Vince Lanci: Silver's London Liquidity Crisis — What's Happening, What's Next
Summary
Silver Market Dynamics: The podcast discusses the recent surge in silver prices, driven by increased demand from the US, China, and India, alongside a liquidity crisis in London.
Liquidity Crisis: London is experiencing a shortage of available silver, causing a short squeeze as it struggles to source silver from the US and Asia, which are not as willing to share their supplies.
Critical Mineral Status: Silver has been added to the US critical minerals list, allowing the government to prioritize its acquisition, similar to previous cases with lithium and uranium, potentially driving prices higher over the next five years.
Lease Rates Surge: The lease rates for silver in London have skyrocketed to 35%, indicating a severe shortage and prompting market participants to buy rather than lease silver.
Market Volatility: The silver market is experiencing significant volatility with rapid price swings, reflecting the ongoing supply chain issues and geopolitical tensions.
Investment Opportunities: Investors are advised to consider miners and rare earth companies as potentially undervalued opportunities, given the current market dynamics and the potential for long-term gains.
Trade War Implications: The ongoing trade tensions and supply chain disruptions are expected to lead to increased costs and inflation, emphasizing the need for hedging against dollar debasement through hard assets like precious metals.
Strategic Positioning: The podcast suggests maintaining a diversified portfolio with a focus on assets that can protect against economic uncertainties and inflationary pressures.
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Vince Lansancy. He is managing partner at Echo Bay, professor at Yukon and publisher of the Goldfix newsletter. Thank you so much for being here. Great to have you once again. >> Yeah, thanks for having me back. I'm happy to be here. >> Really good to be speaking with you. There's so much going on in precious metals. We've got a lot to talk about and where I'm hoping we could focus today is on silver. There's been a lot of focus on silver among our audience members with the price trading at historic highs, but also a lot of discussions around what exactly is pushing it here, especially when it comes to dynamics between London and New York. So, this is a big question to open up with, but I'm hoping you can share your perspective on what's happening there. I can fortunately or unfortunately I have been entrenched in this marketplace for over 30 years and so the events come easy to me unfortunately. So all right um there are a couple points here. I think I think we should start with the facts. The facts are that the price of silver in New York the price of silver globally has risen substantially. We all know that and I think ultimately want to we want to figure out if it's going to go higher and I I'll try and give a little bit of insight into that. But it's important to know how we got here and why we got here. Um there are two forces making silver golf right now. One is uh a normal force. It's a big one but it's normal and that is uh in the US there's been a raised awareness about uh real assets and inflation between the administration buying real uh uh rare earth companies uh and between people worrying about debasement of the dollar and so that's making people buy gold and the price of gold is going up and so silver doesn't get the headlines but now it's getting the headlines because it's getting a little bit crazy. Uh so it but it's not just the US investors buying ETFs or or physical silver. It's um China they're buying handover fist and it's India uh they're buying. In fact they're buying so much that they're turning away clients right now because they can't secure the silver now. So there's your legitimate reasons. There's your normal operating reasons. We're we're in in a market that people like. Now that's simply it. The other reason, the the the catalyst that's making things worse, um is a crisis. There's no other way to describe it. There's a crisis in London's liquidity. Now, liquidity is a word that people throw around. What I mean is London doesn't have enough silver to service its own customers right now. Now, they barely have enough. Let's put it that way. They barely have enough and they're running low on extra inventory. and the extra inventory historically through the years until I'd say co if London had a shortage of silver they could buy it from the US or they could borrow it from the US you could lease silver as well because it's not going to get destroyed it's here it's forever and it's in very very high demand right now but it's out there you know it's not destroyed and it's mostly fungeible there's no crop or weather patterns that affect it Um, and so in the past, forever, uh, London would, if it needed silver, buy it from the US or buy it from Asia or buy it from specifically China, uh, or it would get it from producers, uh, or it would get it from scrap. The problem is fundamentally there's a shortage of silver supply above ground that's available. I'm not saying there's a shortage of silver, but there's a shortage of available silver. So production has has has gone very low over the years. There aren't many silver producers. The ones that do produce silver produce it as an u a waste product of other metals. So you you mine zinc. There's a little silver in there. You pull it out and you sell it. There's just not as much of that as there used to be. But it worked. So if silver was needed in London, uh they would pull it. They would pull it literally and metaphorically. like they would they would the rights to the silver would transfer or the silver would transfer. Uh but since since um since co and since co and the awareness of supply chains being uh fragile uh being too extended being too stretched countries have begun to onshore reshore and protect their supply chains. Now one of the supply chains that's been completely neglected has been