Silver: What’s the deal?

“I am altering the deal. Pray I don’t alter it any further.” – The Empire Strikes Back

Am I the only one still trying to forget Game of Thrones?

Today, we’re diving into silver like Scrooge McDuck® into his money vault, mainly because I think it tells a much deeper story about wealth and reality.  Silver prices have doubled since April.  More than that, really.  But who’s counting?

What’s causing this?

First, the dollar is worth less. Not worthless, though I think anyone checking in from the time the Fed® started back in 1913 would disagree.  No, that delightful dumpster fire comes later, probably around the time Tim Walz starts quoting Marx in his next speech.

But worth less?  Absolutely.  Inflation is like a bottle of Everclear® showing up at a high school kegger.  You know it shouldn’t be there, but everyone is enjoying the party so much that no one wants to pour out the booze.  And, no one has poured out the booze.  People just keep showing up with more and more booze.  And by booze, I mean printing money.

Everclear© eventually turns brains into goo, and the Fed® is turning our money into an unsightly goo.  That’s okay, because who needs actual value when you can just ctrl+p your way to prosperity?

Silver’s price jump isn’t because silver suddenly got sexier; it’s because greenbacks are now less than a dime a dozen.  Okay, not a dime a dozen, but a silver dime is from 1960 is worth $7.87 at $110 an ounce silver.

I have a dime in one hand and a nickel in the other.  What am I?  Broke.

I know, I know, there is nothing new here.  Rome.  Weimar Germany.  Zimbabwe.  Venezuela.  History’s a harsh teacher, and not one of the hot ones that just graduated from college that was a hot blonde with long hair that drove a Trans-Am® while I hummed Hot For Teacher in the back row of the classroom in 11th grade English.

Sorry, that was oddly specific.

Second, a driver of this rise in silver prices is A.I.  A.I. is in everything now, including French’s® Classic Yellow Mustard™, at least according to the label.  But silver is in computer chips, solar panel, and chemical catalysts.  Industry actually consumes the stuff at a rate of 680 million ounces per year.  Yes, that’s a lot, being a bit more than an Ohio-class ballistic missile submarine or the weight of cash exported by Somalians from Minnesota each week.

Everything’s fine, though, right?  We’ve been doing this forever.

Not so fast, Pat Sajak.  The dragon has entered the chat.  No, not George R.R. Martin.  He’s the walrus.  By dragon, I mean:

China.

Dragons don’t explode, but a dino might.

They’re the primary refiner of silver according to some sources, though I’ve been unable to back that up with a source I really trust, so take that as a “trust me, bro” type of number.  Recently, though, China looked around and they do control about 15% of silver production and third of the industrial supply goes through China.

On January 1, China changed its rules.  It will only license exports to specific companies for specific uses.  No more “hey, buddy, can I get a pallet of silver for my Etsy® jewelry shop?”

Nope.

Remember that old Lenin quote where he said that the capitalists would sell the commies the rope to hang the capitalists?

We’re living it.

We outsourced everything except Learing Centers to China because China did it cheaper:  rare earth mining and refining, silver mining, manufacturing, bad fashion choices.  You name it.

“Why get all sweaty and dirty when we can push paper instead?” was the attitude.  So, we traded factories for finance, blue collars for spreadsheets.  Now, the know-how’s gone east, poof, like a magician’s rabbit.

Entire industries vanished from the U.S.

Health is wealth.  Don’t believe me?  Check out the prices of fresh kidneys!  (meme as found)

This is the bill coming due for all that cheap Walmart® crap from China.  We’re paying premium now, and it won’t just be in dollars it will be in our international standing and living standard.

Third:  it’s the paper. Silver’s price used to be all about paper:  silver futures, silver options, the whole Wall Street silver casino.  Sweaty guys in New York could bet on silver in Hong Kong without ever touching it.  It’d never come within 5,000 miles of their Manhattan condo.

It was like playing poker at a casino where people kept trading IOUs.  Nobody cashed out their IOUs for the real chips.  The market was dominated by speculators, hedge funds, a particular big bank, and day traders who treated it like a video game.

This was profits without product.  But oh, how the tables have turned.

Now, the game’s gone real-world, and folks are demanding delivery.  Warehouses are being sacked like a Domino’s Pizza® after Weedfest© in Colorado.  Empty shelves, frantic calls, bummed out hippies, the works.

(as found)

Take Samsung©, for instance.  Reports say they hopped on a plane, jetted to Mexico, and straight-up bought out the silver supply from at least two mines for the next few years.  No matter what it costs, they’ll buy it all, plus front the company the cash to get capacity up to snuff.  That’s not hyperbole; that’s desperation with a corporate jet.

Why?  Because silver’s a tiny part of their widgets:  phones, TVs, fridges.  But it’s an essential part of their widgets.  The recipe calls for it, like flour in a cake.  Skip it, and the chip in the phone won’t work.  Redesigning?  Yeah, maybe.  That takes time, money, and R&D.  The engineers would be pulling all-nighters, and all of a sudden the coffee market is impacted.

