Tom welcomes James Anderson, author and Head of Research at SD Bullion, to discuss the current volatility in the silver market. Anderson attributes the volatility to a combination of physical premiums, especially in the Eastern markets, and leveraged derivatives. He explains that the price of silver is influenced by both physical demand and derivative trading, with recent significant sell-offs driven by options betting. Anderson advises investors to hold physical silver outside the system to avoid short-term market volatility and to keep allocations limited to single digits for swing trading due to the dominance of professional traders with more firepower and information.
The conversation shifts to the impact of month-end and options expiry on volatility, with Anderson noting that options trading involves significant risk but can be profitable with a long-term view. He cautions about the influence of retail traders and meme stocks on the market, suggesting that the “call wall” around $100 SLB (Silver) was a significant level that influenced recent price movements. Anderson also discusses the differences between gold and silver markets, highlighting the role of leverage and gambling in both Western and Eastern markets, particularly in China. Anderson provides historical context for the current silver market, noting that the price of silver has re-rated significantly in the past five decades, with key rebalancing points occurring in 1974, 1980, 2006, 2008, and 2011. He predicts that the current rebalancing could lead to much higher prices, with silver potentially reaching four digits.
Anderson also discusses the challenges of increasing metals market literacy, citing the prevalence of misinformation and the complexity of the silver market, which includes both industrial and investment demand. He advises investors to conduct thorough research and understand the market dynamics before making investment decisions. The discussion also touches on the supply deficits in the silver market, with Anderson noting that both the Western and Eastern markets are experiencing tightness in inventory levels. He predicts that industrial players, such as Samsung, may go directly to silver producers to secure metal for their processes. Anderson also discusses the role of short positions held by bullion banks and the potential for arbitrage plays in the market. Anderson concludes by discussing the potential for a multi-decade top in both gold and silver, predicting that silver could reach $400 an ounce or more in the long term.
He advises investors to think in terms of ratios, such as gold versus the Dow Jones Industrial Average, to understand the relative value of precious metals. Anderson also notes that the current price of housing relative to gold is similar to the 1980 levels, suggesting that gold and silver could appreciate significantly in the coming years. He encourages listeners to stay informed and patient in navigating the volatile precious metals market.
Timestamps:
00:00:00 – Introduction
00:00:48 – Silver Market Volatility Explanations
00:03:23 – Options Expiry Volatility Impact
00:06:20 – Gold Versus Silver Differences
00:08:06 – Silver Price Rebalancing Era
00:11:22 – Metals Market Literacy
00:17:20 – Supply Deficits and Tightness
00:22:36 – ETF Ownership Risks
00:26:03 – East-West Demand Mindset
00:29:30 – Bullion Banks Short Positions
00:31:30 – Dealers & Refiners
00:35:19 – 90% Silver Refining Issues
00:43:35 – Tether’s Gold Holdings?
00:46:09 – Long-Term Endgame
00:52:08 – Concluding Thoughts
Guest Links:
Website: https://sdbullion.com
X: https://x.com/jameshenryand
YouTube: https://youtube.com/sdbullion
Blog: https://sdbullion.com/blog
A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk, and many more.
Given that repressed commodity values are now near 100-year low-level valuations versus large US stocks, investors and savers should buy and maintain a prudent physical bullion position. Continued stimulus and unfunded promises will only debase the dollar further.
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