Michael DiRienzo: Inside the Silver Squeeze Driving Prices Beyond $50
Summary
Market Outlook: The podcast discusses the rising interest in silver as a hedge against fiat currency devaluation and the weakening US dollar, with silver prices recently reaching $48.
Investment Demand: There has been a significant increase in silver investment through Exchange-Traded Products (ETPs), with a 19% surge in ounces recently, indicating a potential start of a new investment cycle.
Industrial Demand: Silver's industrial demand is driven by its use in photovoltaics, electric vehicles, and AI technologies, with industrial demand making up 59% of total silver demand.
Supply Deficit: The silver market has been operating at a supply deficit for several years, with a projected deficit of 117 to 122 million ounces this year, due to limited new mining projects and stable existing output.
Geopolitical Influences: Geopolitical risks, including conflicts and economic policies, are contributing to the increased demand for silver as a safe-haven asset.
Institutional Interest: Institutional investors are increasingly considering silver, which could lead to sustained higher prices and a new price floor between $35 and $38.
Silver Equities: The podcast highlights the limited number of silver equities available for investment, with a focus on junior mining companies and recent M&A activity in the sector.
Future Prospects: The discussion emphasizes the potential for continued price growth in silver, driven by both investment and industrial demand, as well as the strategic role of silver in diversified investment portfolios.
Transcript
People are waking up. People are looking at fiat money. People are looking at the weakness of the US dollar. They're looking at the Fed in general. There are things that are beyond any mechanics control that wants to look at the silver and gold price and say, "We want it here." I think it has taken off. I think that on the silver side, when you couple the investment with the industrial side of the equation, we're looking north. We're pointing forward. [Music] >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Greetings and welcome to our Wealthy Show. My name is Trey Reich and today we're visiting with Michael Denzo of the Silver Institute, both president and CEO. Uh Michael and I have known each other for several years, and the last time we crossed paths was at the SCP Silver Conference uh in New York this past November. Um, and this is a great time for us to remind viewers that the SCP Wealthon Silver Conference for this year will be held October 23rd at the Shangrila Hotel in Toronto. And for Wealthy viewers who are interested in attending either in person or virtually, uh, please click on the links in the description below. Uh, and if you want to attend in person, get signed up as an accredited investor. Uh, and we'd love to see you at the conference. So, Michael, thanks very much for coming. I know you're not going to be there in person, although I saw you last year because you'll be at an LBMA conference, I believe, in Europe. U, but thanks for taking the time to join us today. >> Well, I really appreciate this opportunity, Trey. I'm I'm as well. I'm sorry I'm not going to be able to see you. That was a great conference last year. I'm headed over to uh Kyoto, Japan for the LBMA, LPPPM, precious metals conference. Uh they hold it overseas one year and then they hold it in North America the following year. So we're going to Japan. Last year it was in Miami. And from Japan, I'm going to Wow, China for the China International Silver Conference. It'll be my first time there since co been making virtual presentations. So, I'm looking forward to getting back to that dynamic silver country, China. >> Well, I thought Toronto uh was sort of elegant, but you're showing us up here with your travel. >> That's a lot of miles, Trey. I'd rather just go to Toronto for the day or day or two. >> Make sure you send us postcards. So, um obviously with here with Silver, I'm just, you know, I could do a lot of introduction, but let's just jump right into it. I mean, silver is $48. So, >> um, you know, as president and CEO of the most important sort of silver, uh, ambassador on the planet, are you surprised by this price? >> Uh, I wouldn't say we're surprised. We we we we saw a pretty sizable increase last year of about 21% in the silver price. And as this year started to move forward, we saw nothing but good news on the horizon. We put out a press release in July sort of looking at the sixmonth mark um of of of the silver market in 2025. And I was somewhat struck by the fact that more silver had gone into ETPS through the first six months of this year than all of last year. So it was around late June, July I thought that the price could continue to rise and it has. I've read a lot where they think a new floor for silver is 35 to 38 at this point. Um which is somewhat shocking given when I started at the silver institute a couple decades ago the price was $5 and change. So, we're quite excited about where the price is going and look at everything's, you know, firing in all cylinders right now. >> So, you just covered a lot and uh ETFs or ETPs as you say >> was a topic I was going to get to. We're going to throw up a slide here. Uh in terms of the growth of ounces in ETPS, this is very recent until I think last Friday. Uh so far the surge has been 132 million ounces or 19%. And to give viewers uh a little bit of comparison, the last big surge in ETP uh silver ounce volume was January 20 to Jan February 21 and that surge was 423 million ounces or 71%. So, this ETF inflow uh not to put words in your mouth, but it seems to be at the beginning uh of a reasonable cycle that in past instances has gone much further. Is that a fair assessment? >> Oh, I think it's more than fair. I think you hit the nail on the head. I think what you're seeing is there are so many issues geopolitically, interest rates being reduced, other issues, the the weakness of the US dollar. Um, some people see the frothiness in the tech sector, um, in the stock market and people are going to alternative assets and they're turning to gold and silver. I just saw a note where gold just crossed the $4,000 Rubicon on the futures side. So, you know, as goes gold, hopefully silver will follow. Maybe not to 4,000, but we want to cross that $50 mark real soon. >> So, uh, let me ask you a question. You just mentioned h how how long have you been at the institute? You mentioned $5. What year was that? >> I started in 2001. >> Okay. So, you've been there for a quarter century. So, um, my experience with the silver institute historically, uh, has been a pretty large focus on jewelry, but I believe you would agree that the silver, uh, picture has gotten much more complex than jewelry. Correct. >> Yeah, it really has. I mean, silver is really being led by not only the investment side, but more importantly, its industrial uses. Um, there are investors that look at the duality of the metal and they're saying to themselves, look at silver is used in just about everything that has an on andoff switch >> and countries around the world are reducing their reliance on fossil fuel and looking at alternative sources of energy and silver plays a key role not only in photovalttaics which is the leading source or a leading source of alternative energy but also in electric vehicles. the electrification of of of uh of components and items and especially in cars and the infrastructure that supports those cars. There's a hell of a lot of silver that goes into these electric vehicles, these hybrid vehicles, even the internal combustion engine vehicles. You know, you're getting, you know, an ounce or two of of silver per per vehicle. And as the complexity of these cars continues to grow and more and more safety features are being offered to even a a midsize or a loader lower model scale car, um more silver is required. >> This October, Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.comacredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance Second Global Silver Conference happening on Thursday, October 23rd. