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Global Silver Scrap Supply Falls To 26-Year Low

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Posted by Steve St. Angelo - SRSRocco Report

on Tuesday, 17 April 2018 06:59

This analyst posits that Silver supply will not be adequate when investment demand surges since the 4th largest Silver producer mine supply down 20%, only two mines supply half Of U.S. Silver Production & the global silver scrap supply has plunged from its 2011 high silver  - R. Zurrer for Money Talks 

Global silver scrap supply fell to its lowest level in 26 years.  World silver recycling in 2017 dropped by nearly 50% since its peak in 2011.  According to the 2018 World Silver Survey, global silver scrap supply declined to 138 million oz (Moz) compared to 261 Moz in 2011.  While the lower silver price is partly responsible for the large drop in silver recycling, there are other market dynamics.

For example, silver recycling from the photography sector has declined since consumption peaked in 1999.  The photography industry was using 228 Moz of silver in 1999 compared to the 44 Moz last year.  Thus, silver consumption in photography has declined by 80% in nearly two decades… and along with it, a great deal of recycled silver supply.

Furthermore, a lot of silverware was recycled during the period of rising prices (2007-2012).   A lot of Millennials who inherited their parent’s (and grandparents) silverware decided it was much easier to pawn it rather than spending a lot of time polishing it for holiday gatherings.  Which means, a lot of available stocks of silver scrap have already been recycled.

Global-Silver-Scrap-Supply-1990-2017

As we can see in the chart above, even though the $17 silver price in 2017 was four times higher than in 1991 ($3.91), global silver scrap supply is less than it was 26 years ago.  Moreover, world silver scrap was over 200 Moz a year (2005-2009) when the average annual price was much less than it was last year.

Now according to the Metal Focus Silver Scrap Report published in 2015, they forecasted the following percentages of silver scrap from the various sectors:

Industry = 60%

Silverware = 16%

Photographic = 12%

Jewelry = 10%

Coin = 2%

While it is well known that the majority of silver scrap comes from recycling of industrial silver waste, due to the industrial sector being the largest user of silver, jewelry only accounts for 10% but is the second largest consumer.  For example, the 2018 World Silver Survey reported that the industrial sector consumed nearly 600 Moz of silver in 2017 while jewelry fabricators used 209 Moz.  However, silverware and the photographic sectors only consumed 102 Moz, but account for 28% of silver scrap supply.

What this tells us is that owners of silver jewelry are not that motivated to pawn their silver jewelry because there just isn’t enough monetary value.  So, a large supply of potential silver scrap will likely never make it to the market, even at much higher prices, due to the relatively small value of silver jewelry held by individuals.

As for gold jewelry, it’s quite the opposite.  Nearly 90% of global gold scrap supply comes from recycled gold jewelry.  Thus, a significant increase in the gold price would result in higher gold jewelry recycling, whereas a higher silver price would not generate much of an increase in silver jewelry scrap supplies.  So, each year about 200 Moz of silver are used in silver jewelry fabrication, but only a small amount is ever recycled.

Lastly, annual gold scrap accounts for 28% of total global gold supply compared to only 14% for the silver market.  Even at much higher silver prices, global silver recycling will not be able to supply enough metal when investment demand surges as the broader markets collapse.

Also from Steve: Two Mines Supply Half Of U.S. Silver Production & The Real Cost To Produce Silver

and

CHILE, WORLD’S FOURTH LARGEST SILVER PRODUCER: Mine Supply Down 20%



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Gold & Precious Metals

Juniors are Close to Breaking Downtrend

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Posted by Jordan Roy Byrne - The Daily Gold

on Monday, 16 April 2018 06:57

A few weeks ago we wrote that it may not be Gold’s time yet but a few recent developments suggest its time could be sooner than we anticipated. Although Gold failed to breakout last week, we should note the positive action in the miners. Over the past seven trading days the miners have strongly outperformed Gold. That includes the juniors, which appear very close to breaking out of the downtrend that has been in effect for over 12 months. 