It’s far easier to pay $100 or even $200 an ounce.  Even at $200, it’s just a buck or two per gadget.  Compare that to shutting down production lines, which would be a corporate catastrophe.  They’re going to buy the silver.  Sure, there’s a breakeven, and it will vary by use:  I saw one as low as $134.  Less silver jewelry will be made.  Werewolves will go unhunted.

Finally, the biggest risk for most people reading this is that it shines a spotlight on the made-up money system for what it is:  made-up promises, ink on a ledger or magnetic bits on a hard drive.  Silver, gold, copper, lead, corn, PEZ®, that’s real.  It’s tangible, you-can-hold-it-in-your-grubby-paws stuff and eat it our swim in it if you’re Scrooge McDuck©.  Fiat currency?  It’s money conjured out of a belief system, a collective hallucination we’ve all bought into since LBJ printed bucks for Vietnam and Nixon got called on our “gold-backed” bluff by the French.

Hmmm, which one? (as found)

The dollar has been floating on faith ever since, like Wile E. Coyote™ before he looks down. But now, with silver spiking, the fall is in sight.  People want assets, not abstractions.  It’s the ultimate vote of no confidence in the dollar downsizing derby.

Is silver in a bubble?

Beats me.  Maybe.

Maybe not.

Is the dollar in an anti-bubble and collapsing first in slow motion and then all at once?

Beats me.  Maybe.

Maybe not.

Silver could crash tomorrow or double by next month.  But my gut says $20 or even $50 silver is in the rear-view mirror, except for after a deflationary collapse temporarily crushes it.  I think it has vanished like cops without tattoo sleeves or the McDonald’s® Dollar Menu™ where something on the menu actually cost a dollar.

It’s just gone.

I’m sure it’ll be fine.

But, hey, what are you worried about?  Chuck just showed up with more Everclear®!  Party on!

Disclaimer:  I write funny things, and you should know that by now so this isn’t investment advice or fashion advice or love-life advice.  Think for yourself and do your own research and stop copying me!  Teacher, he’s copying me!
Disclosure:  I do have a position in silver that I’ve had forever, and bought (literally) about a hundred and thirty bucks more today in my IRA, which might have been stupid, but, whatever.  If you think this article will move the international silver price, you’re stoned.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

45 thoughts on “Silver: What’s the deal?”

  1. This post rates right up there with an Everclear-spiked fruit punch.

    Karl Ushanka

  2. My wife and I started buying physical gold and silver in 2010 after I read “The Patriot” by James Wesley-Rawles. It wasn’t always easy for us to make the annual purchase, not having a lot of “disposable income”, but we did it. With an increase in value of more than 500% since 2010, I wish we would have started earlier…

  3. It is interesting at least to me that as we have made electronics disposable, we are now dumping tons of silver in tiny amounts at a time into landfills. Yet another delightful aspect of our fake and ghey economy.

  4. Samsung has invented a new solid-state battery that will replace the lithium type batteries found in EV’s and other electric powered devices. It uses a lot of silver.

    The battery is being developed for sales currently; announcement last year said Samsung wd begin production in 2026….. Battery has half the weight, 1/4 the size, holds twice the stored power if current batteries and recharges in about ten minutes. It will be used in Teslas, other EV cars, and in new battery powered airplanes like Beta’s “Alia”.

    No doubt this new battery contributes to manufacturing’s quest for reliable silver supply and the resulting sky rocketing of price.

    Another point: silver has doubled in price, not just since April, but since September !

  5. That gold-and-green arrow chart is the key. People just don’t get it. And by “it”, I mean physical commodity atoms needed to run our world, as compared to “bit” as in the electrons needed to run a spreadsheet.

    https://substack.com/home/post/p-185419407

    And as an aside, magnetic storage hard drives are now as obsolete as 5 1/4 inch plastic floppy drives. The hot lick these days for ultra-fast memory is solid-state drives (SSDs), baby, storing electrons in an M2 form factor the size of a stick of chewing gum. And yep, there’s a crisis there too. AI is stuck using SSSLLLOOOWWW spinning magnetic disks these days because the cost of NAND memory is following the silver price trajectory.

    https://www.tomshardware.com/pc-components/storage/ssds-now-cost-16x-more-than-hdds-hybrid-ssd-hdd-datacenter-deployments-are-now-significantly-cheaper-to-deploy-than-ssd-only-equivalents

    1. FWIW, don’t store critical data on an SSD – and if you do – run a real-time backup system (like Bvckvp2) that mirrors that critical data onto a spinning HDD. Why, you may ask? – and I speak from experience – an SSD can dump it’s “index” in a microsecond – blank itself – and be unrecoverable. I lost two years worth of work on an SSD that just went “poof” and even the data recovery experts claimed that the drive was blank. A spinning HDD is much easier to recover data from as they usually start acting up way before they fail outright.