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. It's a must attend for anyone serious about investing in silver. Tickets both in person and virtual are now available. Find out more in the description below. So uh you know on the aggregate not to uh put you on your heels but can you give us an idea of the growth of industrial demand say over the last four or five years? >> Yeah. So if I just go back to just go taking 2016 for example, we had somewhat of I think it was 490 million ounces of silver in the entire industrial basket and last year was about 680 million ounces. So this year we're projecting about 677 million ounces. So, um, roughly even, but that's what we put out in April. I think things have changed since then. I mean, you're seeing and I'm reading a lot of silver going into these data centers and AI and and silver. So, silver is a key component of these new technologies and as they grow, so does silver demand. >> So, and not to interrupt, but you mentioned roughly even. You mean in 2025 versus 2024? >> Correct. That is correct. Yeah. Not going back to the 491 of 2016. Yeah. >> Right. And just for viewers that this these numbers are a percentage of about 1.2 billion uh ounces of total demand. So industrial demand is estimated to be around 59% uh this year. uh and that total demand is is up 30% just in the last four or five years. So it's clearly been a good support. You mentioned the AI. Uh I was going to ask you about sort of plateauing of solar demand and I think it's reasonable that after this vertigenous rise in solar panel installations around the globe it would be reasonable to expect a plateau of faultto voltaic demand but the along comes the AI uh beast if you will. What what sort of applications for silver and AI can you mention and have you really seen that start to take hold? Well, I mean to the average person in the United States or even across the globe, their first dabble into AI will be a new feature on an iPhone, for example, where you can click a button and and AI will go through and sort of condense a longer worded phrase or paragraph into short sentences. I've used it um on my own computer. I haven't purchased AI yet. Um, I'm not at that level, but quite frankly, AI is an energy cruncher. It uses a lot of energy, and that's why you're seeing all these data centers being built. Where I live, Trey, in Virginia, if you go out towards Dallas airport, you're you're your drive to the airport, you're seeing nothing but brand new data centers being built. And it's the same thing for Northern California and portions of Texas as well. It's just energydriven construction um for these data centers. Uh AI will chew up a lot of silver from the energy standpoint, from the infrastructure standpoint too. Building the buildings, construction is a big component of of of silver use, the wiring and so forth, the contacts um all require silver to operate correctly. So yeah, silver is going to play a big role in AI and we'll be putting out a report hopefully by the end of October that talks about these new areas of demand. Um so >> and again not to put you on the spot but in in terms of the power or the servers uh where does silver actually play the role? What's it used for? >> Well, it's used in the construction and for the operational capabilities of these servers. Okay. Okay, >> you'll need silver to to you to make it run. Now, there may be more copper in there. There may be other components that are more widely used, but the fact is is that silver will be used. You know, you go back 20 23 years ago, the number one use for silver from an industrial side was photography. And when it started to w go down due to the inroads made by digital photography, everybody was wondering what's next on the horizon. Well, that started to show its head around 2009 2010 with a very very small use um in photovalttaics. So for example in 2016 there was about 82 million ounces of silver used in photovoltaics and last year we had about 198 million ounces of silver used in solar panels and you raised a good point about the penetration of solar panels and where they are and have we plateaued. Um, I don't know if we've hit a peak with respect to silver's use in in uh photovalttaics. I know they're thrifting. They've been thrifting since day one. They've tried all types of various components, copper, zinc, lead. Um, they're not quite as structurally good as silver is for a long scale project. If you're building a a solar farm and you have a 20-year life expectancy and you're going to want to have silver and they used to coat both the front and the back side of the panel with silver, then they got away from that. Now they're doing that again, but the silver content is being reduced. The reason why these numbers are staying the same or rising slightly is because the number of installations and you're looking at countries like Europe, the countries within Europe and you're looking at China are the leaders. >> Excellent. So uh again not to get too numbers oriented but when you add this all up uh the silver industry uh as defined by your estimates and metals focus and other folks who put together compendiums of supply and demand has been operating uh at a deficit for the past five years. Can you give us sort of a rough uh precy of that deficit and how it's evolved? >> Yeah, so the deficit really came into play in about 2021 right after the COVID era. Okay, we were seeing lower mine supply come into the market and increased demand. And if my memor is right, it was about 70 million ounces deficit in 2021. um that went up to about 200 million ounces in 2023, down to about 150 million ounces last year. And this year we think it's going to be anywhere between 117 to 122 million ounce market structural deficit. And that's important for a couple of reasons. It tells you that that there's not a lot of new silver mining projects coming online. And it's also telling you that those that are in existence um are they're not at peak by any means, but they're putting out basically the same amount of silver output as they had in years past. Now, there are some exceptions to this rule. There are certain mines that are that are continuing to to put out more silver. Um there are new projects coming online but nothing on the short-term horizon which is going to reduce that deficit where we go into a surplus um in the near future. >> Gotcha. And this brings up a uh uh sort of a cosmic uh characteristic of silver which is how it appears in the earth's crust which is usually is part of other deposits whether it's lead or zinc or or gold or copper. Um can you talk a little bit about the fact that uh on the supply side how inelastic supply is because of the nature of where the silver comes from? >> Yeah. So we define and metals focus defines a primary silver mine as a mine that produces 51% silver from its ore body. >> And last year I believe it was only 27% of silver came from a primary mine. So you're right. It is naturally a byproduct of other mining activities. Lead, zinc, gold, copper mining activities. You look at our world service survey and you look at some of the world's largest silver mining companies and you have companies