In the chart below we plot the three major junior ETFs: GDXJ, GOEX (explorers) and SILJ (silver juniors). The juniors have trended lower since February 2017 but are now threatening to break trendline resistance. Since December 2017 the juniors have traded in an increasingly tighter and tighter range which indicates a break is coming very soon. Also, note how the 200-day moving averages are flat and no longer sloping lower. That reflects a mature correction and the potential for a new uptrend if the juniors break above resistance in a strong fashion. 

04152018jrstl

Larger Chart 

There are a few other things worth mentioning. 



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Gold & Precious Metals

Coup d'État That May Shake the World

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Posted by Arkadiusz Sieron, Ph.D.

on Friday, 13 April 2018 07:47

Everyone focuses now on the chemical attack in Syria. Meanwhile, the most important turnover in the world remains mostly unnoticed. But we’re on guard. Let’s read our analysis of the key revolution of 2018 and find out the implications for the gold market.

Hawks Take Over the Fed

Are we going to write about Syria? North Korea? China? No. You already know everything you should about these geopolitical threats. The media bomb you with news about bombings, trade wars, nuclear trials, etc. But the key upheaval is taking place in silence, in the cool marble rooms of the Federal Reserve Banks. ‘The Hawkish Revolution’ – this is how the future historians will call it.

What is going on? We will tell you – but first read the key paragraph of the minutes from the recent FOMC meeting the Fed published yesterday.

Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.

What does it mean? The FOMC members have started to consider the end of its accommodative stance. This is a real revolution, as the U.S. central bank has been supporting growth since the outbreak of the financial crisis. Now, for the first time since the Great Recession ended a decade ago, the Fed is talking about adopting a neutral or even tight stance. The possible consequences are enormous. More interest rate hikes are up ahead. Gold investors, be prepared!

Before we discuss the conclusions for gold, let’s analyze the rest of the latest minutes. Generally speaking, even without the remarks about possibly dropping the accommodative bias, the minutes had a hawkish tone. Why? Well, the FOMC members agreed that the nation’s economic outlook had recently strengthened:

All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months. In addition, all participants expected inflation on a 12-month basis to move up in coming months.

Have you noticed something interesting? Look carefully. “All” – isn’t this a rare show of unity? We are all hawks now. Indeed:

Most participants commented that the stronger economic outlook and the somewhat higher inflation readings in recent months had increased the likelihood of progress toward the Committee's 2 percent inflation objective.

And another hawkish strike:

A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected.

Brace yourself for further hikes.

Fed Comments Trade Wars

Interestingly, the FOMC members discussed the potential impact of Trump’s trade wars. Although they downplayed the importance of U.S. tariffs, the central bankers worried about retaliatory trade actions:

A number of participants reported concern among their business contacts about the possible ramifications of the recent imposition of tariffs on imported steel and aluminum. Participants did not see the steel and aluminum tariffs, by themselves, as likely to have a significant effect on the national economic outlook, but a strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the U.S. economy.

The Fed officials were also uncertain about the impact of the American fiscal policy. Generally, they believed that it should boost growth, but some question marks remained.

Tax changes enacted late last year and the recent federal budget agreement, taken together, were expected to provide a significant boost to output over the next few years. However, participants generally regarded the magnitude and timing of the economic effects of the fiscal policy changes as uncertain, partly because there have been few historical examples of expansionary fiscal policy being implemented when the economy was operating at a high level of resource utilization. A number of participants also suggested that uncertainty about whether all elements of the tax cuts would be made permanent, or about the implications of higher budget deficits for fiscal sustainability and real interest rates, represented sources of downside risk to the economic outlook.

Implications for Gold

Is gold doomed after the hawkish revolution? Well, the price of gold has indeed declined after the minutes were released, as one can see in the chart below.