the uh precious metal supply chain. The precious metal supply chain is has been robust, but it's very one-dimensional. And this is where the problem comes in. You see, over the years, there's been free communication back and forth with the metal between London and the US. Now, we're allies. There's no problem there. However, London when it needs metal has a hard time getting it from Asia because China's not cooperating with the West for good reason in their mind. And for some reason, the US is not making its metal available as robustly as it used to uh to help fill refill London's coffers. And so that creates uh a short squeeze. So there's enough metal in the world for current uh needs, let's say, for today's needs. Uh but it's not where it should be. So it's a dislocation. Uh, and London is saying, "Hey, I need to uh buy silver. Can I have some of yours?" And the US is saying, "No, it has to go higher." China is saying, "No, it has to go." I mean, we're not saying it has to go, but it has to go higher. It's like, "It's not available. It's not for sale. I'm not going to sell you my house." And and and and the reason, there are several reasons for this. Well, one of the reasons is that with the world splitting on trade, with everyone going to their own corners to protect their own kind, um countries are more reticent uh to share uh with their neighbor. Now, even with the good relationship that we have with London, there's another factor and that's the same factor, but it's going to get very big. Now, uh about a month ago, uh President Trump added silver to the critical minerals list. Now, when you add people think that's important, but that not many people really understand why it's important. What it does is it allows him allows the country to spend money on acquiring more silver. It allows us to hoard it and buy it without asking permission. It's basically it's it's a constant emergency. So when we needed lithium and we made it a critical mineral and that gave the government permission to not have to ask every time it wanted to buy it just went out and bought it. And lithium is a critical mineral and over the 5-year period after it was added as critical it went up about 500%. 300% actually maybe more. Uh, another example would be uranium. So over a five-year period that doubled and tripled. And I've done some I've done some math and uh based on those analogies over the next 5 years without predicting if it were to follow the critical mineral path of previous metals, silver would probably go to $144. Now that's a 5-year move. That's not tomorrow. So you can imagine when London says, "Hey, can I borrow some silver?" the US says sorry uh it's spoken for and that's causing a problem because the London market operates with thin margins. they don't have a lot of extra laying around and it's dwindling even more and so they start bidding the price up to buy it and what you have happen is you have you have the com silver the New York American future silver in a normal environment is supposed to be trading slightly above what the London price is right I have a Should I bring that picture up >> let's do that so the The chart you're looking at there is is is a graphic representation of where the silver is and where it needs to go. Now, it's hard to see the red and green. They don't show up well uh on this picture because I kind of scrunched it together, but the the yellow line going from left to right labeled normal. When there's a good balance between London and US, that line will pretty much serve as the uh where the market is. So, the market will be in that area. Now, when there's an irrational demand for US silver versus London silver, you will see the line go above. So all the way up here where my arrow is, I don't have a good cursor for you here, but when when when the data trades above the yellow line, that's a sign that they need more silver in the US. And this happened at liberation day when the price of silver exploded in the US but did nothing in London. Now you can see over time it vacasillates back and forth. But on the lower right hand side, you now see something that's very rare, a pronounced uh movement below the yellow line to a very steep area to the arrow that I put there, the gray area that says they need metal in London. So there's plenty of metal metal in the US, plenty of silver uh in the US allegedly, uh but it's not being made available to London. So this line dropping down there, this is really unheard of. It's it's it's never hap it's never happened before. Not even at the Hunt Brothers level if I if I'm if I if I could if I remember correctly. I mean I was too young for that. But um if my if I remember the data correctly. So what you're looking at here is is a graphic representation of the fact that there is no metal in London and they need it and there is plenty of metal in the US and they're not sharing it. So, uh, that's that's, uh, what I would say, uh, to describe that. Does that help a little bit? It does. It helps a lot. I'm definitely with you. It's very well explained. It helps me get a grasp on the situation. And I think what people might then be wondering is, all right, London needs the silver. The silver exists in other places, but they don't want to provide it. So, how does the situation play out? I know you mentioned a higher price could be something that prompts that silver to start to move, but what what would you say to that? >> Um, well, first off, I actually have another picture that might be helpful with that. Um, and and and I'll put that Let me put that while we're talking. Is that okay? >> Perfect. Yes. >> Okay. So, let's talk about how it's playing out right now. If you're in London and you need uh silver and you can't buy it from anyone or you're not willing to pay the price, what you will do is you will actually lease silver from someone who has it. So, let's say you're Rockefeller or Rothschild and you have a lot of silver in a vault in London, you know, Scrooge McDuck type of stuff. Um, you would you would be asked by