like BHP Bilitin or Riotinto which do not consider themselves silver miners, right? Um they have other key focus areas whether it be copper, lead, whatever. Um but silver is brought up through the through the bar the door bar it is refined and the silver credits to that particular company make them you know in the top five. Uh we're not seeing any new discoveries on the on the m on the mining side these days. And while there are different companies coming to market, and there certainly are a lot of key projects out there that just haven't been able to put the pick in the ground, um due to a variety of reasons. Uh um you're seeing that we're sort of like stable. We are calling for a very small increase in mine supply this year. Um we're looking at about a 1% increase in production. So that's rather nominal for about 820 to about 835 million ounces. That's what we forecast and that's basically due to the resumption of activities at some mining sites which had been either hit by a strike, you know, labor concerns, some energy concerns, um also some geopolitical issues with respect to strikes and so forth. So we are calling for a small increase in mine production this year. Um, on the recycling side, we think that's going to be reduced this year. Um, which is interesting given these high price points. I remember back in 2011, Trey, uh, when the silver price got almost up to $50. It closed at 49 and change on a Friday night. And the whole couple months beforehand, you couldn't walk down the streets of Washington without seeing a sign that says, "We buy gold and silver." >> Mhm. And I'm not seeing those signs today. >> I think people are sticky with their silver. They traditionally always have been. Um, if you're trading in your gold pieces, sometimes you swipe your silver along with it, whether that be for a need to have some extra cash or whatever. Well, I'm not seeing those signs. >> Yeah. I tell people all the time, if you look at the big three fundamentals that are driving precious metals, which have been around for a couple of decades, they're declining Fed credibility, anti-US dollar sentiment, and concerns about US fiscal position. So, none of those are new. We've been talking about them for decades, but they're all hitting inflection points right now. And what you just mentioned, I tell people all the time, who is going to sell their gold or silver right now? Like who what large entity or market player is going to say, uh, I want to go with the dollar. I'm going to dump my gold and silver. So, right, >> I think that's the lack of sellers is is really part of what's happening. Do you agree? >> I do indeed. I read an interesting article this week in the Financial Times about FOMO, fear of missing out, and how you're seeing a lot of these institutional investors, which have traditionally been targeted more towards the gold side of the equation, are taking a serious look at silver. And I've always maintained that that was the one missing ingredient uh of the silver complex with respect to investment was the institutional investor getting into silver. We have a great retail base. Of course, there are hedge funds that play around people um into on an individual basis. The EFPs have been quite successful since 2006 on the silver side. But when the institutional investors start to jump into the game, I think that's where you're going to see not only a higher silver price, but a sustained silver price with a a floor like I mentioned earlier of $35, $38. So, you've uh just done a great segue to sort of my pet favorite topic about silver, which is even though the industrial demand is a great story and establishes a great floor and is 59% of demand, so therefore, you know, very important. It's important that we're not in a recession, that type of thing. What really drives silver bull markets is investment demand. And we're starting to see that we've mentioned the ETFs. Uh we've definitely uh you know central banks as of now we're not uh using silver but we have seen a couple of hints from Russia and Saudi Arabia very tiny but just as a uh indoctrination of the fact that >> people are uh central bank and global wealth are looking for ways to reduce reliance on dollar denominated assets. Um, so I do think investment demand uh is the key and it's and it's really starting to take off. So this brings up a question as we were saying earlier, who's going to sell to fill this demand? So this segus into another one of my favorite topics which is the mystery of the above ground silver stock. So >> uh obviously with gold uh because it's hard to destroy, it doesn't melt until 1900° Fahrenheit. It can only be destroyed by a couple of aggressive assets and it's a very high price point. So we assume all the gold ever mined is still around in some form or another. And that 216,000 tons is 27 trillion. And if we assume 45% is in jewelry that leaves roughly 15 trillion in the investable gold stock. Now with silver uh since all I think it's 55 billion ounces of silver have been mined over time if I have that right and of course uh you know half is in jewelry and and that type of thing and another large percentage has been consumed which leads to the question how do you at the silver institute uh estimate above ground stocks of freely traded silver. >> Well, it's a very complex question. It's it's it's opaque in some areas because it's hard to get the numbers from some entities and and other countries and so forth. But I encourage you, Trey, if you haven't already or or your listeners or readers >> to go to the Silver Institute's website and look under publications. We put out a report earlier this year on the price sensitivity of above ground stocks and it really delves into the complexity of these various stock piles. There are price points in which these could be I don't want to use the word liquidated but they can be drawn down. There's a certain bank that's saying right now that we are in a silver squeeze. We have a very small float on the LBMA of of of silver that's available for lease to ETPs uh to industrial users and so forth. And that number is going down. They they are literally arguing that we are at an inflection point with about 200 to 250 million ounces of free floating silver that's available currently. They maintain that China has to come to the rescue in order to fulfill this demand and it'll be interesting to see but they are saying that the silver squeeze that you could buy into for the last year and a half is here. So I think this is TD who you're referring to will be the bad guy but um you know their analysis focuses an awful lot on the really really transparent uh sort of easy to follow reported stocks at LBMA and and Comx. Um, can you talk a little bit about how those stocks have diminished say over the past four years and uh the percentage of what's left that's spoken for by ETFs? Yeah, I'm afraid I don't have the numbers right in front of me, but what I can speak to is not only TD's analysis, but Bank of America's, Goldman Sachs, and others that are saying that there's a genuine concern in the market that the LBMA stocks, the COMEX stocks, I mean, we just go back to January of this year when President Trump was reelected in November of last year. Um it was only a week afterward, and he had mentioned this during the campaign, the potential of tariffs, um 30 35% tariffs on all products coming from Canada and Mexico. This is before he started to venture out into um other countries with respect to tariffs. And you'll note that a lot of silver and gold was being shipped from the Far East, especially London and Switzerland to New York in advance of any potential tariff. They