Can industrial demand for silver get crushed during a stock market crash?

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lilbromarky1
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Can industrial demand for silver get crushed during a stock market crash?

If the answer is yes, would panic flight from fiat buying be able to pick up demand slack or will there be a lull period where phys can be scored on the cheap? Seems to me silver bulls like to igmore this chink in silver's armor. What is the consensus gents?

Edited by admin on 11/08/2014 - 06:09

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mrgneiss
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2/3 of mined silver from base metal miners, which drops

It is debatable that an economic collapse would be bad for silver. Industrial demand would collapse, but base metal mining would collapse as well, and 2/3 of mined silver comes from base metal mining, so let's say industrial demand, which is almost half of total demand decreases by half, so we lose about 220 Mozs of demand, and 2/3 of mined silver decreases by half, which is half of 2/3 of 735Mozs, which ends up being a decrease of about 240Mozs. Assuming investment demand would stay the same or increase in a collapse, we are looking at a further net deficit of 20 Mozs per year, hardly bearish.

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lilbromarky1
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Hmm okay thanks. What is

Hmm okay thanks. What is best place to see a 2010 demand pie chart? In the end data and numbers help to solidify positions

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jlev
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i think you could see silver

i think you could see silver take a decent sized dip in a liquidity crisis.  In an overall market crash i can totally see the paper price of silver getting hammered with everything else at first.  Gold/Silver (paper) are pretty liquid assets and firms will dump if they are in a crunch. 

However, i see the metals having a very short dip in terms of time frame (i have no idea how deep the dip could get), even shorter then in 2008.  As we know, in 2008 the PM sector was one of the first, if not the first, to bottom.  In a new crisis, i see that bottom happening in an even shorter time frame as people realize that all paper currencies are inherently flawed.

I do see industrial demand going down some intially but should rebound since silver is used in some necessary applications.   The increase in investment demand with another financial crisis is what will make silver the star.  In 2008 the POSX was the safe haven people ran too, in a 2011/2012 crisis, it will be the metals that are the safe haven since the world has figuered out the paper money game. 

mrgneiss
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Silver databases

jlev wrote:

i think you could see silver take a decent sized dip in a liquidity crisis.  In an overall market crash i can totally see the paper price of silver getting hammered with everything else at first.  Gold/Silver (paper) are pretty liquid assets and firms will dump if they are in a crunch. 

However, i see the metals having a very short dip in terms of time frame (i have no idea how deep the dip could get), even shorter then in 2008.  As we know, in 2008 the PM sector was one of the first, if not the first, to bottom.  In a new crisis, i see that bottom happening in an even shorter time frame as people realize that all paper currencies are inherently flawed.

I do see industrial demand going down some intially but should rebound since silver is used in some necessary applications.   The increase in investment demand with another financial crisis is what will make silver the star.  In 2008 the POSX was the safe haven people ran too, in a 2011/2012 crisis, it will be the metals that are the safe haven since the world has figuered out the paper money game. 

If we get another severe liquidity crisis silver will definitely get hit.  Though think of what the solution to that would have to be - some kind of global QE - which would be good for silver in the longer term.

lilbromarky1 wrote:
Hmm okay thanks. What is best place to see a 2010 demand pie chart? In the end data and numbers help to solidify positions

Here is the 2010 Silver Institute stats and some stats from the 2011 CPM Yearbook, from what I know two of the biggest databases for silver info:

http://www.silverinstitute.org/pr07apr2011.php

http://www.caseyresearch.com/cdd/what-do-you-know-about-silver-trends-2011

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Yes

Yes, perceived or actual loss of industrial demand would give the Crimex the leverage over the market required to drive a solid downdraft.  There would most likely also be a flight to safety FROM paper silver trades, however, post crash silver should be poised for a massive bounce back.  Holding phys PMs for safety long term still the name of the game.  The ultimate endgame should be very bullish for PMs no matter how the short term price action plays out.

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bernard
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Let's do some math, and a

Let's do some math, and a little out of the box analysis. Let's compare stock tickers. Let's normalize around 2007.

SLV vs. DBB

SLV roughly represents silver's movement.

DBB roughly represents the entire industrial base metal movement.

              Jan 2007 - Jan 2008

             SLV up 24%, DBB down 3%

              Jan 2007 - Jan 2009

               ​SLV down 6.3%, DBB down 47.57%

            Jan 2007 - Jan 2010

              ​SLV up 49% and DBB down 3.25%

            ​Jan 2007 - Present

            SLV up 187%, DBB down 2.77%

2011 YTD, silver is up 15.81%, and DBB is down 5.65%

Obviously there are some fallacies with measuring these things like this, but it is overall a very nice representation of what could happen to silver during another dip for industry

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I don't know if demand will

I don't know if demand will be crushed so I remain skeptical in that regard. Unless there is an alternative element that can be used in place of silver...

Unless we are only talking about North American and perhaps EU demand taking a dip. I will assume therefore a market crash means NYC right ?