the London traders, hey, can I borrow your silver and I'll give it back to you in 30 days? Now this is a very common thing to do. Uh it may not sound common for us as layman but it's very common. Now if you look at the chart that's up there now the dark this is from uh Goldman Sachs. Uh the the uh and there's plenty of charts out there but this one is the easiest to see. The dark blue line is the lease rate. So, if I'm London and you're the US and I say or or you're let's say you're Charlotte McDuck, you know, Scrooge, Mc Scrooge, whatever it is, um, and you had silver laying around, I would say, "Hey, can I can I borrow yours?" And you would say, "Sure." And the lease rates that you would charge me are very low. You know, somewhere between zero and 2% um, per month. Very, that's relatively low, right? Usually it's at zero. However, now I say to you, "Hey, Charlotte, can I borrow you silver?" And you say, you say, "No, I mean," you say, "Yes, I'll lease it to you." And I go, "Sure, how much?" And you say, "I want 35% of the price every month." So that's a 400% interest rate on the silver that you're lending me. And so, right, that's you see there on the right hand side, the arrow goes all the way up to ETF demand surge where it says that there. We don't care about that. We care about the number 35%. So, the one month lease rate in London for silver for Charlotte um to lease to me is 35%. Now, I'm in a panic because I don't want to pay 35%. So, what I'll do is I'll go into the market and just buy it. So, that's why we're going up. Um, that's the actual situation. And little by little, some people are saying, "Hey, that's a lot of money." And so, people are starting to lease the silver uh to London. Some people in the US are starting to transfer the silver. So, it's starting to come in in significant portions. Uh but it's still dribbs and drabs compared to what is actually needed. So now that so now you know we are there there's not enough silver. They realized it. Plus there's all these people in China and the US and India that are just buying it for a different reason. And London is caught short. That's what a short squeeze is. And so they look to borrow it. And that's getting increasingly hard to do. 35%. Uh but they're starting to come in in in some in some uh uh drips and drabs. Uh but what you see now is so this will m this right now it's manifesting exactly what I'm describing. And that manifestation is anytime there's a problem it goes up. Anytime someone feels a relief it goes down. So it's very much like u we're in the middle of a thing. You know we're in the middle of a fight. And so the prices can swing wildly. Uh, another way to look at it is what's happening dayto day is usually stuff that happens over months. So you're seeing months happen in a day. So the market's going up 5%. Down 3%. And it it is it is if I mean if anyone's wondering, yes, the market is broken and the market needs to rebuild its supply chains. Now what what happens is just about the London situation, right? like I I believe silver's going to $144 and you know my portfolio reflects that. I don't believe it's happening tomorrow. But the London situation reconciles one of two ways, up or down, right? And the the the up situation reconciles with with nobody giving more silver to London for whatever the reason. It's critical mineral. We don't like it. We don't like London. We're going to make them pay. You know, China is worried about trade wars. Uh the tension with the US spills over into London. Everybody's kind of taking their toys and going home. They don't want to share anymore. There's no community. So, that would that would that would make it go higher. A second reason it would go higher would be if and I believe I believe something will come out of this uh but we just won't find out till later that someone has been in London one of the participants in that uh it's called an over-the-counter it's called the LBMA London Bullion Market Association and what it really is is a cooperative of of of traders it's not it's not a literal exchange but they get by they they they self-pol lease with trust, kind of like your neighborhood shop. And um I think when this is over, we will find that one of the primary dealers on that exchange has been less than forthright with actually how much silver they have. You know, I'll surely I'll get it back to you next week. And next week comes, you say, "Vince, where's that silver you owe me?" And I go, "Well, can I have another week?" And that's the problem. So you're a big player. I'm a big player. I borrow from you. I don't give it back to you. the trust is broken and now all of a sudden we're bad neighbors. So I think you're going to find out that someone has been less than uh frank or less than honest with their inventories. Someone's been misrepresenting their inventories. So those are the two bullish scenarios that come out of this scandal which you probably won't hear about for years which I just described or uh the people who have the silver continue to say no I'm not giving it to you for whatever reason. the lower scenario where the market goes lower uh or as the relief comes will be that chart that I showed you if the line started to move up and as the line starts to move up that would be things returning to normal and the normalness would be we have the silver in London we don't need any more silver from the US we're okay we've got plenty of inventory so you know it's it's it's simple supply demand uh basics but it's all it's all because u it's the catalyst for is is the demand that's coming out of the world because gold has gone up. And the other catalyst is the trade tensions tend to function like Warren Buffett has a phrase, I'm not sure if it's him or it's Charlie Mer. There's a phrase like when the tide when the tide drops um when the tide drops when the tide goes out, you see who's naked and who's actually wearing a bathing suit. So, the tide is going out on silver and uh we're seeing um we're seeing slowly that somebody has uh a smaller