  6. In Australia the local (South Pacific Peso) dollar was worth about 62 US cents a month or so ago. Now it’s climbing past the 70 mark

  7. Bubbles are usually driven by speculation. Silver is being driven by supply/demand. They’ve been using more silver than they’ve been producing every year – slowly eroding the once-respectable silver stockpile. Current advances have just sped up that erosion. The ComEx scumbags have used paper-silver to crush silver prices for well over 10 years – while they quietly sold and resold their client’s silver that they were supposed to be holding. IIRC, the last time they published numbers (2013?) they had sold 170 silver certificates for every OZ of silver on the shelves. Gee, I wonder if any of that filth will go to prison (spoiler alert: NOPE).

    I also think something worth noting is that “money” is not “printed out of thin air”: DEBT (“currency”) is printed out of thin air. With every dollar (currency – not money – only a representation of money) created by the pond-scum Fed owners (the list is a secret, BTW), DEBT is attached to that dollar. However – and this is important – the currency to pay off the interest on the debt is never conjured into existence. Therefore, if you took every penny and gave it back to the cancerous-shite-bags at the Fed, the DEBT (interest) would still remain. The Fed, and everyone who works for them and owns a part of it, need to be loaded into a rocket and fired into the Sun.

    Let the people who live on the Sun deal with them.

    1. Supply/Demand is the fuel, but speculation (me) is the additional accelerant. It will overshoot.

      329 paper per physical was the last I heard.

  10. “Sorry, that was oddly specific.”
    She was my teacher in 12th grade Myths & Legends. She wore miniskirts and sat on top of her desk. She knew *exactly* what she was doing to us. She married one of my classmates a week after graduation.

  11. Another gorilla driver for Ag is Solar. Cu corrodes out in 15 or so years, AG goes 30 minimum. Whomever comes up with an inexpensive way to reclaim Ag from solar panels will become a Gazillonaire.

    Betcha he’ll be a Chinese engineer.

  12. The US economy has openly been self-destructing since the Plandemic. Millions of small businesses gutted, hordes of female administrators ‘working’ from home, tanked restaurants and supply systems, closed sorry closed . . . foreign banks look on at America doing that ole Seppuku Shuffle aaaand . . . devalue dollars.

    When I landed in this country a decade ago, everybody wanted my dollars. Now, You want to give me what? Sorry senor no posible.

    When a nation subverts its own currency because Sexism and Racism and Diversity and Reasons, foreign institutions and private investors take note: a buncha women and dildos are now in charge. Confidence then moves to ‘hard commodities’ and metals with less volatility than pieces of paper that the host citizenry considers Evidence of Indigenous Oppression.

    I certainly have no investment funds, but if I did, it’s a little like surfing. You get on that early wave (ensured by the self-immolating Laura Biden Government), the foreign banks go dollar-short, and then you take silver or gold and wait for the inevitable swell. Now, can you get your metal in the palm of your hand? Is another matter.

  14. Silver solder sure is spendy. Romex ain’t cheap neither. Bought a 250′ roll of 14/2 back in July for $58, lucky to find it at twice the price now. Wiring my shop with mostly ends and used stuff, I couldn’t imagine buying all this new anymore.

    Especially for an AI data center. On the shakiest grid north of Mexico.

  15. Gold has blasted past $5000 per ounce Sunday night to $5600 only 72 hours later. The Greater Depression Panic is now fully underway!!!

    Tip ‘O The Hat to James Turk:

    January 26 (King World News)

    “Gold’s Purchasing Power Is Skyrocketing!

    We’re re-living 1930s deflation but ***only visible when measured with gold money***.

    Example – base MSRP of a BMW X5:

    ( https://www.bmwusa.com/vehicles/x-series/x5/bmw-x5.html – Ricky link)

    Jan 2024 $65,200 or 32.12 oz gold
    Jan 2026 $68,300 or 12.81 oz gold

    Price up 4.8% in US dollar terms because of inflation and down 60.1% in gold, just like prices fell in the Great Depression when money was gold.

    Purchasing power today like back then is moving out of the hands of people owning fiat currency and into hands of people owning gold & silver.”

  16. How long until we start seeing stories about guys with their savings safely stacked in physical PM being found dead next to an empty safe? It might be worth a lot while you’re holding it, but you can’t convert it to anything actually useful (e.g., bread, fuel) without somebody noticing, and investigating how much more might be seft where that came from.

  17. Go search for a chart on the Dow/Gold ratio. We have been in a fiat currency deflation since 1999 and people are finally beginning to realize it.

  18. Finally! I’ve been expecting paper and physical to decouple for a few years now. The gamblers “making money” and distorting prices have started to get their comeuppance.

      1. 1/329th. And then they’re under indictment.
        It’s hard to flee with to S. America, unless you have a freighter handy.

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