I suspect that Asia's continuing growth will smooth out any market corrections over the long run. Shanghai, Singapore, Mumbai and their 2 plus billion people all wanting things that use silver should actually increase demand right ? Not to mention wage and price inflation which should increase their buying power. If anything said inflation should drive those seeking a hedge into PM as a store of wealth should it not ?

I think it boils down to the time period. Could silver see a short term dip in price, say $25 ? sure. why not ? that would be great news for those of us a little late to the game as we can improve our dollar cost avg.

Over the long term I feel silver be bullish arrr

not ignoring the chink, just waiting for a better buying opportunity before the demand returns to "normal" err the new normal.

prana
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Silver Future

Everything including PM's will take a hit when the economy falters (or crashes) but that will be a temporary blip. PM's will recover as will commodities which are necessary for survival.

Silver has many things going for it including:

- when the confidence in fiat currencies fails and people/institutions rush into gold, prices will become so high that silver will benefit from the "flight to safety" as the next most affordable. Only 1% of the world's retail investors is invested in silver. Hardly any institutional biggies have bought into silver (yet). With lousy/no yields from other investments PLUS the scary fate of fiat currencies, this reason alone is bullish for PM's

- fears about nuclear power, "too expensive" oil (and insufficient oil @ any price if you believe in Peak Oil) means that alternative energies must take over. one of the few alternatives already ready to bring to market is solar.... and solar panels all need silver

- the device you are reading this on, the cellphone in your pocket, the light switch you turned on to illuminate your space, all need silver. In the event of war, every one of those missiles needs silver. So even if the demand for catalytic convertor vehicles drops away, silver will be needed in key areas of our lives, in war or peace. 

As for supply, since less than 10% of silver supply comes from base supply i.e. more than 3/4 silver supply is by-product of mining copper, zinc etc. It means that as economic demand for industrial metals falls away, the silver by-product will also lesses. Do the maths: increasing or steady demand.... falling supply = ?

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I agree with jlev

prana wrote:

...

Silver has many things going for it including:

- fears about nuclear power, "too expensive" oil (and insufficient oil @ any price if you believe in Peak Oil) means that alternative energies must take over. one of the few alternatives already ready to bring to market is solar.... and solar panels all need silver ...

I agree with jlev about silver dipping in the event of a crash.  I think much of the fundamental analysis for the PMs is bullish long term (we wouldn't be here if we thought otherwise).  Let's keep in mind that the market usually overreacts - that's sentiment, not fundamentals.  So the fundamentals drive the PMs up long term, but the fear epidemic that follows the crash will be widespread and the PMs would still take a hit imo.  Hopefully, we'll see something like a V dip and the PMs go straight up after the crash(es)!

@prana, I agree with nearly everything you said except for the quoted text above.  Yes nuclear has its issues, but I don't think solar can get anywhere near the energy generating capacity that nuclear can.  Nuclear is clean so long as it's safe (don't build it near places with high seismic activity!).  We require alternatives to oil - nuclear is an option.  Nuclear power is needed in many places around the world - I highly doubt it would get replaced in the foreseeable future.

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ASAP

The Price of Comex silver might drop but the price of physical silver will dip much less.  and your ability to buy silver will be very difficult with long waits.  Not worth the risk.  The best deal is to simply hold on to all your physical silver and buy more on a crash. 

People are not stupid.  Just because the Comex price drops does not mean that people with silver will sell it.  They won't.  They will wait for prices to go back up. 

Right now people who bought physical silver at $50 are simply waiting for the run up.  Do not worry it is coming very quickly.  My advice is to stop worrying about the price of physical and just go buy all you can and stash it away.  ASAP

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What the comex does and what

What the comex does and what the rest of the world do may be two different things completely.

Industrial use of silver? Lets take a closer look into who is using  the most silver .....

India along with China are two of the world’s largest silver users. India's silver demand averages 2,500 tons per year and  China has moved from an exporter of silver to a net importer despite being one of the countries with the biggest silver production. China currently is the biggest user of silver for industrial applications and i really dont see much of that demand being affected by a paper crash in the North American stock markets. Investment demand may or may not increase with a market crash as people continue to lose faith in paper, be it stocks or currency. Comex artificially lowering the silver price does not make the china and india stockpilers unhappy, they are more than willing to load up for their needs at the manipulated lower price. Will investment demand slow in asia? Not likely. It really doesnt compare at the moment to the investment happening in the US with  record sales of bullion and coins the past year, and it does not appear to be slowing down.

But the growth in ASIA is real and immense. More wedding gifts are being given in the form of silver now, as it is considered more affordable and desirable , particularly for jewelry in INDIA.

Personally i am gathering silver , in any physical form, and the best of the silver producers.

donpaulo
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just as an fyi, the cost in

just as an fyi, the cost in energy to produce a solar panel is greater than the energy you will create from having the panel itself. So on an energy only decision making scale its a losing formula... There are of course other factors in the decision making however.

I think the future of power generation in Asia will be LNG. Its carving out a larger market share on an annual basis here in Japan.

I am hoping there is a major dip in PM as do most here. It should be interesting to see what percent of "investors" panic at say $28 and which ones are backing up the truck.

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