wanted that metal on the ground before any premium or tariff tax had to be paid. And that created a strong EFP, the exchange for physical and lease rates really spiked. And they're not much lower today on the silver side. They're still relatively high. They've come down somewhat on the gold side, but it creates it created a a a market dynamic where the players to be had to get their gold and silver over to New York. And for many months, silver and gold was on on chips because they couldn't really intake it all at the I like to call it the COMX. I'm an old school guy, but this call it the CME what it is. Um, and that created a I don't want to say a price spike, but it created concern in the market. Um, nobody thought the market was dysfunctional, but they thought that there could be a point where it became quite serious and I think we're returning to that on the silver side right now. >> Interesting. So um that where do you think let's just say in the past month or two are you privy to any flow data or um sort of inside uh understanding where is the demand coming from? >> Well demand primarily was through the EFPs. Okay. Okay. Or ETPs I should say. So >> um it has been more than robust. It has been quite dynamic. It's something that I didn't foresee at the beginning of the year. >> Uh I didn't think that this demand for EF for ETP demand was going to be as strong as it is. You know, alternatively, when you look at retail silver investment bars and coins, that's not doing that great. >> Premiums are not that large. Correct. >> Well, the market at large is okay. The market in the United States is struggling. Okay, you're seeing buybacks of silver coins, sellbacks of silver coins, American Eagles and so forth. If you talk to dealers like Dylan Gage and others across the the spectrum, a mark and all that, um they're having certain great areas in Europe, um Germany of course has a VAT tax, so that's somewhat of a challenge, but um it's doing better in Europe than it is here in the United States in terms of retail investment. And uh not to put you on the spot again, but over the next six to 12 months, you've been in this business for a quarter century. How far do you see the silver price going? What's a reasonable expectation? >> Well, you know, we don't we I tend to shy away from price projections, but all I can say is north. I mean, that really I don't see any impediment at this point. Um and that's let's just take some of the risks that are challenging or facing the world right now. Okay, >> we have geopolitical risks. We have war in Ukraine. We have Russia. We have Hamas and Israel. We have other hot spots across the globe. Um we had a threat of a nuclear war earlier this year with India and Pakistan. Um these aren't going away anytime soon. And even if the Israelis and the Hamas were to strike some sort of peace agreement, that's not going to affect the precious metals complex in my opinion. Um, what you're seeing is people are waking up. People are looking at fiat money. People are looking at the weakness of the US dollar. They're looking at the the Fed in general, like you mentioned. They're looking at potential even lower interest rates in the next six months starting at the end of this month in October um with another cut um which of course is good for the precious metals complex. Correct. So there are things that are beyond any mechanics control that wants to look at the silver and gold price and say we want it here. I think it has taken off. I think that on the silver side when you couple the investment with the industrial side of the equation um we're looking north. We're we're pointing forward. >> And uh I know it's really not your purview, but do you have any input uh for our viewers on the value or the role on a portfolio level of silver equities? >> Yeah. So we we we we we think that every investor should have a portion of their portfolio into silver and and to another degree gold. So we put out a report last year about silver and funds and investment and we looked at the top funds. We looked at individual um investment in silver and the number we came up was anywhere between 8 and 10% on a conservative level of of of of safe haven asset investment within a well ststructured portfolio and and again we put out that report. I think you all should take a look at that. I mean that was uh last year we put this report out um and uh yeah it was last year. So look at we're putting out a lot of material here at the at the silver institute. We are at a very small scale when you compare it with other metal um industry associations. So we're not as big. not as well funded as the we're as big as the World Gold Council, but we're not nearly as well funded as the World Gold Council, >> but we do a lot with what we have. And um these reports that we put out uh I think your readers would be I mean they're timely. They cover a whole host of uh various topics. The last one we put out um was uh on um uh physical silver investment. And I think that's something that your viewers and readers would be interested in seeing. It was a a timely piece, five-year look back, a little bit of forward thinking as to where we're going. But these are reports that are available just to be downloaded at our website in addition to our world silver survey which we put out each April. >> Terrific. And uh my my question was more related uh about the role of silver equities in a portfolio. Do you guys do much work on the equity side or not? Really? >> We don't. We don't. But that's one thing that we really will be we we are going to be focusing on it next year. >> So, it's one of the ideas that I have that I will present to our executive committee in December for a 2026 project. And as a segue, uh, that makes what we're doing at the Wealthon SCP silver conference at the end of October in Toronto, uh, even more relevant because I do think we all agree that the number of investment vehicles on the equity side in the silver space is very limited. uh you know if you look at the selective silver uh minor index I think there's 38 names and we screened them for market caps above 500 >> and 20% silver revenue and that only leaves 15 so it's a very limited universe and I think the neat thing about the SCP conference is that we focus on the explorers the developers and the emerging producers um three of which were purchased last year in in large M&A transactions. So I think we're really covering the cream of the crop at uh at the conference in upand cominging silver equity exposure. So uh I'm sorry you're not going to be there this year uh but we'll certainly give you a full report. >> Very good. I I look forward to it. you know, these junior mining companies, these people who are um I'll just give you a couple of recent examples, although um you know, Mag Silver some six, seven, eight, 10 years ago probably could have been considered a junior mining company. Um Gate Silver, okay, look, they're both acquired. got acquired by First Majestic, Mag by Paname, um with significantly great projects ready to be folded into those operations. >> And Silver Crest by Core, >> I'm sorry. >> Silver Crest by Core was the third. >> Yeah. Exactly. Exactly. Yes. Yes. That's another great great great example. So they have they have relevance, they have significance and um they're in the game because they are confident in their abilities to bring the metal to the to to from the mine um up and and and they do and it just takes time. The interesting thing about today's silver price is that if you look at some of these junior mining companies and these um their stock prices are doing a hell of a lot better than they were. And if you look at some of the bigger players, um the mining stocks are doing quite well this year, not just on the silver side, >> right? >> Um so it's it's encouraging at this point in history for the gold and silver arena. >> Excellent. Well, Michael, thanks for taking the time to join us. We'll be looking forward to a report from your overseas travels >> notes on the SCP Silver Conference. And if it's okay, we'll put you on the schedule to check back in a few months and see how things are going. >> We'd love to do it. I'd love to do it. Trey, thank you for your time. My best to you and your colleagues. Um, I look forward to seeing you shortly. >> Thank you, Mike. Good to see you. Bye-bye. >> You bet. Bye-bye. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]