bathing suit than they say they do and that's how it's going to resolve one way or the other. U that's it. But but this is a this is a uh a crisis in a longer term bull market and these things happen. You know, the foundations crack a little bit. Um I have a couple notes here. Uh so yeah I mean the the against the backdrop of the bigger picture right let's say the London problem is solved and everybody has their silver over there the US has it as a critical mineral right now right uh the US is in a trade war with China that's that's focused on rare earths and I cannot emphasize how important that is you know rare earths are so important for us that we probably as an economy could could feasibly be stopped and put at a standstill in 6 months and the reason for that is rare earths are uh you know our economy is driven uh by a lot of it is driven by military sales. We have to build submarines for Australia and Japan. And without rare earths, without those special magnets, uh, without the other materials that go into it, well, we can't do that. And if we can't sell things, then we can't earn money. And there's really not too many things that we sell, uh, other than military equipment and some bigger capital goods. So, in this sense, you could say that it's well balanced, but I think that China has the upper hand. And if your if your viewers are are watching the the tennis match between G and Trump, it really comes down to I mean the events went like this. Uh G said we're going to restrict rare earths. Trump said I'm going to tariff you 100%. Or or vice versa, one of those other. And then uh Gi said we're going to tax your ships that are in our ports. That's pretty significant. And then Trump said something else. I don't know. But now Scott Bessen, uh, the Treasury Treasury Secretary has come out and he seems to be acting in a in a in a consiliatory tone. So maybe the tensions will back off. Uh, but but it it it's it's it's really serious and uh whatever happens in London doesn't matter. This isn't going to go away. We're not going to start hugging each other. You know, there's no kumbaya moment. I mean, it's not happening. You know, we haven't even gotten to Taiwan yet. So that's it. the the the crisis is a sprint. Uh uh it's a sprint in a marathon. That's what I would look at it as. You know, it's it's a it's a uh it's making people painfully aware of how dependent we are on other countries. So that's my story. >> I think that lays it out really, really well. So even if we resolve this situation that we have going on right now, the broader picture that we have to be aware of is this silver critical mineral status and the trade wars and supply chain concerns around the world. >> Right? When you hear when you hear someone talk about copper, think silver. They they go hand in hand in that respect. Sure. >> Well, I think this this really answers all the questions that I had for you on silver. or have a much better understanding of the situation. Any final takeaways that you would want to leave with investors who are looking at the market right now? >> Uh yeah, if if if and I'm not giving financial advice, uh but I but I am saying what I am doing or what I'm looking at. uh if you're interested in buying hard assets or buying something that if you're worried about the debasement risk, uh I would say that silver and gold are the type of things you want. But at this at this point in the game, I would say that miners are probably less um less fairly valued than silver and gold. I do believe silver I I don't primarily play in miners but if you can find a silver miner that you're comfortable with the company you can find the management you know there's several of them PAS uh AG and there's a couple others uh streamers uh miners are in my opinion even though they've appreciated substantially over the last year because people are waking up to it they're really just getting off the mats and I'm not bullish I'm not selling anything except maybe a newsletter Um, but I am saying that Wall Street still hasn't woken up uh to miners. So, I would say if you if you have the patience for a 5-year hold, you want to own materials and and and and precious metals miners and rare earth miners are in play now, for lack of a better word. That's what I would say. I I would not I would not go out there and just and just, you know, buy gold or buy silver like there's there's plenty of silver right now, but will there be plenty of silver 6 months from now? There's there's a hoarding process going on. So, I think I think uh I think the the way to look at this is the trade war is going to make everything more expensive, right? the president uh believes he can restore manufacturing and if we restore manufacturing there'll be inflation leading up to that. If we don't restore manufacturing there will be inflation going through that for a decade. So I think you need to have a substantial portion of your assets in in um of your of your worth in assets that will be a hedge against dollar debasement. Whether you're a precious metals person or Bitcoin person or you know even if you think your house is your piggy bank and houses have been piggy banks for years. The problem is in a in a in a worsening economic environment a stagflationary environment in a stagflationary environment prices of things go up and your house is worth more money but the bank won't loan you money against it. So you can't use it like a piggy bank in that environment anyway. So it's something to think about. >> Great great points. We are seeing those headlines about gold and silver now, but I I don't really see them about the miners. So, definitely something for people to consider. And you mentioned your newsletter. We'll have a link in the video description. Anything else on where we may find you online? >> Uh I'm on I'm on uh on mostly on X Twitter. uh you would look up VBL's ghost. But if you're interested in these assets or interested in uh you know commentary and analysis, that's going to be a mixed bag. You want to be you want to be on the Substack place for me there. Whether you're free or premium or what have you. But there's a lot of there's a lot there is just a self plug. There is a lot of information out there that's not being conveyed and we've been doing it for five years uh since co because we thought something like this would happen and uh we've done right by people that are uh that are that are uh looking to protect their uh worth without telling them what they should be doing. So that's it. >> Well, thank you so much. We'll have those links below and thank you for taking the time to go through this. I found it really helpful. >> Thanks for having I'll see you again. >> Okay, once again, I'm Charlotte Mloud with investingnews.com and this is Vince Lansancy. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]