Chart 1: Gold prices from April 9 to April 11, 2018.

gold-price-chart



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Gold & Precious Metals

Gold Tests Resistance – Again

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Posted by John Rubino - Dollarcollapse.com

on Wednesday, 11 April 2018 08:42

Gold is rattling against $1367 resistance as Donald Trump tweeted early this morning "Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!”.  Two takes below, one a wait and see, the other by an analyst who wrote yesterday before all of these Syrian missle tweets and Gold's rise that "The Time is Now" for Gold to make a move. So far they are both right, but if Gold should break through this resistance at $1365 barrier the latter could be significantly more right - R. Zurrer for Money Talks

Gold Tests Resistance – Again

Just when everyone was getting used to gold sitting around and doing nothing while tech stocks provided non-stop thrills and chills, the metal took off this morning on the “news” (read “Tweet”) that Trump is aiming some cruise missiles at Syria. 

Now the $1,360 resistance level that has been an absolute brick wall since 2014 is looming once again, and gold-bugs are – once again – wondering where the next resistance lurks if this level is finally pierced. 

 

Gold-resistance-April-18

The correct answer is that the chart doesn’t (or at least shouldn’t) matter in a world where Russia might soon be trying to shoot down US cruise missiles, Chinese and US aircraft carriers are staking competing claims to the South China Sea and trillion-dollar deficits are explicit and unapologetic government policy. 

But until fundamentals retake control and precious metals start acting like bitcoin circa 2017, charts like this one are a fun diversion.

Gold Market Nirvana: The Time Is Now

Apr 10, 2018

  1. The main drivers of global stock, bond, and gold markets are interest rates and demographics. Unfortunately, most investors focus on items that get a lot of media attention but are almost irrelevant to price discovery in the markets.
  2. Please  click here now. I’ve predicted that there will be no trade war, but governments around the world will roll out a modest amount of mildly inflationary tariff taxes.


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Gold & Precious Metals

Great Alignment – Metals – Shares – Tangible Assets

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Posted by Martin Armstrong - Armstrong Economics

on Monday, 09 April 2018 08:49

Martin reinforces the case that it is just not time for Gold yet but that there is a necessary alignment taking place. How about this quote in Martin's answer: "99% of analysis out there on gold is just so wrong it is laughable". More from Martin below is "Understanding the Markets - R Zurrer for Money Talks

Great-Alignment

QUESTION: Hi Mr. Armstrong, I notice that the gold market and the Dow Jones they both had a high in January and since then they have been treading water, are these markets getting in sync or is just a coincidence. Also when it comes to the markets you have explained that we will always see the “if then” situation, my question is a what point do we know that this is the right time to pull the trigger on buying or selling? Thank you - NMP


ANSWER: We are not there just yet. However, we are starting the Great Alignment and this is what needs to take place as we move into the future. The 99% of analysis out there on gold is just so wrong it is laughable. They typically call the dollar to collapse and gold will soar. They look at historical charts without understanding the economics behind them. Yes, you see gold rally between 1930 and 1932 so they forecast gold will rally with the collapse of the dollar and the stock market. However, 1931 was the Sovereign Debt Crisis where most of the world permanently defaulted on their National Debts. The USA did not. So because we were on a gold standard, if the price of gold rose, so did the dollar. OMG! That must be heresy!

When you are on a gold standard, then tangible assets drop in terms of currency so yes gold rises. But when you are NOT on a gold standard, then gold is just a tangible asset that declines against the currency along with everything else. Most of these people are clueless about understanding the monetary system

During the rally for gold into 1980 when the dollar was declining in the floating exchange rate system, the stock market did not crash – it consolidated. These people spin out total sophistry that sounds great, cause so many people to lose their savings, and they never repent or try to understand why they have been wrong ever since 1980

The Great Alignment will be when all tangible assets rise against a declining purchasing power of the currencies which today are NOT linked to gold.

We are getting closer. Do not rush in where only fools are found.

.....also from Martin: 

Understanding the Markets

 



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