Michael DiRienzo: Inside the Silver Squeeze Driving Prices Beyond $50
Summary
Transcript
People are waking up. People are looking at fiat money. People are looking at the weakness of the US dollar. They're looking at the Fed in general. There are things that are beyond any mechanics control that wants to look at the silver and gold price and say, "We want it here." I think it has taken off. I think that on the silver side, when you couple the investment with the industrial side of the equation, we're looking north. We're pointing forward. [Music] >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Greetings and welcome to our Wealthy Show. My name is Trey Reich and today we're visiting with Michael Denzo of the Silver Institute, both president and CEO. Uh Michael and I have known each other for several years, and the last time we crossed paths was at the SCP Silver Conference uh in New York this past November. Um, and this is a great time for us to remind viewers that the SCP Wealthon Silver Conference for this year will be held October 23rd at the Shangrila Hotel in Toronto. And for Wealthy viewers who are interested in attending either in person or virtually, uh, please click on the links in the description below. Uh, and if you want to attend in person, get signed up as an accredited investor. Uh, and we'd love to see you at the conference. So, Michael, thanks very much for coming. I know you're not going to be there in person, although I saw you last year because you'll be at an LBMA conference, I believe, in Europe. U, but thanks for taking the time to join us today. >> Well, I really appreciate this opportunity, Trey. I'm I'm as well. I'm sorry I'm not going to be able to see you. That was a great conference last year. I'm headed over to uh Kyoto, Japan for the LBMA, LPPPM, precious metals conference. Uh they hold it overseas one year and then they hold it in North America the following year. So we're going to Japan. Last year it was in Miami. And from Japan, I'm going to Wow, China for the China International Silver Conference. It'll be my first time there since co been making virtual presentations. So, I'm looking forward to getting back to that dynamic silver country, China. >> Well, I thought Toronto uh was sort of elegant, but you're showing us up here with your travel. >> That's a lot of miles, Trey. I'd rather just go to Toronto for the day or day or two. >> Make sure you send us postcards. So, um obviously with here with Silver, I'm just, you know, I could do a lot of introduction, but let's just jump right into it. I mean, silver is $48. So, >> um, you know, as president and CEO of the most important sort of silver, uh, ambassador on the planet, are you surprised by this price? >> Uh, I wouldn't say we're surprised. We we we we saw a pretty sizable increase last year of about 21% in the silver price. And as this year started to move forward, we saw nothing but good news on the horizon. We put out a press release in July sort of looking at the sixmonth mark um of of of the silver market in 2025. And I was somewhat struck by the fact that more silver had gone into ETPS through the first six months of this year than all of last year. So it was around late June, July I thought that the price could continue to rise and it has. I've read a lot where they think a new floor for silver is 35 to 38 at this point. Um which is somewhat shocking given when I started at the silver institute a couple decades ago the price was $5 and change. So, we're quite excited about where the price is going and look at everything's, you know, firing in all cylinders right now. >> So, you just covered a lot and uh ETFs or ETPs as you say >> was a topic I was going to get to. We're going to throw up a slide here. Uh in terms of the growth of ounces in ETPS, this is very recent until I think last Friday. Uh so far the surge has been 132 million ounces or 19%. And to give viewers uh a little bit of comparison, the last big surge in ETP uh silver ounce volume was January 20 to Jan February 21 and that surge was 423 million ounces or 71%. So, this ETF inflow uh not to put words in your mouth, but it seems to be at the beginning uh of a reasonable cycle that in past instances has gone much further. Is that a fair assessment? >> Oh, I think it's more than fair. I think you hit the nail on the head. I think what you're seeing is there are so many issues geopolitically, interest rates being reduced, other issues, the the weakness of the US dollar. Um, some people see the frothiness in the tech sector, um, in the stock market and people are going to alternative assets and they're turning to gold and silver. I just saw a note where gold just crossed the $4,000 Rubicon on the futures side. So, you know, as goes gold, hopefully silver will follow. Maybe not to 4,000, but we want to cross that $50 mark real soon. >> So, uh, let me ask you a question. You just mentioned h how how long have you been at the institute? You mentioned $5. What year was that? >> I started in 2001. >> Okay. So, you've been there for a quarter century. So, um, my experience with the silver institute historically, uh, has been a pretty large focus on jewelry, but I believe you would agree that the silver, uh, picture has gotten much more complex than jewelry. Correct. >> Yeah, it really has. I mean, silver is really being led by not only the investment side, but more importantly, its industrial uses. Um, there are investors that look at the duality of the metal and they're saying to themselves, look at silver is used in just about everything that has an on andoff switch >> and countries around the world are reducing their reliance on fossil fuel and looking at alternative sources of energy and silver plays a key role not only in photovalttaics which is the leading source or a leading source of alternative energy but also in electric vehicles. the electrification of of of uh of components and items and especially in cars and the infrastructure that supports those cars. There's a hell of a lot of silver that goes into these electric vehicles, these hybrid vehicles, even the internal combustion engine vehicles. You know, you're getting, you know, an ounce or two of of silver per per vehicle. And as the complexity of these cars continues to grow and more and more safety features are being offered to even a a midsize or a loader lower model scale car, um more silver is required. >> This October, Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.comacredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance Second Global Silver Conference happening on Thursday, October 23rd. