers all in sustainable cost and that
cost has been rising due to inflation.
You know, that cost was down in here somewhere, and it's, it has risen
substantially due to inflation.
We've had the price go up and and sort of stabilize.
And then fall while we are seeing the, you know, real estate now is
deflating in.
In the United States.
It's going to go into a full-blown crash in China.
So the demand for all of these primary Metals is going to plummet.
The automotive industry, saw its peak in 2017 and the entire
automotive industry.
Pretty much with the exception of Tesla who grows at a more than fifty
percent per year, the entire automotive industry, hit its peak and has
been falling pretty much since then.
And so the demand
All of the castings for automobiles and for lead acid batteries is
falling.
So, we're in this same setup that was in this blue box here.
And I think that, within the next few years, you should see silver
exceed, these previous highs.
And this time, it will exceed the 50 dollar high from 1980.
It was actually $52.50,
On the Chicago, Mercantile Exchange.