Why Silver is the Ultimate Investment in 2025: Peter Krauth’s Bold Predictions
Summary
Silver Market Analysis: Silver is considered dramatically undervalued and oversold, with the gold-silver ratio indicating significant built-in value.
Investment Demand: There is a notable increase in investment in silver ETFs and physical silver, driven by inflation and geopolitical instability, leading to market tightness and potential price increases.
Federal Reserve Policy: The expectation of a return to rate cuts by the Federal Reserve is seen as a catalyst for precious metals, with predictions of significant rate reductions over the next year.
Gold-Silver Ratio: Historically, a decline in the gold-silver ratio below 80 is a bullish signal for silver, suggesting potential for silver to outperform gold.
Global Economic Shifts: Central banks are increasing gold reserves over US dollars, with a growing trend of de-dollarization and increased precious metal purchases in Eastern markets.
Industrial Demand: Silver's role in electronics and solar energy is expanding, with advancements in battery technology enhancing solar power's viability, boosting silver's industrial demand.
Junior Mining Opportunities: The current market conditions favor junior silver miners, with strong financing activity and potential for significant returns as silver prices rise.
Geopolitical Considerations: Exploration and production are expected to increase in Latin American countries like Colombia and Bolivia, as these regions become more favorable for mining investments.
Transcript
I just think that given the way silver's been going and the price and so on, people are really cluing in that this is a u this is an asset has been dramatically undervalued, very very much oversold for a long time. The the gold silver ratio we talked about is a great indicator of that. Um so there's a lot of built-in value in silver. Um it's one of the cheapest assets I believe even still today at around $412. uh that you can find anywhere. Here's what the interesting point is, Cali. If you add the investment into silver ETFs and then you look at what your overall deficit will be for the year, you're at the third highest deficit in the last decade. So that would be 187 million ounces. I uh very much believe that to to perhaps a little bit lesser extent the ETFs but people who are buying physical silver and people who are buying silver ETFs especially in this kind of environment with what's going on with inflation and you know geopolitically instability and so on. I think that a lot of that silver is going to stay off the market and so that's going to continue to add to tightness in the silver market and that's going to help continue to push prices higher. For disclosure purposes, our site does not make recommendations for purchases or sale of stocks, services, or products. Nothing on our site or this podcast should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This podcast is for entertainment purposes only. Peter, it's always great to have you on the show. Big day today for the markets. Um, we're assuming the Fed cut is happening today. Do you want to just talk a little bit about the setup for silver? It feels probably like the best setup in the world for silver right now. >> So, thanks Cali. Uh, yes, and thanks for having me. So, the Fed's going to pronounce itself uh in uh probably an hour or two from right now. Um, and uh I think it's pretty widely expected that they're going to cut start cutting rates. So, they're going to return to the rate cutting cycle, which they've paused since I believe it was either earlier this year or or late last year. And um the expected cut is a uh 25 basis points, so a quarter of a percent. Um that's what I'm expecting. I don't think they want to shock the markets or anything. And uh they've certainly been telegraphing that. And I think what we've been seeing in um in the precious metals prices and commodities as well is uh is is that expectation is that rates are going to be cut in the face of uh sustained high inflation. And I've been saying, you know, going back several quarters, probably at least even a year, is that this was when we would probably see, you know, um big upside come in precious metals because really what it's telling us is that the Fed is uh is between the proverbial rock and hard place. It's it sees that um you know uh unemployment uh is is rising uh and yet and so it's supposed to encourage that by cutting rates and yet it sees that inflation's also rising. And so um you know it's got this dual mandate but it's sacrificing inflation for employment. And so sacrificing inflation means that they're willing to cut rates even though to help fight against inflation they should be at least leaving rates where they are. um which technically should help. Uh so they're caving and so because they're caving in the face of high inflation suggests that uh you know they'll continue probably caving as well as we go on over the next several quarters and through the next year probably cutting a full uh 100 basis points or or or more maybe up to 150 basis points. And uh that's just fuel to the fire for precious metals. And I think that's what we've been seeing over the last sort of couple of months especially as we've as these expectations have gotten baked in. Uh my personal opinion is that look um who no one no one knows for sure but I think a lot of this may have been priced in by now and that we maybe experiencing the the sort of what we call buy the rumor sell the news. Um it wouldn't surprise me if we see some profit taking at this point in both the metals and then the miners. So um that that's kind of what I'm I'm expecting to see play out. think a lot of this has been priced in. Um, and you know, uh, it's been so hot in the precious metals that it wouldn't surprise me that we get this at the very least sort of a a consolidation phase over the next little while. Um, and that would lead to very probably some fantastic opportunities in terms of buying or adding to uh exposure. Can we talk about the silver to gold ratio that it is currently and then some of the historicals and like what you're seeing shortterm I guess for uh the silver bugs out there. >> Sure. So right now the silver gold silver ratio is around 87 88 um actually uh yeah closer to 87 right now. If you look back over the last uh say 20 years or so, it's probably averaged somewhere around 60 65ish. Um and that's what I'm expecting to see it eventually move back to uh at 87. It's still very high. It's been higher. It was it was it was near an all-time high, I believe, uh at the COVID uh peak, which was in early 2020 when it went to about 125 to1. In other words, it took 125 ounces of silver to buy one gold ounce. And then just recently, we were at uh this would have been around uh the middle of last year, we were at about 1034. And we've fallen from that point drop of about 20 points from about as I say about 84 104 to about 84. Uh we've we've or 85. We've risen a little bit since then. Um what we've seen though besides the fact that the average say the last 20 years is closer to about 65ish um is that historically if you look far back enough whenever the ratio let's say reaches above 80 and then and peaks and starts to come back down from 80 and especially once it crosses below 80 and uh continues to fall. That's like a a starter pistol for silver in