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. It's a must attend for anyone serious about investing in silver. Tickets both in person and virtual are now available. Find out more in the description below. So uh you know on the aggregate not to uh put you on your heels but can you give us an idea of the growth of industrial demand say over the last four or five years? >> Yeah. So if I just go back to just go taking 2016 for example, we had somewhat of I think it was 490 million ounces of silver in the entire industrial basket and last year was about 680 million ounces. So this year we're projecting about 677 million ounces. So, um, roughly even, but that's what we put out in April. I think things have changed since then. I mean, you're seeing and I'm reading a lot of silver going into these data centers and AI and and silver. So, silver is a key component of these new technologies and as they grow, so does silver demand. >> So, and not to interrupt, but you mentioned roughly even. You mean in 2025 versus 2024? >> Correct. That is correct. Yeah. Not going back to the 491 of 2016. Yeah. >> Right. And just for viewers that this these numbers are a percentage of about 1.2 billion uh ounces of total demand. So industrial demand is estimated to be around 59% uh this year. uh and that total demand is is up 30% just in the last four or five years. So it's clearly been a good support. You mentioned the AI. Uh I was going to ask you about sort of plateauing of solar demand and I think it's reasonable that after this vertigenous rise in solar panel installations around the globe it would be reasonable to expect a plateau of faultto voltaic demand but the along comes the AI uh beast if you will. What what sort of applications for silver and AI can you mention and have you really seen that start to take hold? Well, I mean to the average person in the United States or even across the globe, their first dabble into AI will be a new feature on an iPhone, for example, where you can click a button and and AI will go through and sort of condense a longer worded phrase or paragraph into short sentences. I've used it um on my own computer. I haven't purchased AI yet. Um, I'm not at that level, but quite frankly, AI is an energy cruncher. It uses a lot of energy, and that's why you're seeing all these data centers being built. Where I live, Trey, in Virginia, if you go out towards Dallas airport, you're you're your drive to the airport, you're seeing nothing but brand new data centers being built. And it's the same thing for Northern California and portions of Texas as well. It's just energydriven construction um for these data centers. Uh AI will chew up a lot of silver from the energy standpoint, from the infrastructure standpoint too. Building the buildings, construction is a big component of of of silver use, the wiring and so forth, the contacts um all require silver to operate correctly. So yeah, silver is going to play a big role in AI and we'll be putting out a report hopefully by the end of October that talks about these new areas of demand. Um so >> and again not to put you on the spot but in in terms of the power or the servers uh where does silver actually play the role? What's it used for? >> Well, it's used in the construction and for the operational capabilities of these servers. Okay. Okay, >> you'll need silver to to you to make it run. Now, there may be more copper in there. There may be other components that are more widely used, but the fact is is that silver will be used. You know, you go back 20 23 years ago, the number one use for silver from an industrial side was photography. And when it started to w go down due to the inroads made by digital photography, everybody was wondering what's next on the horizon. Well, that started to show its head around 2009 2010 with a very very small use um in photovalttaics. So for example in 2016 there was about 82 million ounces of silver used in photovoltaics and last year we had about 198 million ounces of silver used in solar panels and you raised a good point about the penetration of solar panels and where they are and have we plateaued. Um, I don't know if we've hit a peak with respect to silver's use in in uh photovalttaics. I know they're thrifting. They've been thrifting since day one. They've tried all types of various components, copper, zinc, lead. Um, they're not quite as structurally good as silver is for a long scale project. If you're building a a solar farm and you have a 20-year life expectancy and you're going to want to have silver and they used to coat both the front and the back side of the panel with silver, then they got away from that. Now they're doing that again, but the silver content is being reduced. The reason why these numbers are staying the same or rising slightly is because the number of installations and you're looking at countries like Europe, the countries within Europe and you're looking at China are the leaders. >> Excellent. So uh again not to get too numbers oriented but when you add this all up uh the silver industry uh as defined by your estimates and metals focus and other folks who put together compendiums of supply and demand has been operating uh at a deficit for the past five years. Can you give us sort of a rough uh precy of that deficit and how it's evolved? >> Yeah, so the deficit really came into play in about 2021 right after the COVID era. Okay, we were seeing lower mine supply come into the market and increased demand. And if my memor is right, it was about 70 million ounces deficit in 2021. um that went up to about 200 million ounces in 2023, down to about 150 million ounces last year. And this year we think it's going to be anywhere between 117 to 122 million ounce market structural deficit. And that's important for a couple of reasons. It tells you that that there's not a lot of new silver mining projects coming online. And it's also telling you that those that are in existence um are they're not at peak by any means, but they're putting out basically the same amount of silver output as they had in years past. Now, there are some exceptions to this rule. There are certain mines that are that are continuing to to put out more silver. Um there are new projects coming online but nothing on the short-term horizon which is going to reduce that deficit where we go into a surplus um in the near future. >> Gotcha. And this brings up a uh uh sort of a cosmic uh characteristic of silver which is how it appears in the earth's crust which is usually is part of other deposits whether it's lead or zinc or or gold or copper. Um can you talk a little bit about the fact that uh on the supply side how inelastic supply is because of the nature of where the silver comes from? >> Yeah. So we define and metals focus defines a primary silver mine as a mine that produces 51% silver from its ore body. >> And last year I believe it was only 27% of silver came from a primary mine. So you're right. It is naturally a byproduct of other mining activities. Lead, zinc, gold, copper mining activities. You look at our world service survey and you look at some of the world's largest silver mining companies and you have companies like BHP Bilitin or Riotinto which do not consider themselves silver miners, right? Um they have other key focus areas whether it be copper, lead, whatever. Um but silver is brought up through the through the bar the door bar it is refined and the silver credits to that particular company make them you know in the top five. Uh we're not seeing any new discoveries on the on the m on the mining side these days. And while there are different companies coming to market, and there certainly are a lot of key projects out there that just haven't been able to put the pick in the ground, um due to a variety of reasons. Uh um you're seeing that we're sort of like stable. We are calling for a very small increase in mine supply this year. Um we're looking at about a 