Silver dropped almost 50 cents on Thursday and broke through the $19 level to the downside. Please remember that silver has a global “all in cost” of production somewhere near $25 per ounce so these prices will only augur for much less supply. “Supply” in this case is REAL supply of raw silver to be used for electronics, solar panels, jewelry, investment etc.. Common sense tells you if you must sell your product for a loss you will either sell less of it, not sell any of it, or sell all that you can for cash flow and go bankrupt …supply will dry up.
One more point on this from a different angle, in the past whenever there was a major price decline …physical silver became very hard to find. And especially at the so called “market price” as any and all silver changed hands at a premium above the so called market price. This is proof that the declines were caused by paper derivative contracts rather than real selling of metal. Were it real silver that was being sold, it would have been plentiful. Silver became scarce on every single “dump” in price because the lower price brought out new physical demand which was not offset by any supply other than that of naked contracts. This is easy to understand, take a desirable food like beef for example. Let’s say that “XYZ” broker (or central bank) decided they wanted the price of beef to drop and then sold cattle futures to suppress the price. They sold so many cattle futures that the price dropped so low it was the cheapest of all meats, cheaper than poultry, pork and fish. What would you expect to happen? You could probably expect not to find ANY beef as it would be scooped up and hoarded with each new shipment. This is supply and demand where the “price” acts as the deciding factor …the price went too low and consumers increased their demand without any increase (and probably a decrease by ranchers withholding supply while waiting for higher prices) in supply. …Thus a shortage.
Source Gold Seek
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