particular. Now, it's interesting to to note that both metals actually tend to do well when um we see the gold silver ratio come down. It's just that silver does better. So, it silver moves higher faster than gold does. It doesn't have to be that way, but typically that's what happens. So, it's very bullish for silver. Gold as well, but especially silver at this point. Beaver Creek is, you know, probably one of the biggest conferences that everyone looks forward to and kind of gives the sentiment for the end of the year and Frank Gustra made a big comment that pay for gold is over. Um, do you want to give some commentary or expand on that because I feel like that's a big statement to come into the end of the year with. >> I I don't disagree with him frankly. I I I think that he's right. Um, you know, for for a few reasons. One is that um there's always there has been and there I think will continue to be talk of manipulation unless uh it it technically ends uh and everyone agrees that it it ends and has ended at some point. Um silver to to uh a fair degree of course is uh in that same boat and my view is that the manipulation happens in the short term. Um, I was actually uh discussing this with David Morgan not too long ago and uh he explained his point of view and I completely agree with it that the manipulation happens in the short term but but it can't be sort of sustained and so despite the sort of short-term manipulation you still it can't override this sort of um longerterm upward trend in the in the silver price uh gold price as well. And so I mean and you know the best example I have is that and although it's it has been admittedly a long time but still you know silver was about a dollar uh I think 35 or something in 1971 and it went all the way to $50 across that decade and then silver was $4 in I think it was 2001 and went to $49 in 2011. So that took a decade. despite manipulation, you're going to get this uh you're going to get this move upward and I think that's going to continue. And to to Frank Gustra's point, um I think some of the things that we can we can point to are the fact that a lot of the pricing more and more of the pricing is taking part taking place in the east. You've got a large centers in the Middle East, in Asia that uh obviously trade a lot of precious metals and whose exchanges are becoming more and more important. And uh the Shanghai exchange, for example, is is a physically backed uh contract that um participants are taking uh a lot of delivery on. And so in a sense it's more meaningful than western exchanges because people are going there to actually uh take delivery of of the metal. So um I think we have to look at the pricing that takes place there uh and they're becoming more uh they're coming becoming increasingly big uh buyers of both metals. So, um, yeah, I mean, I agree with, uh, Frank and, uh, I think, you know, that's that's a big statement, but I do believe, uh, he's right, and I do believe that we're going to see that, uh, play out and prove itself out to be a fact over the next few years. So you think this will be um a trend that's going to follow into 2026 that the dolorization and the east might um feel a little more important than over here. >> Well definitely you know um couple of interesting points to make. One is that if you look there there was some statistic that just came out. I think it was actually Tabby Costa of Crescat Capital who put this chart out. Great guy. I'm glad to call him a friend. uh because he's such a smart guy and and he puts out such great macro uh info and his chart was uh applauded um central bank holdings of US dollars versus gold and for the first time um we're you know unless you look back say 50 years or so uh for the first time in sort of recent history gold the value of the gold held by central banks has actually surpassed uh uh the value of treasuries So um that's very meaningful and if you look at surveys of central banks they're all saying we have all very much intention of continuing to keep buying. So that certainly is not changing and we know a lot of the east um is interested in in getting rid of dollars. you know, you've got these uh all this talk about bricks currencies. To what extent that ends up sort of playing out is is one thing, but uh we know that in the east they're they're they're selling off their treasuries. They're not buying as many treasuries. And so I certainly expect that trend to continue. So uh and then the other thing so that's gold but but if we talk about silver it's very interesting to note that uh Russia about a year ago you know was public about the fact that for their um for their national reserves with their central bank they were going to start buying silver. uh they were the first ones to say this publicly and then we found out little while ago maybe a month or two ago that Saudi Arabia was had had now um purchased shares in SLV and I believe uh one of the uh one of the silver mining ETFs and so it was not huge amounts but it's what they were willing to say and it's that their fact that they're taking a step and I'm sure it's minute for the kind of you know investment funds that they have and and the funds that their central bank has under management Um, but it's the fact that they're doing it and that you can very likely I think fairly assume that uh what they're saying publicly is perhaps a portion of what they're doing and what they're saying publicly probably there are multiple others who are doing the same thing without actually you know uh revealing it. So, uh, it's very meaningful in my view and I think that we're going to see that, uh, continue to happen and I think a lot of that has to do with, well, one, of course, you know, silver's historical role is money, but also it's it's it it's increasing um, you know, different players industrially and otherwise starting to see silver as increasingly critical and its role in electronics uh, industrially. really generally um things like uh solar panels especially you and I have talked about this a lot in the past uh is sort of undeniable frankly and uh w with the importance of solar and and you know there's there's been some push back on solar people saying well you know we think that China's going to stall less this this year that they've there's been a ramp up at the beginning of the year because they had these um you know tax credits or subsidies from the government uh that are running out and so there's been sort of this. They've been front running it and trying to get a bunch of uh solar panels uh produced and installed before this runs out. But um I think one of the game changers that that people are missing is the role of batteries. And uh I don't remember the stats exactly, but I was looking at them just again recently. Uh it's sort of lighting a new fire so to speak under solar the way I see it because the downside of solar is of course nighttime. You can't produce at night. But uh and so it's not what we call base load uh energy kind of like nuclear or uh or coal or whatever um because it's variable. But uh batteries can can do away with that completely. So you can produce during the day, produce more than you need, store it and then um you know tap into the the storage from the batteries at night time and you can that way get it continuous throughout the day and make it a base load power. So um batteries are becoming a real gamecher for