1% increase in production. So that's rather nominal for about 820 to about 835 million ounces. That's what we forecast and that's basically due to the resumption of activities at some mining sites which had been either hit by a strike, you know, labor concerns, some energy concerns, um also some geopolitical issues with respect to strikes and so forth. So we are calling for a small increase in mine production this year. Um, on the recycling side, we think that's going to be reduced this year. Um, which is interesting given these high price points. I remember back in 2011, Trey, uh, when the silver price got almost up to $50. It closed at 49 and change on a Friday night. And the whole couple months beforehand, you couldn't walk down the streets of Washington without seeing a sign that says, "We buy gold and silver." >> Mhm. And I'm not seeing those signs today. >> I think people are sticky with their silver. They traditionally always have been. Um, if you're trading in your gold pieces, sometimes you swipe your silver along with it, whether that be for a need to have some extra cash or whatever. Well, I'm not seeing those signs. >> Yeah. I tell people all the time, if you look at the big three fundamentals that are driving precious metals, which have been around for a couple of decades, they're declining Fed credibility, anti-US dollar sentiment, and concerns about US fiscal position. So, none of those are new. We've been talking about them for decades, but they're all hitting inflection points right now. And what you just mentioned, I tell people all the time, who is going to sell their gold or silver right now? Like who what large entity or market player is going to say, uh, I want to go with the dollar. I'm going to dump my gold and silver. So, right, >> I think that's the lack of sellers is is really part of what's happening. Do you agree? >> I do indeed. I read an interesting article this week in the Financial Times about FOMO, fear of missing out, and how you're seeing a lot of these institutional investors, which have traditionally been targeted more towards the gold side of the equation, are taking a serious look at silver. And I've always maintained that that was the one missing ingredient uh of the silver complex with respect to investment was the institutional investor getting into silver. We have a great retail base. Of course, there are hedge funds that play around people um into on an individual basis. The EFPs have been quite successful since 2006 on the silver side. But when the institutional investors start to jump into the game, I think that's where you're going to see not only a higher silver price, but a sustained silver price with a a floor like I mentioned earlier of $35, $38. So, you've uh just done a great segue to sort of my pet favorite topic about silver, which is even though the industrial demand is a great story and establishes a great floor and is 59% of demand, so therefore, you know, very important. It's important that we're not in a recession, that type of thing. What really drives silver bull markets is investment demand. And we're starting to see that we've mentioned the ETFs. Uh we've definitely uh you know central banks as of now we're not uh using silver but we have seen a couple of hints from Russia and Saudi Arabia very tiny but just as a uh indoctrination of the fact that >> people are uh central bank and global wealth are looking for ways to reduce reliance on dollar denominated assets. Um, so I do think investment demand uh is the key and it's and it's really starting to take off. So this brings up a question as we were saying earlier, who's going to sell to fill this demand? So this segus into another one of my favorite topics which is the mystery of the above ground silver stock. So >> uh obviously with gold uh because it's hard to destroy, it doesn't melt until 1900° Fahrenheit. It can only be destroyed by a couple of aggressive assets and it's a very high price point. So we assume all the gold ever mined is still around in some form or another. And that 216,000 tons is 27 trillion. And if we assume 45% is in jewelry that leaves roughly 15 trillion in the investable gold stock. Now with silver uh since all I think it's 55 billion ounces of silver have been mined over time if I have that right and of course uh you know half is in jewelry and and that type of thing and another large percentage has been consumed which leads to the question how do you at the silver institute uh estimate above ground stocks of freely traded silver. >> Well, it's a very complex question. It's it's it's opaque in some areas because it's hard to get the numbers from some entities and and other countries and so forth. But I encourage you, Trey, if you haven't already or or your listeners or readers >> to go to the Silver Institute's website and look under publications. We put out a report earlier this year on the price sensitivity of above ground stocks and it really delves into the complexity of these various stock piles. There are price points in which these could be I don't want to use the word liquidated but they can be drawn down. There's a certain bank that's saying right now that we are in a silver squeeze. We have a very small float on the LBMA of of of silver that's available for lease to ETPs uh to industrial users and so forth. And that number is going down. They they are literally arguing that we are at an inflection point with about 200 to 250 million ounces of free floating silver that's available currently. They maintain that China has to come to the rescue in order to fulfill this demand and it'll be interesting to see but they are saying that the silver squeeze that you could buy into for the last year and a half is here. So I think this is TD who you're referring to will be the bad guy but um you know their analysis focuses an awful lot on the really really transparent uh sort of easy to follow reported stocks at LBMA and and Comx. Um, can you talk a little bit about how those stocks have diminished say over the past four years and uh the percentage of what's left that's spoken for by ETFs? Yeah, I'm afraid I don't have the numbers right in front of me, but what I can speak to is not only TD's analysis, but Bank of America's, Goldman Sachs, and others that are saying that there's a genuine concern in the market that the LBMA stocks, the COMEX stocks, I mean, we just go back to January of this year when President Trump was reelected in November of last year. Um it was only a week afterward, and he had mentioned this during the campaign, the potential of tariffs, um 30 35% tariffs on all products coming from Canada and Mexico. This is before he started to venture out into um other countries with respect to tariffs. And you'll note that a lot of silver and gold was being shipped from the Far East, especially London and Switzerland to New York in advance of any potential tariff. They wanted that metal on the ground before any premium or tariff tax had to be paid. And that created a strong EFP, the exchange for physical and lease rates really spiked. And they're not much lower today on the silver side. They're still relatively high. They've come down somewhat on the gold side, but it creates it created a a a market dynamic where the players to be had to get their gold and silver over to New York. And for many months, silver and gold was on on chips because they couldn't really intake it all at the I like to call it the COMX. I'm an old school guy, but this call it the CME what it is. Um, and that created a I don't want to say a price spike, but it created concern in the market. Um, nobody thought the market was dysfunctional, but they