“I won a silver medal. But really, I ended up running the fastest race of my life to become part of something that transcended the Games.” – Peter Norman By way of introduction and disclosure, I’m a long-time investor in precious metals. (A doomer with precious metals? Shocking!) I own physical gold and silver. I often own various forms of paper gold and silver and trade around those positions. Unlike with cryptocurrencies where I’m merely a market observer, when I write about gold or silver you should assume I’m biased and I would like the price of precious metals to go up. Also, nothing I write is trading advice. I’m a paranoid chicken on Substack. If you are taking trading advice from a paranoid chicken on Substack, you’ve got serious problems. You probably also hate money.
One thing you're failing to consider in your analysis is that PSLV is a closed-end fund, and as such always carries a premium or discount to the price of the silver that they hold. By going to the company's website, you can see how this fluctuates by looking at the % gain/loss over a specific time period compared to the underlying silver. All other things being equal, the fund will underperform silver because of its 0.62% management fee for the cost involved with its storing the physical silver and other costs of ownership. However, on a monthly basis (as well as a year-to-date basis), it has outperformed silver. What this means is that the discount normally associated with the fund has disappeared and become a slight premium due to the cash inflows that you mentioned. What I think you will find is that the cash inflows (or outflows) into the fund actually have a bigger effect on the specific premium/discount that the fund trades at as opposed to the price of silver itself. As money flows into the fund, the premium of the fund increases, while if money flows out of the fund on a net basis the customary discount that the fund trades at will increase. Large enough inflows could in theory affect COMEX inventories (since that is where Sprott gets its needed silver) and therefore price, but part of that would be absorbed into the premium/discount that the fund trades at over its NAV, and would be transitory.
Hey Doomberg excellent stuff, loving your insight, btw if you're trading Comex Options drop me an email, we have an interesting analytics system(web) that can have for gratis, I think you can see my details)
Your blog is excellent , however don't get too excited about Silver, for every reason you like silver there is a better and much more convincing argument in favour of Tin ! , there is no Tin etf and the LME warehouses are empty so there is zero physical Tin and you need it to make every iPhone, tablet computer, Tesla etc etc where it is not substitutable, all the major tin mines in the world are running out and the marginal supply is from child slave labour in Myanmar in the fast depleting mines there, Gold , Silver and Tin are all currently priced pretty much exactly in the ratio that you would predict from the abundance in the earths crust but all the gold and most of the silver ever mined is in vaults/safes while pretty much all the Tin is in landfills, you could try corner the market in Tin but physical is becoming impossible to procure ...
You want to see something really exciting check out the coming sprott takeover of uranium participation corp. That is gonna squeeze a market even tighten than silver till it pops.
The movement didn’t fizzle out on Wallstreetbets, mods came in with high level censoring of any posts related to silver and bannings of anyone mention it. They didn’t want to lose the possible funds of more GME investors. WSS was started out of necessity.
Might be worth looking at a price of Silver in Indian Rupee. Public there massive holders and this price for them is like 50usd/oz. Quite possible the trade is/will be buying in India, from Indians who are doing it a bit tough, so very happy to see the bid from the "Squeezers".
Also a cynic might suggest Sprott is a huge beneficiary of the latest move. Why not promote, which is what they do well.
Globally there is no shortage of silver, except on the shelves of the US merchants who charge outrageous premiums. And are also huge promoters.
Silver might go up if the flows in GSCI etc continue so the squeezers may well make money. For the right reasons but despite their delusions.
One thing you're failing to consider in your analysis is that PSLV is a closed-end fund, and as such always carries a premium or discount to the price of the silver that they hold. By going to the company's website, you can see how this fluctuates by looking at the % gain/loss over a specific time period compared to the underlying silver. All other things being equal, the fund will underperform silver because of its 0.62% management fee for the cost involved with its storing the physical silver and other costs of ownership. However, on a monthly basis (as well as a year-to-date basis), it has outperformed silver. What this means is that the discount normally associated with the fund has disappeared and become a slight premium due to the cash inflows that you mentioned. What I think you will find is that the cash inflows (or outflows) into the fund actually have a bigger effect on the specific premium/discount that the fund trades at as opposed to the price of silver itself. As money flows into the fund, the premium of the fund increases, while if money flows out of the fund on a net basis the customary discount that the fund trades at will increase. Large enough inflows could in theory affect COMEX inventories (since that is where Sprott gets its needed silver) and therefore price, but part of that would be absorbed into the premium/discount that the fund trades at over its NAV, and would be transitory.
Hey Doomberg excellent stuff, loving your insight, btw if you're trading Comex Options drop me an email, we have an interesting analytics system(web) that can have for gratis, I think you can see my details)
So umm, you reckon there's 70,754 contract equivalent inventory and July open interest is 142,666? Nah that can't be correct can it?
Your blog is excellent , however don't get too excited about Silver, for every reason you like silver there is a better and much more convincing argument in favour of Tin ! , there is no Tin etf and the LME warehouses are empty so there is zero physical Tin and you need it to make every iPhone, tablet computer, Tesla etc etc where it is not substitutable, all the major tin mines in the world are running out and the marginal supply is from child slave labour in Myanmar in the fast depleting mines there, Gold , Silver and Tin are all currently priced pretty much exactly in the ratio that you would predict from the abundance in the earths crust but all the gold and most of the silver ever mined is in vaults/safes while pretty much all the Tin is in landfills, you could try corner the market in Tin but physical is becoming impossible to procure ...
"No matter how you slice it, $1.8 billion of de facto physical silver is a lot of cheese."
Jeff Christian disagrees.
You want to see something really exciting check out the coming sprott takeover of uranium participation corp. That is gonna squeeze a market even tighten than silver till it pops.
The movement didn’t fizzle out on Wallstreetbets, mods came in with high level censoring of any posts related to silver and bannings of anyone mention it. They didn’t want to lose the possible funds of more GME investors. WSS was started out of necessity.
Loving your stuff. Thanks.
Might be worth looking at a price of Silver in Indian Rupee. Public there massive holders and this price for them is like 50usd/oz. Quite possible the trade is/will be buying in India, from Indians who are doing it a bit tough, so very happy to see the bid from the "Squeezers".
Also a cynic might suggest Sprott is a huge beneficiary of the latest move. Why not promote, which is what they do well.
Globally there is no shortage of silver, except on the shelves of the US merchants who charge outrageous premiums. And are also huge promoters.
Silver might go up if the flows in GSCI etc continue so the squeezers may well make money. For the right reasons but despite their delusions.