solar. And one last point on that is that um I was looking at some stats as well on how um solar is being adopted by uh a lot of these data centers and AI uh requirements for uh for energy and uh the data centers are very very heavily turning towards solar. Um, you know, there's been some talk about nuclear, but that's I think for the really really really big boys that have, you know, billions of dollars to to tap into perhaps some unused nuclear power. Uh, but but nuclear takes like 15 years to turn around. You have to you have to uh, you know, design, approve, build, and get and then get this thing running. As opposed to solar that can turn around in like a tenth of that. We're talking about a year and a half. So, it's obvious. And that's what I had said and I got push back on that about a year ago. And I said, "No, I don't think so." I said, "I think that because you can be completely independent. Uh you're off technically off the grid. You can have your own grid if you're one of these data centers and you have the room for it. You can actually build your your solar farm right on site, tap into your energy. And now again we've seen that the batteries have made that again uh you know that much more attractive for the data centers because they can you know they obviously need base load power um and they can they can have that with batteries and be totally independent. So you know that that again bodess I think very very well for the demand for solar as we go forward uh given what uh what I think is going to happen with continuous demand for solar. >> I think solar is one of the most applicable actually real time renewable energies that we have comparatively to some of them sound great but are quite a few years uh away from actually >> exactly >> being ready to go. Is there any other updates or commentary that you want to give on the demand side for industrial on silver or is there any anything from silver institute? >> There is something that I find really interesting and that is the institute their forecast shows that they expect uh well here's a couple of things. So so the broad strokes are that um we are going to be in the fifth year of a of a of a deficit this year. Um, and if you add the deficits of the last five years together, including this year, you're at an entire year's mine supply. So about 800 million ounces. What's interesting is that they think that the deficit will actually be less than last year. So they're forecasting about 117 million ounces versus last year's 149 million ounces of deficit. and and yet still this in this year's uh world silver survey they um they said that they expect these deficits to be ongoing for the next five years and that we would actually very likely hit new record deficits at some point in the next 5 years. So that's sort of one aspect of it. The other thing I think that's worth looking at and that that's very interesting is that when they um when they publish their numbers, they have supply, total supply and total demand. And within total demand, they have uh demand for physical coins and bars. And they actually expect that to to rise uh somewhat this year from about 190 million ounces demand to 204 million ounces. I think we're going to see that number ultimately be higher, but that's what So, that's still pretty significant. We're talking about 20% of all demand going to physical coins and bars. What's interesting to me though is if you look at what they show separately is um investment into silver ETFs, physically backed silver ETFs. And they see that having switched from 2 years ago um a uh you know u silver flowing out about 38 million ounces flowing out to uh 100 ounce swing to um 60 million ounces flowing in last year and then a growth this year to about 70 million ounces flowing into silver ETFs. So that's about a 14% increase over last year they expect of the amount of silver that's going to flow into silver ETFs. So what I find um like I'll put it this way, what I disagree with is that when I've asked why they show s the amount of silver that flows into silver ETFs separately from the supply demand uh the the base supply demand um numbers uh is that they say well you know the silver that flows into ETFs is technically still available. it hasn't been consumed and that that silver if you know if if people sell their silver ETFs that silver will flow back into the market and make it available again. Well, that's also true for physically purchased silver uh coins and silver bars that's not consumed. I mean some of it maybe but mostly it's not and that can easily come back to the market as well. So, I'm not clear on why one should be excluded and the other shouldn't be excluded. Um, and I also think that uh yes, it's probably true that, you know, ETFs are sort of easier to sell and someone can just kind of go into their brokerage account and hit sell and and that, you know, will help that silver flow back to the market and help supply. But uh I just think that given the way silver's been going and the price and so on that um people are really cluing in that this is a um this is an asset has been dramatically undervalued. Uh very very much oversold for a long time. The the gold silver ratio we talked about is a great um indicator of that. Um so there's a lot of builtin value in silver. Um, it's one of the cheapest assets I believe even still today at around41 $42 uh that you can find anywhere. If you add, here's what the interesting point is, Cali. If you add the investment into silver ETFs and then you look at what your um your overall deficit will be for the year, you're at the third highest deficit in the last decade. So that would be 187 million ounces. I uh very much believe that to to perhaps a little bit lesser extent the ETFs but people who are buying physical silver and people who are buying silver ETFs especially in this kind of environment with what's going on with inflation and you know geopolitically instability and so on. I think that a lot of that silver is going to stay off the market and so that's going to continue to add to tightness in the silver market and that's going to help continue to push prices higher. So that that those are my two cents on uh on on what's going on in um on on the numbers in the silver uh supply demand uh aspect of things >> with silver around 42. Great time for a lot of these juniors and mid-tiers for raising capital. Um what are you seeing out there as far as the financings are going? Are they closing at rapid pace? Uh do you think this is going to continue like into the end of the year for all these juniors in the silver space? >> If we get a pullback, which I think would be good, healthy in the silver price, uh we could we will very very likely get it in the miners as well. That doesn't worry me. It doesn't scare me. I think it'll just lead to some good buying opportunities. And once they have bottomed, that's going to be a fantastic uh time to sort of jump in, you know, in a more meaningful way. Um and I think the market will continue to stay very healthy and very strong. The financings have been off the charts. Uh you have a great point uh which is that the financings are um not only closing some I mean sometimes you know I hear about things and then I I I I'm shocked but I I shouldn't be that you know we're hearing about some of these financings and you know I'm hearing about some people are saying well did you