thought that there could be a point where it became quite serious and I think we're returning to that on the silver side right now. >> Interesting. So um that where do you think let's just say in the past month or two are you privy to any flow data or um sort of inside uh understanding where is the demand coming from? >> Well demand primarily was through the EFPs. Okay. Okay. Or ETPs I should say. So >> um it has been more than robust. It has been quite dynamic. It's something that I didn't foresee at the beginning of the year. >> Uh I didn't think that this demand for EF for ETP demand was going to be as strong as it is. You know, alternatively, when you look at retail silver investment bars and coins, that's not doing that great. >> Premiums are not that large. Correct. >> Well, the market at large is okay. The market in the United States is struggling. Okay, you're seeing buybacks of silver coins, sellbacks of silver coins, American Eagles and so forth. If you talk to dealers like Dylan Gage and others across the the spectrum, a mark and all that, um they're having certain great areas in Europe, um Germany of course has a VAT tax, so that's somewhat of a challenge, but um it's doing better in Europe than it is here in the United States in terms of retail investment. And uh not to put you on the spot again, but over the next six to 12 months, you've been in this business for a quarter century. How far do you see the silver price going? What's a reasonable expectation? >> Well, you know, we don't we I tend to shy away from price projections, but all I can say is north. I mean, that really I don't see any impediment at this point. Um and that's let's just take some of the risks that are challenging or facing the world right now. Okay, >> we have geopolitical risks. We have war in Ukraine. We have Russia. We have Hamas and Israel. We have other hot spots across the globe. Um we had a threat of a nuclear war earlier this year with India and Pakistan. Um these aren't going away anytime soon. And even if the Israelis and the Hamas were to strike some sort of peace agreement, that's not going to affect the precious metals complex in my opinion. Um, what you're seeing is people are waking up. People are looking at fiat money. People are looking at the weakness of the US dollar. They're looking at the the Fed in general, like you mentioned. They're looking at potential even lower interest rates in the next six months starting at the end of this month in October um with another cut um which of course is good for the precious metals complex. Correct. So there are things that are beyond any mechanics control that wants to look at the silver and gold price and say we want it here. I think it has taken off. I think that on the silver side when you couple the investment with the industrial side of the equation um we're looking north. We're we're pointing forward. >> And uh I know it's really not your purview, but do you have any input uh for our viewers on the value or the role on a portfolio level of silver equities? >> Yeah. So we we we we we think that every investor should have a portion of their portfolio into silver and and to another degree gold. So we put out a report last year about silver and funds and investment and we looked at the top funds. We looked at individual um investment in silver and the number we came up was anywhere between 8 and 10% on a conservative level of of of of safe haven asset investment within a well ststructured portfolio and and again we put out that report. I think you all should take a look at that. I mean that was uh last year we put this report out um and uh yeah it was last year. So look at we're putting out a lot of material here at the at the silver institute. We are at a very small scale when you compare it with other metal um industry associations. So we're not as big. not as well funded as the we're as big as the World Gold Council, but we're not nearly as well funded as the World Gold Council, >> but we do a lot with what we have. And um these reports that we put out uh I think your readers would be I mean they're timely. They cover a whole host of uh various topics. The last one we put out um was uh on um uh physical silver investment. And I think that's something that your viewers and readers would be interested in seeing. It was a a timely piece, five-year look back, a little bit of forward thinking as to where we're going. But these are reports that are available just to be downloaded at our website in addition to our world silver survey which we put out each April. >> Terrific. And uh my my question was more related uh about the role of silver equities in a portfolio. Do you guys do much work on the equity side or not? Really? >> We don't. We don't. But that's one thing that we really will be we we are going to be focusing on it next year. >> So, it's one of the ideas that I have that I will present to our executive committee in December for a 2026 project. And as a segue, uh, that makes what we're doing at the Wealthon SCP silver conference at the end of October in Toronto, uh, even more relevant because I do think we all agree that the number of investment vehicles on the equity side in the silver space is very limited. uh you know if you look at the selective silver uh minor index I think there's 38 names and we screened them for market caps above 500 >> and 20% silver revenue and that only leaves 15 so it's a very limited universe and I think the neat thing about the SCP conference is that we focus on the explorers the developers and the emerging producers um three of which were purchased last year in in large M&A transactions. So I think we're really covering the cream of the crop at uh at the conference in upand cominging silver equity exposure. So uh I'm sorry you're not going to be there this year uh but we'll certainly give you a full report. >> Very good. I I look forward to it. you know, these junior mining companies, these people who are um I'll just give you a couple of recent examples, although um you know, Mag Silver some six, seven, eight, 10 years ago probably could have been considered a junior mining company. Um Gate Silver, okay, look, they're both acquired. got acquired by First Majestic, Mag by Paname, um with significantly great projects ready to be folded into those operations. >> And Silver Crest by Core, >> I'm sorry. >> Silver Crest by Core was the third. >> Yeah. Exactly. Exactly. Yes. Yes. That's another great great great example. So they have they have relevance, they have significance and um they're in the game because they are confident in their abilities to bring the metal to the to to from the mine um up and and and they do and it just takes time. The interesting thing about today's silver price is that if you look at some of these junior mining companies and these um their stock prices are doing a hell of a lot better than they were. And if you look at some of the bigger players, um the mining stocks are doing quite well this year, not just on the silver side, >> right? >> Um so it's it's encouraging at this point in history for the gold and silver arena. >> Excellent. Well, Michael, thanks for taking the time to join us. We'll be looking forward to a report from your overseas travels >> notes on the SCP Silver Conference. And if it's okay, we'll put you on the schedule to check back in a few months and see how things are going. >> We'd love to do it. I'd love to do it. Trey, thank you for your time. My best to you and your colleagues. Um, I look forward to seeing you shortly. >> Thank you, Mike. Good to see you. Bye-bye. >> You bet. Bye-bye. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]