Vince Lanci: Silver's London Liquidity Crisis — What's Happening, What's Next
Summary
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Vince Lansancy. He is managing partner at Echo Bay, professor at Yukon and publisher of the Goldfix newsletter. Thank you so much for being here. Great to have you once again. >> Yeah, thanks for having me back. I'm happy to be here. >> Really good to be speaking with you. There's so much going on in precious metals. We've got a lot to talk about and where I'm hoping we could focus today is on silver. There's been a lot of focus on silver among our audience members with the price trading at historic highs, but also a lot of discussions around what exactly is pushing it here, especially when it comes to dynamics between London and New York. So, this is a big question to open up with, but I'm hoping you can share your perspective on what's happening there. I can fortunately or unfortunately I have been entrenched in this marketplace for over 30 years and so the events come easy to me unfortunately. So all right um there are a couple points here. I think I think we should start with the facts. The facts are that the price of silver in New York the price of silver globally has risen substantially. We all know that and I think ultimately want to we want to figure out if it's going to go higher and I I'll try and give a little bit of insight into that. But it's important to know how we got here and why we got here. Um there are two forces making silver golf right now. One is uh a normal force. It's a big one but it's normal and that is uh in the US there's been a raised awareness about uh real assets and inflation between the administration buying real uh uh rare earth companies uh and between people worrying about debasement of the dollar and so that's making people buy gold and the price of gold is going up and so silver doesn't get the headlines but now it's getting the headlines because it's getting a little bit crazy. Uh so it but it's not just the US investors buying ETFs or or physical silver. It's um China they're buying handover fist and it's India uh they're buying. In fact they're buying so much that they're turning away clients right now because they can't secure the silver now. So there's your legitimate reasons. There's your normal operating reasons. We're we're in in a market that people like. Now that's simply it. The other reason, the the the catalyst that's making things worse, um is a crisis. There's no other way to describe it. There's a crisis in London's liquidity. Now, liquidity is a word that people throw around. What I mean is London doesn't have enough silver to service its own customers right now. Now, they barely have enough. Let's put it that way. They barely have enough and they're running low on extra inventory. and the extra inventory historically through the years until I'd say co if London had a shortage of silver they could buy it from the US or they could borrow it from the US you could lease silver as well because it's not going to get destroyed it's here it's forever and it's in very very high demand right now but it's out there you know it's not destroyed and it's mostly fungeible there's no crop or weather patterns that affect it Um, and so in the past, forever, uh, London would, if it needed silver, buy it from the US or buy it from Asia or buy it from specifically China, uh, or it would get it from producers, uh, or it would get it from scrap. The problem is fundamentally there's a shortage of silver supply above ground that's available. I'm not saying there's a shortage of silver, but there's a shortage of available silver. So production has has has gone very low over the years. There aren't many silver producers. The ones that do produce silver produce it as an u a waste product of other metals. So you you mine zinc. There's a little silver in there. You pull it out and you sell it. There's just not as much of that as there used to be. But it worked. So if silver was needed in London, uh they would pull it. They would pull it literally and metaphorically. like they would they would the rights to the silver would transfer or the silver would transfer. Uh but since since um since co and since co and the awareness of supply chains being uh fragile uh being too extended being too stretched countries have begun to onshore reshore and protect their supply chains. Now one of the supply chains that's been completely neglected has been the uh precious metal supply chain. The precious metal supply chain is has been robust, but it's very one-dimensional. And this is where the problem comes in. You see, over the years, there's been free communication back and forth with the metal between London and the US. Now, we're allies. There's no problem there. However, London when it needs metal has a hard time getting it from Asia because China's not cooperating with the West for good reason in their mind. And for some reason, the US is not making its metal available as robustly as it used to uh to help fill refill London's coffers. And so that creates uh a short squeeze. So there's enough metal in the world for current uh needs, let's say, for today's needs. Uh but it's not where it should be. So it's a dislocation. Uh, and London