hear about this? you know, if there's room, whatever, and I'll find out. I'll ask, and then the company will tell me, "Oh, that, you know, that we opened that financing yesterday was closed at the end of the day, and it was overs subscribed." Sometimes some of these things are oversubscribed two and three times. So, they could raise two or three times the money that they had intended to raise originally. Um, then they, you know, they'll turn around and of course they if if if it's reasonable, they'll take more than they had originally planned. So they'll upsize the financing. Sometimes it's 20%, 30%. And then on top of it, there is an overallotment that's available to the uh to the broker that's helping them to raise the money and uh those get completely exercised as well. So you could go from, you know, let's say you're raising 10 million, you could easily be at 15 million by the time this closes and it could take a matter of a couple of days. So it's been very, very hot. There's no question about it. I think that's going to continue and um it's not completely surprising frankly you know silver has almost doubled from the end of February last year was I think $22 we've been to 4243 in the last few days so on that basis not surprising at all and I think that uh it would be unreasonable to be surprised that you know these these juniors are taking advantage and raising money and frankly you know at at4ish dollars let's say in silver even frank even honestly at 30 high30s 35 37 $38 um they can make some really really good money uh mining silver and uh and so that makes them that much more attractive makes the juniors attractive to the uh the developers and the seniors and it makes producing more attractive to the producers. Um you know they they look for ways that they can expand production. they're more willing to uh you know spend money on exploration especially brown fields that's you know near existing infrastructure so they could bring that into production sooner. So um yeah I mean the financings are there. They're hot. I think they will continue. I'm hearing about a few uh private deals that are supposed to go public over the next sort of month or two and I can think of probably three or four that uh that are in the pipeline. So, we're going to hear more about this and uh it's just going to it's it's a small space. It's going to remain I believe small. Silver is quite niche. Uh and that's what in in my view makes it attractive. >> How how valuable or quality I guess of finding a company now if they're close to that production as we've just laid out a map that the demand for silver is obviously not going away. um that if you can find a junior that's close to production like what's I guess a great setup for that at the current >> so yeah I mean that's a good point that's something that's frankly not typical of juniors to be close to production most of them are you know uh in the business of and it's it's understandable but most of them are in the business of uh issuing shares to raise money and and inevitably uh dilute existing shareholders. It's all fine when, you know, you're in a in a really good market and the silver price keeps going up and everybody forgets about that, you know, in a matter of days or weeks because, you know, that that uh that raise is an afterthought and the delusions an afterthought and the price is quickly higher than, you know, uh the the the small dip it took after the the raise was announced. Um but you know we will have periods where we get back to reality and that business model uh weighs on people and uh and you know maybe the silver price stagnates for a little while. So a junior that is set up to be able to produce and to uh bring some serious cash flow uh is is very attractive and there are very few like that. Um one that I like is ES gold. Uh they interestingly just about two weeks ago announced that um they had updated their uh pea on their Monttoba uh project which is in in Quebec and um it's it's tremendous. I mean the after tax IRRa on this thing is 60%. The payback period is less than 2 years and the pre-tax um value of the uh of the project is $44 million. The pre-tax irrra is 105%. So this thing pre-tax will pay itself back completely in less than two years. So um and so they are probably a matter of a few months away from production. So that's going to be tremendous for them. By the way, the the the price that they assumed and in this revised pea was um was where they had revised um the prices of the underlying commodities. So this is with a revised price of gold to 2900. We're at 36 and a revised silver price to 31 and we're at 41. So that means that these numbers are actually still low in in this revised pea and that the IR technically at current prices are a lot higher. So um it's very very compelling. They've been pretty um aggressive in the sense that they are they've they've raised some money. they are now spending on uh doing exploration besides you know building the the uh the plant that's going to process the uh these tailings and and start flowing a lot of cash to the company. They've also announced that they're uh acquiring a project in Colombia that is going to be uh sort of a sister project to what they're doing uh in Quebec uh processing tailings u which is fantastic actually for not only them and shareholders but it's fantastic for the environment for the the community because they're basically doing a cleanup uh process and so they're going to copycat this um carbon copy it I should say in uh in Colombia and they've made that announcement and it's something that they can duplicate on and on in all kinds of places across Canada and elsewhere. So, uh I see, you know, this is very compelling, a lot of growth and and because of their pending their uh their near-term cash flow, uh they will not need to be able to go not need to have to go back to market for I think quite some time um because of the of the cash coming in that will feed all these different avenues they have to uh to expand. Do you think now again with silver prices the way they are and the markets conditions obviously favoring commodities that we'll see more back in Latin America like Colombia, Peru, and places where we kind of felt stalled a little bit for a while. >> I do. Yeah, absolutely. That's that's a good point. I think that uh people will start to have to look a little more widely um you know rather than sort of uh you know North America, Australia and frankly if if you think about where you find silver there aren't all that many places. Um, and so you're right, the sort of western, if you look at a map in sort of the western uh side of uh North America and then uh South America is where most of the gold is, sorry, the most of the silver is. And so um that's why I think people have to look more towards places like Colombia um Bolivia which by the way is in the middle of uh of an election and it's looking actually favorable that they may be leaning uh favorable for mining that they may be leaning more to the right. Um and one of the companies I know of that is actually looking to go public soon is a Bolivian Explorer has some very interesting projects. Um, and so I've become more favorable. In fact, I have been for a couple of years. But the way I've seen things play out, I think that, um, if it continues to lean right and that works out to be the case in Bolivia, then that will be a new sort of untapped mostly untapped jurisdiction that uh, will probably have get a lot more attention. Um so yeah I mean as I say Colombia, Bolivia, Chile, Argentina has really turned around. There are two plays there. Abraas and Argenta, both of which you have tremendous silver projects. And now because of all the changes that the new president Malay has brought in, um are looking a lot more attractive and uh so yes, um we're going to start looking south, I believe, uh for silver and uh we're going to find a lot more of it. >> Well, Peter, it's always such a pleasure having you on the show. For anyone that's possibly new who doesn't know who you are, do you want to just quickly mention your newsletter and then where they can find your book as well because I feel like your book is a mustave for this year. >> Thanks, Cali. Yes. So, uh, so my newsletter is Silverstock Investor. You can go to silverstockinvestor.com um, and you'll find out more about it there. Um, and then my book is The Great Silver Bull, which you can buy on Amazon. And uh, you can you have that available in print or in Kindle. And so I'm active on Twitter. Just look for Peter Kraut. I'm active on LinkedIn. You can connect me with me there. Um, and yeah, I mean, you know, here here's what I would maybe leave people with is is that silver is a small market. Silver is very much in a in a tight under supplied market. It's kind of a perfect storm for this metal and it will be by all indications it will be for the next I would say at least 5 to 10 years probably possibly longer. Um so you know it being a small market means it's also uh more uh volatile but I don't see the volatility as a reason to stay away from it. In fact, I see it as a reason to be attracted to it. And that by that I mean that there's something for everyone. You know, you could be the most conservative investor and then but silver has a place for you. And that could be just owning some physical silver. And if you're uh uh uh you have a much higher risk tolerance, then you can go towards the silver juniors that are exploring for silver and get a lot more alpha, you know, with with your investments. More risk of course, but you can weigh that in different ways. You can counterbalance it by perhaps having more cash or having more physical silver. um you know buying in trashes when you buy into these small juniors um and take profits when they double which is something that you know we've managed to do actually just in the past week in two companies and these were big companies uh we took profits in two companies that doubled just in the past well I'm not saying they doubled in the past week but we took profits in the past week one of them doubled in a matter of months and one of them doubled over the last two years these are larger silver producers so um it's it's a very very healthy environment for this metal And it will continue to be strong in my view for quite some time. [Music]
Why Silver is the Ultimate Investment in 2025: Peter Krauth’s Bold Predictions
Summary
Transcript
I just think that given the way silver's been going and the price and so on, people are really cluing in that this is a u this is an asset has been dramatically undervalued, very very much oversold for a long time. The the gold silver ratio we talked about is a great indicator of that. Um so there's a lot of built-in value in silver. Um it's one of the cheapest assets I believe even still today at around $412. uh that you can find anywhere. Here's what the interesting point is, Cali. If you add the investment into silver ETFs and then you look at what your overall deficit will be for the year, you're at the third highest deficit in the last decade. So that would be 187 million ounces. I uh very much believe that to to perhaps a little bit lesser extent the ETFs but people who are buying physical silver and people who are buying silver ETFs especially in this kind of environment with what's going on with inflation and you know geopolitically instability and so on. I think that a lot of that silver is going to stay off the market and so that's going to continue to add to tightness in the silver market and that's going to help continue to push prices higher. For disclosure purposes, our site does not make recommendations for purchases or sale of stocks, services, or products. Nothing on our site or this podcast should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This podcast is for entertainment purposes only. Peter, it's always great to have you on the show. Big day today for the markets. Um, we're assuming the Fed cut is happening today. Do you want to just talk a little bit about the setup for silver? It feels probably like the best setup in the world for silver right now. >> So, thanks Cali. Uh, yes, and thanks for having me. So, the Fed's going to pronounce itself uh in uh probably an hour or two from right now. Um, and uh I think it's pretty widely expected that they're going to cut start cutting rates. So, they're going to return to the rate cutting cycle, which they've paused since I believe it was either earlier this year or or late last year. And um the expected cut is a uh 25 basis points, so a quarter of a percent. Um that's what I'm expecting. I don't think they want to shock the markets or anything. And uh they've certainly been telegraphing that. And I think what we've been seeing in um in the precious metals prices and commodities as well is uh is is that expectation is that rates are going to be cut in the face of uh sustained high inflation. And I've been saying, you know, going back several quarters, probably at least even a year, is that this was when we would probably see, you know, um big upside come in precious metals because really what it's telling us is that the Fed is uh is between the proverbial rock and hard place. It's it sees that um you know uh unemployment uh is is rising uh and yet and so it's supposed to encourage that by cutting rates and yet it sees that inflation's also rising. And so um you know it's got this dual mandate but it's sacrificing inflation for employment. And so sacrificing inflation means that they're willing to cut rates even though to help fight against inflation they should be at least leaving rates where they are. um which technically should help. Uh so they're caving and so because they're caving in the face of high inflation suggests that uh you know they'll continue probably caving as well as we go on over the next several quarters and through the next year probably cutting a full uh 100 basis points or or or more maybe up to 150 basis points. And uh that's just fuel to the fire for precious metals. And I think that's what we've been seeing over the last sort of couple of months especially as we've as these expectations have gotten baked in. Uh my personal opinion is that look um who no one no one knows for sure but I think a lot of this may have been priced in by now and that we maybe experiencing the the sort of what we call buy the rumor sell the news. Um it wouldn't surprise me if we see some profit taking at this point in both the metals and then the miners. So um that that's kind of what I'm I'm expecting to see play out. think a lot of this has been priced in. Um, and you know, uh, it's been so hot in the precious metals that it wouldn't surprise me that we get this at the very least sort of a a consolidation phase over the next