is saying, "Hey, I need to uh buy silver. Can I have some of yours?" And the US is saying, "No, it has to go higher." China is saying, "No, it has to go." I mean, we're not saying it has to go, but it has to go higher. It's like, "It's not available. It's not for sale. I'm not going to sell you my house." And and and and the reason, there are several reasons for this. Well, one of the reasons is that with the world splitting on trade, with everyone going to their own corners to protect their own kind, um countries are more reticent uh to share uh with their neighbor. Now, even with the good relationship that we have with London, there's another factor and that's the same factor, but it's going to get very big. Now, uh about a month ago, uh President Trump added silver to the critical minerals list. Now, when you add people think that's important, but that not many people really understand why it's important. What it does is it allows him allows the country to spend money on acquiring more silver. It allows us to hoard it and buy it without asking permission. It's basically it's it's a constant emergency. So when we needed lithium and we made it a critical mineral and that gave the government permission to not have to ask every time it wanted to buy it just went out and bought it. And lithium is a critical mineral and over the 5-year period after it was added as critical it went up about 500%. 300% actually maybe more. Uh, another example would be uranium. So over a five-year period that doubled and tripled. And I've done some I've done some math and uh based on those analogies over the next 5 years without predicting if it were to follow the critical mineral path of previous metals, silver would probably go to $144. Now that's a 5-year move. That's not tomorrow. So you can imagine when London says, "Hey, can I borrow some silver?" the US says sorry uh it's spoken for and that's causing a problem because the London market operates with thin margins. they don't have a lot of extra laying around and it's dwindling even more and so they start bidding the price up to buy it and what you have happen is you have you have the com silver the New York American future silver in a normal environment is supposed to be trading slightly above what the London price is right I have a Should I bring that picture up >> let's do that so the The chart you're looking at there is is is a graphic representation of where the silver is and where it needs to go. Now, it's hard to see the red and green. They don't show up well uh on this picture because I kind of scrunched it together, but the the yellow line going from left to right labeled normal. When there's a good balance between London and US, that line will pretty much serve as the uh where the market is. So, the market will be in that area. Now, when there's an irrational demand for US silver versus London silver, you will see the line go above. So all the way up here where my arrow is, I don't have a good cursor for you here, but when when when the data trades above the yellow line, that's a sign that they need more silver in the US. And this happened at liberation day when the price of silver exploded in the US but did nothing in London. Now you can see over time it vacasillates back and forth. But on the lower right hand side, you now see something that's very rare, a pronounced uh movement below the yellow line to a very steep area to the arrow that I put there, the gray area that says they need metal in London. So there's plenty of metal metal in the US, plenty of silver uh in the US allegedly, uh but it's not being made available to London. So this line dropping down there, this is really unheard of. It's it's it's never hap it's never happened before. Not even at the Hunt Brothers level if I if I'm if I if I could if I remember correctly. I mean I was too young for that. But um if my if I remember the data correctly. So what you're looking at here is is a graphic representation of the fact that there is no metal in London and they need it and there is plenty of metal in the US and they're not sharing it. So, uh, that's that's, uh, what I would say, uh, to describe that. Does that help a little bit? It does. It helps a lot. I'm definitely with you. It's very well explained. It helps me get a grasp on the situation. And I think what people might then be wondering is, all right, London needs the silver. The silver exists in other places, but they don't want to provide it. So, how does the situation play out? I know you mentioned a higher price could be something that prompts that silver to start to move, but what what would you say to that? >> Um, well, first off, I actually have another picture that might be helpful with that. Um, and and and I'll put that Let me put that while we're talking. Is that okay? >> Perfect. Yes. >> Okay. So, let's talk about how it's playing out right now. If you're in London and you need uh silver and you can't buy it from anyone or you're not willing to pay the price, what you will do is you will actually lease silver from someone who has it. So, let's say you're Rockefeller or Rothschild and you have a lot of silver in a vault in London, you know, Scrooge McDuck type of stuff. Um, you would you would be asked by the London traders, hey, can I borrow your silver and I'll give it back to you in 30 days? Now this is a very common thing to do. Uh it may not sound common for us as layman but it's very common. Now if you look at the chart that's up there now the dark this is from uh Goldman Sachs. Uh the the uh and there's plenty of charts out there but this one is the easiest to see. The dark blue line is the lease rate. So, if I'm London and you're the US and I say or or you're let's say you're Charlotte McDuck, you know, Scrooge, Mc Scrooge, whatever it is, um, and you had silver laying around, I would say, "Hey, can I can I borrow yours?" And you would say, "Sure." And the lease rates that you would charge me are very low. You know, somewhere between zero and 2% um, per month. Very, that's relatively