little while. Um, and that would lead to very probably some fantastic opportunities in terms of buying or adding to uh exposure. Can we talk about the silver to gold ratio that it is currently and then some of the historicals and like what you're seeing shortterm I guess for uh the silver bugs out there. >> Sure. So right now the silver gold silver ratio is around 87 88 um actually uh yeah closer to 87 right now. If you look back over the last uh say 20 years or so, it's probably averaged somewhere around 60 65ish. Um and that's what I'm expecting to see it eventually move back to uh at 87. It's still very high. It's been higher. It was it was it was near an all-time high, I believe, uh at the COVID uh peak, which was in early 2020 when it went to about 125 to1. In other words, it took 125 ounces of silver to buy one gold ounce. And then just recently, we were at uh this would have been around uh the middle of last year, we were at about 1034. And we've fallen from that point drop of about 20 points from about as I say about 84 104 to about 84. Uh we've we've or 85. We've risen a little bit since then. Um what we've seen though besides the fact that the average say the last 20 years is closer to about 65ish um is that historically if you look far back enough whenever the ratio let's say reaches above 80 and then and peaks and starts to come back down from 80 and especially once it crosses below 80 and uh continues to fall. That's like a a starter pistol for silver in particular. Now, it's interesting to to note that both metals actually tend to do well when um we see the gold silver ratio come down. It's just that silver does better. So, it silver moves higher faster than gold does. It doesn't have to be that way, but typically that's what happens. So, it's very bullish for silver. Gold as well, but especially silver at this point. Beaver Creek is, you know, probably one of the biggest conferences that everyone looks forward to and kind of gives the sentiment for the end of the year and Frank Gustra made a big comment that pay for gold is over. Um, do you want to give some commentary or expand on that because I feel like that's a big statement to come into the end of the year with. >> I I don't disagree with him frankly. I I I think that he's right. Um, you know, for for a few reasons. One is that um there's always there has been and there I think will continue to be talk of manipulation unless uh it it technically ends uh and everyone agrees that it it ends and has ended at some point. Um silver to to uh a fair degree of course is uh in that same boat and my view is that the manipulation happens in the short term. Um, I was actually uh discussing this with David Morgan not too long ago and uh he explained his point of view and I completely agree with it that the manipulation happens in the short term but but it can't be sort of sustained and so despite the sort of short-term manipulation you still it can't override this sort of um longerterm upward trend in the in the silver price uh gold price as well. And so I mean and you know the best example I have is that and although it's it has been admittedly a long time but still you know silver was about a dollar uh I think 35 or something in 1971 and it went all the way to $50 across that decade and then silver was $4 in I think it was 2001 and went to $49 in 2011. So that took a decade. despite manipulation, you're going to get this uh you're going to get this move upward and I think that's going to continue. And to to Frank Gustra's point, um I think some of the things that we can we can point to are the fact that a lot of the pricing more and more of the pricing is taking part taking place in the east. You've got a large centers in the Middle East, in Asia that uh obviously trade a lot of precious metals and whose exchanges are becoming more and more important. And uh the Shanghai exchange, for example, is is a physically backed uh contract that um participants are taking uh a lot of delivery on. And so in a sense it's more meaningful than western exchanges because people are going there to actually uh take delivery of of the metal. So um I think we have to look at the pricing that takes place there uh and they're becoming more uh they're coming becoming increasingly big uh buyers of both metals. So, um, yeah, I mean, I agree with, uh, Frank and, uh, I think, you know, that's that's a big statement, but I do believe, uh, he's right, and I do believe that we're going to see that, uh, play out and prove itself out to be a fact over the next few years. So you think this will be um a trend that's going to follow into 2026 that the dolorization and the east might um feel a little more important than over here. >> Well definitely you know um couple of interesting points to make. One is that if you look there there was some statistic that just came out. I think it was actually Tabby Costa of Crescat Capital who put this chart out. Great guy. I'm glad to call him a friend. uh because he's such a smart guy and and he puts out such great macro uh info and his chart was uh applauded um central bank holdings of US dollars versus gold and for the first time um we're you know unless you look back say 50 years or so uh for the first time in sort of recent history gold the value of the gold held by central banks has actually surpassed uh uh the value of treasuries So um that's very meaningful and if you look at surveys of central banks they're all saying we have all very much intention of continuing to keep buying. So that certainly is not changing and we know a lot of the east um is interested in in getting rid of dollars. you know, you've got these uh all this talk about bricks currencies. To what extent that ends up sort of playing out is is one thing, but uh we know that in the east they're they're they're selling off their treasuries. They're not buying as many treasuries. And so I certainly expect that trend to continue. So uh and then the other thing so that's gold but but if we talk about silver it's very interesting to note that uh Russia about a year ago you know was public about the fact that for their um for their national reserves with their central bank they were going to start buying silver. uh they were the first ones to say this publicly and then we found out little while ago maybe a month or two ago that Saudi Arabia was had had now um purchased shares in SLV and I believe uh one of the uh one of the silver mining ETFs and so it was not huge amounts but it's what they were willing to say and it's that their fact that they're taking a step and I'm sure it's minute for the kind of you know investment funds that they have and and the funds that their central bank has under management Um, but it's the fact that they're doing it and that you can very likely I think fairly assume that uh what they're saying publicly is perhaps a portion of what they're doing and what they're saying publicly probably there are multiple others who are doing the same thing without actually you know uh revealing it. So, uh, it's very meaningful in my view and I think that we're going to see that, uh, continue to happen and I think a lot of that has to do with, well, one, of course, you know, silver's historical role is money, but also it's it's it it's increasing um, you know, different players industrially and otherwise starting to see silver as increasingly critical and its role in electronics uh, industrially. really generally um things like uh solar panels especially you and I have talked about this a lot in the past uh is sort of undeniable frankly and uh w with the importance of solar and and you know there's there's been some push back on solar people saying well you know we think that China's going to stall less this this year that they've there's been a ramp up at the beginning of the year because they had these um you know tax credits or subsidies from the government uh that are running out and so there's been sort of this. They've been front running it and trying to get a bunch of uh solar panels uh produced and installed before this runs out. But um I think one of the game changers that that people are missing is the role of batteries. And uh I don't remember the stats exactly, but I was looking at them just again recently. Uh it's sort of lighting a new fire so to speak under solar the way I see it because the downside of solar is of course nighttime. You can't produce at night. But uh and so it's not what we call base load uh energy kind of like nuclear or uh or coal or whatever um because it's variable. But uh batteries can can do away with that completely. So you can produce during the day, produce more than you need, store it and then um you know tap into the the storage from the batteries at night time and you can that way get it continuous throughout the day and make it a base load power. So um batteries are becoming a real gamecher for solar. And one last point on that is that um I was looking at some stats as well on how um solar is being adopted by uh a lot of these data centers and AI uh requirements for uh for energy and uh the data centers are very very heavily turning towards solar. Um, you know, there's been some talk about nuclear, but that's I think for the really really really big boys that have, you know, billions of dollars to to tap into perhaps some unused nuclear power. Uh, but but nuclear takes like 15 years to turn around. You have to you have to uh, you know, design, approve, build, and get and then get this thing running. As opposed to solar that can turn around in like a tenth of that. We're talking about a year and a half. So, it's obvious. And that's what I had said and I got push back on that about a year ago. And I said, "No, I don't think so." I said, "I think that because you can be completely independent. Uh you're off technically off the grid. You can have your own grid if you're one of these data centers and you have the room for it. You can actually build your your solar farm right on site, tap into your energy. And now again we've seen that the batteries have made that again uh you know that much more attractive for the data centers because they can you know they obviously need base load power um and they can they can have that with batteries and be totally independent. So you know that that again bodess I think very very well for the demand for solar as we go forward uh given what uh what I think is going to happen with continuous demand for solar. >> I think solar is one of the most applicable actually real time renewable energies that we have comparatively to some of them sound great but are quite a few years uh away from actually >> exactly >> being ready to go. Is there any other updates or commentary that you want to give on the demand side for industrial on silver or is there any anything from silver institute? >> There is something that I find really interesting and that is the institute their forecast shows that they expect uh well here's a couple of things. So so the broad strokes are that um we are going to be in the fifth year of a of a of a deficit this year. Um, and if you add the deficits of the last five years together, including this year, you're at an entire year's mine supply. So about 800 million ounces. What's interesting is that they think that the deficit will actually be less than last year. So they're forecasting about 117 million ounces versus last year's 149 million ounces of deficit. and and yet still this in this year's uh world silver survey they um they said that they expect these deficits to be ongoing for the next five years and that we would actually very likely hit new record deficits at some point in the next 5 years. So that's sort of one aspect of it. The other thing I think that's worth looking at and that that's very interesting is that when they um when they publish their numbers, they have supply, total supply and total demand. And within total demand, they have uh demand for physical coins and bars. And they actually expect that to to rise uh somewhat this year from about 190 million ounces demand to 204 million ounces. I think we're going to see that number ultimately be higher, but that's what So, that's still pretty significant. We're talking about 20% of all demand going to physical coins and bars. What's interesting to me though is if you look at what they show separately is um investment into silver ETFs, physically backed silver ETFs. And they see that having switched from 2 years ago um a uh you know u silver flowing out about 38 million ounces flowing out to uh 100 ounce swing to um 60 million ounces flowing in last year and then a growth this year to about 70 million ounces flowing into silver ETFs. So that's about a 14% increase over last year they expect of the amount of silver that's going to flow into silver ETFs. So what I find um like I'll put it this way, what I disagree with is that when I've asked why they show s the amount of silver that flows into silver ETFs separately from the supply demand uh the the base supply demand um numbers uh is that they say well you know the silver that flows into ETFs is technically still available. it hasn't been consumed and that that silver if you know if if people sell their silver ETFs that silver will flow back into the market and make it available again. Well, that's also true for physically purchased silver uh coins and silver bars that's not consumed. I mean some of it maybe but mostly it's not and that can easily come back to the market as well. So, I'm not clear on why one should be excluded and the other shouldn't be excluded. Um, and I also think that uh yes, it's probably true that, you know, ETFs are sort of easier to sell and someone can just kind of go into their brokerage account and hit sell and and that, you know, will help that silver flow back to the market and help supply. But uh I just think that given the way silver's been going and the price and so on that um people are really cluing in that this is a um this is an asset has been dramatically undervalued. Uh very very much oversold for a long time. The the gold silver ratio we talked about is a great um indicator of that. Um so there's a lot of builtin value in silver. Um, it's one of the cheapest assets I believe even still today at around41 $42 uh that you can find anywhere. If you add, here's what the interesting point is, Cali. If you add the investment into silver ETFs and then you look at what your um your overall deficit will be for the year, you're at the third highest deficit in the last decade. So that would be 187 million ounces. I uh very much believe that to to perhaps a little bit lesser extent the ETFs but people who are buying physical silver and people who are buying silver ETFs especially in this kind of environment with what's going on with inflation