low, right? Usually it's at zero. However, now I say to you, "Hey, Charlotte, can I borrow you silver?" And you say, you say, "No, I mean," you say, "Yes, I'll lease it to you." And I go, "Sure, how much?" And you say, "I want 35% of the price every month." So that's a 400% interest rate on the silver that you're lending me. And so, right, that's you see there on the right hand side, the arrow goes all the way up to ETF demand surge where it says that there. We don't care about that. We care about the number 35%. So, the one month lease rate in London for silver for Charlotte um to lease to me is 35%. Now, I'm in a panic because I don't want to pay 35%. So, what I'll do is I'll go into the market and just buy it. So, that's why we're going up. Um, that's the actual situation. And little by little, some people are saying, "Hey, that's a lot of money." And so, people are starting to lease the silver uh to London. Some people in the US are starting to transfer the silver. So, it's starting to come in in significant portions. Uh but it's still dribbs and drabs compared to what is actually needed. So now that so now you know we are there there's not enough silver. They realized it. Plus there's all these people in China and the US and India that are just buying it for a different reason. And London is caught short. That's what a short squeeze is. And so they look to borrow it. And that's getting increasingly hard to do. 35%. Uh but they're starting to come in in in some in some uh uh drips and drabs. Uh but what you see now is so this will m this right now it's manifesting exactly what I'm describing. And that manifestation is anytime there's a problem it goes up. Anytime someone feels a relief it goes down. So it's very much like u we're in the middle of a thing. You know we're in the middle of a fight. And so the prices can swing wildly. Uh, another way to look at it is what's happening dayto day is usually stuff that happens over months. So you're seeing months happen in a day. So the market's going up 5%. Down 3%. And it it is it is if I mean if anyone's wondering, yes, the market is broken and the market needs to rebuild its supply chains. Now what what happens is just about the London situation, right? like I I believe silver's going to $144 and you know my portfolio reflects that. I don't believe it's happening tomorrow. But the London situation reconciles one of two ways, up or down, right? And the the the up situation reconciles with with nobody giving more silver to London for whatever the reason. It's critical mineral. We don't like it. We don't like London. We're going to make them pay. You know, China is worried about trade wars. Uh the tension with the US spills over into London. Everybody's kind of taking their toys and going home. They don't want to share anymore. There's no community. So, that would that would that would make it go higher. A second reason it would go higher would be if and I believe I believe something will come out of this uh but we just won't find out till later that someone has been in London one of the participants in that uh it's called an over-the-counter it's called the LBMA London Bullion Market Association and what it really is is a cooperative of of of traders it's not it's not a literal exchange but they get by they they they self-pol lease with trust, kind of like your neighborhood shop. And um I think when this is over, we will find that one of the primary dealers on that exchange has been less than forthright with actually how much silver they have. You know, I'll surely I'll get it back to you next week. And next week comes, you say, "Vince, where's that silver you owe me?" And I go, "Well, can I have another week?" And that's the problem. So you're a big player. I'm a big player. I borrow from you. I don't give it back to you. the trust is broken and now all of a sudden we're bad neighbors. So I think you're going to find out that someone has been less than uh frank or less than honest with their inventories. Someone's been misrepresenting their inventories. So those are the two bullish scenarios that come out of this scandal which you probably won't hear about for years which I just described or uh the people who have the silver continue to say no I'm not giving it to you for whatever reason. the lower scenario where the market goes lower uh or as the relief comes will be that chart that I showed you if the line started to move up and as the line starts to move up that would be things returning to normal and the normalness would be we have the silver in London we don't need any more silver from the US we're okay we've got plenty of inventory so you know it's it's it's simple supply demand uh basics but it's all it's all because u it's the catalyst for is is the demand that's coming out of the world because gold has gone up. And the other catalyst is the trade tensions tend to function like Warren Buffett has a phrase, I'm not sure if it's him or it's Charlie Mer. There's a phrase like when the tide when the tide drops um when the tide drops when the tide goes out, you see who's naked and who's actually wearing a bathing suit. So, the tide is going out on silver and uh we're seeing um we're seeing slowly that somebody has uh a smaller bathing suit than they say they do and that's how it's going to resolve one way or the other. U that's it. But but this is a this is a uh a crisis in a longer term bull market and these things happen. You know, the foundations crack a little bit. Um I have a couple notes here. Uh so yeah I mean the the against the backdrop of the bigger picture right let's say the London problem is solved and everybody has their silver over there the US has it as a critical mineral right now right uh the US is in a trade war with China that's that's focused on rare earths and I cannot emphasize how important that is you know rare earths are so important for us that we probably as an economy could could feasibly be stopped and put at a standstill in 6 months and the reason for that is rare earths are uh you know our economy is driven uh by a lot of it is driven by military sales. We have to build submarines for Australia and Japan. And without rare earths, without those special magnets, uh, without the other materials that go into it, well, we can't do that. And if we can't sell things, then we can't earn money. And there's really not too many things that we sell, uh, other than military equipment and some bigger capital goods. So, in this sense, you could say that it's well balanced, but I think that China has the upper hand. And if your if your viewers are are watching the the tennis match between G and Trump, it really comes down to I mean the events went like this. Uh G said we're going to restrict rare earths. Trump said I'm going to tariff you 100%. Or or vice versa, one of those other. And then uh Gi said we're going to tax your ships that are in our ports. That's pretty significant. And then Trump said something else. I don't know. But now Scott Bessen, uh, the Treasury Treasury Secretary has come out and he seems to be acting in a in a in a consiliatory tone. So maybe the tensions will back off. Uh, but but it it it's it's it's really serious and uh whatever happens in London doesn't matter. This isn't going to go away. We're not going to start hugging each other. You know, there's no kumbaya moment. I mean, it's not happening. You know, we haven't even gotten to Taiwan yet. So that's it. the the the crisis is a sprint. Uh uh it's a sprint in a marathon. That's what I would look at it as. You know, it's it's a it's a uh it's making people painfully aware of how dependent we are on other countries. So that's my story. >> I think that lays it out really, really well. So even if we resolve this situation that we have going on right now, the broader picture that we have to be aware of is this silver critical mineral status and the trade wars and supply chain concerns around the world. >> Right? When you hear when you hear someone talk about copper, think silver. They they go hand in hand in that respect. Sure. >> Well, I think this this really answers all the questions that I had for you on silver. or have a much better understanding of the situation. Any final takeaways that you would want to leave with investors who are looking at the market right now? >> Uh yeah, if if if and I'm not giving financial advice, uh but I but I am saying what I am doing or what I'm looking at. uh if you're interested in buying hard assets or buying something that if you're worried about the debasement risk, uh I would say that silver and gold are the type of things you want. But at this at this point in the game, I would say that miners are probably less um less fairly valued than silver and gold. I do believe silver I I don't primarily play in miners but if you can find a silver miner that you're comfortable with the company you can find the management you know there's several of them PAS uh AG and there's a couple others uh streamers uh miners are in my opinion even though they've appreciated substantially over the last year because people are waking up to it they're really just getting off the mats and I'm not bullish I'm not selling anything except maybe a newsletter Um, but I am saying that Wall Street still hasn't woken up uh to miners. So, I would say if you if you have the patience for a 5-year hold, you want to own materials and and and and precious metals miners and rare earth miners are in play now, for lack of a better word. That's what I would say. I I would not I would not go out there and just and just, you know, buy gold or buy silver like there's there's plenty of silver right now, but will there be plenty of silver 6 months from now? There's there's a hoarding process going on. So, I think I think uh I think the the way to look at this is the trade war is going to make everything more expensive, right? the president uh believes he can restore manufacturing and if we restore manufacturing there'll be inflation leading up to that. If we don't restore manufacturing there will be inflation going through that for a decade. So I think you need to have a substantial portion of your assets in in um of your of your worth in assets that will be a hedge against dollar debasement. Whether you're a precious metals person or Bitcoin person or you know even if you think your house is your piggy bank and houses have been piggy banks for years. The problem is in a in a in a worsening economic environment a stagflationary environment in a stagflationary environment prices of things go up and your house is worth more money but the bank won't loan you money against it. So you can't use it like a piggy bank in that environment anyway. So it's something to think about. >> Great great points. We are seeing those headlines about gold and silver now, but I I don't really see them about the miners. So, definitely something for people to consider. And you mentioned your newsletter. We'll have a link in the video description. Anything else on where we may find you online? >> Uh I'm on I'm on uh on mostly on X Twitter. uh you would look up VBL's ghost. But if you're interested in these assets or interested in uh you know commentary and analysis, that's going to be a mixed bag. You want to be you want to be on the Substack place for me there. Whether you're free or premium or what have you. But there's a lot of there's a lot there is just a self plug. There is a lot of information out there that's not being conveyed and we've been doing it for five years uh since co because we thought something like this would happen and uh we've done right by people that are uh that are that are uh looking to protect their uh worth without telling them what they should be doing. So that's it. >> Well, thank you so much. We'll have those links below and thank you for taking the time to go through this. I found it really helpful. >> Thanks for having I'll see you again. >> Okay, once again, I'm Charlotte Mloud with investingnews.com and this is Vince Lansancy. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]