and you know geopolitically instability and so on. I think that a lot of that silver is going to stay off the market and so that's going to continue to add to tightness in the silver market and that's going to help continue to push prices higher. So that that those are my two cents on uh on on what's going on in um on on the numbers in the silver uh supply demand uh aspect of things >> with silver around 42. Great time for a lot of these juniors and mid-tiers for raising capital. Um what are you seeing out there as far as the financings are going? Are they closing at rapid pace? Uh do you think this is going to continue like into the end of the year for all these juniors in the silver space? >> If we get a pullback, which I think would be good, healthy in the silver price, uh we could we will very very likely get it in the miners as well. That doesn't worry me. It doesn't scare me. I think it'll just lead to some good buying opportunities. And once they have bottomed, that's going to be a fantastic uh time to sort of jump in, you know, in a more meaningful way. Um and I think the market will continue to stay very healthy and very strong. The financings have been off the charts. Uh you have a great point uh which is that the financings are um not only closing some I mean sometimes you know I hear about things and then I I I I'm shocked but I I shouldn't be that you know we're hearing about some of these financings and you know I'm hearing about some people are saying well did you hear about this? you know, if there's room, whatever, and I'll find out. I'll ask, and then the company will tell me, "Oh, that, you know, that we opened that financing yesterday was closed at the end of the day, and it was overs subscribed." Sometimes some of these things are oversubscribed two and three times. So, they could raise two or three times the money that they had intended to raise originally. Um, then they, you know, they'll turn around and of course they if if if it's reasonable, they'll take more than they had originally planned. So they'll upsize the financing. Sometimes it's 20%, 30%. And then on top of it, there is an overallotment that's available to the uh to the broker that's helping them to raise the money and uh those get completely exercised as well. So you could go from, you know, let's say you're raising 10 million, you could easily be at 15 million by the time this closes and it could take a matter of a couple of days. So it's been very, very hot. There's no question about it. I think that's going to continue and um it's not completely surprising frankly you know silver has almost doubled from the end of February last year was I think $22 we've been to 4243 in the last few days so on that basis not surprising at all and I think that uh it would be unreasonable to be surprised that you know these these juniors are taking advantage and raising money and frankly you know at at4ish dollars let's say in silver even frank even honestly at 30 high30s 35 37 $38 um they can make some really really good money uh mining silver and uh and so that makes them that much more attractive makes the juniors attractive to the uh the developers and the seniors and it makes producing more attractive to the producers. Um you know they they look for ways that they can expand production. they're more willing to uh you know spend money on exploration especially brown fields that's you know near existing infrastructure so they could bring that into production sooner. So um yeah I mean the financings are there. They're hot. I think they will continue. I'm hearing about a few uh private deals that are supposed to go public over the next sort of month or two and I can think of probably three or four that uh that are in the pipeline. So, we're going to hear more about this and uh it's just going to it's it's a small space. It's going to remain I believe small. Silver is quite niche. Uh and that's what in in my view makes it attractive. >> How how valuable or quality I guess of finding a company now if they're close to that production as we've just laid out a map that the demand for silver is obviously not going away. um that if you can find a junior that's close to production like what's I guess a great setup for that at the current >> so yeah I mean that's a good point that's something that's frankly not typical of juniors to be close to production most of them are you know uh in the business of and it's it's understandable but most of them are in the business of uh issuing shares to raise money and and inevitably uh dilute existing shareholders. It's all fine when, you know, you're in a in a really good market and the silver price keeps going up and everybody forgets about that, you know, in a matter of days or weeks because, you know, that that uh that raise is an afterthought and the delusions an afterthought and the price is quickly higher than, you know, uh the the the small dip it took after the the raise was announced. Um but you know we will have periods where we get back to reality and that business model uh weighs on people and uh and you know maybe the silver price stagnates for a little while. So a junior that is set up to be able to produce and to uh bring some serious cash flow uh is is very attractive and there are very few like that. Um one that I like is ES gold. Uh they interestingly just about two weeks ago announced that um they had updated their uh pea on their Monttoba uh project which is in in Quebec and um it's it's tremendous. I mean the after tax IRRa on this thing is 60%. The payback period is less than 2 years and the pre-tax um value of the uh of the project is $44 million. The pre-tax irrra is 105%. So this thing pre-tax will pay itself back completely in less than two years. So um and so they are probably a matter of a few months away from production. So that's going to be tremendous for them. By the way, the the the price that they assumed and in this revised pea was um was where they had revised um the prices of the underlying commodities. So this is with a revised price of gold to 2900. We're at 36 and a revised silver price to 31 and we're at 41. So that means that these numbers are actually still low in in this revised pea and that the IR technically at current prices are a lot higher. So um it's very very compelling. They've been pretty um aggressive in the sense that they are they've they've raised some money. they are now spending on uh doing exploration besides you know building the the uh the plant that's going to process the uh these tailings and and start flowing a lot of cash to the company. They've also announced that they're uh acquiring a project in Colombia that is going to be uh sort of a sister project to what they're doing uh in Quebec uh processing tailings u which is fantastic actually for not only them and shareholders but it's fantastic for the environment for the the community because they're basically doing a cleanup uh process and so they're going to copycat this um carbon copy it I should say in uh in Colombia and they've made that announcement and it's something that they can duplicate on and on in all kinds of places across Canada and elsewhere. So, uh I see, you know, this is very compelling, a lot of growth and and because of their pending their uh their near-term cash flow, uh they will not need to be able to go not need to have to go back to market for I think quite some time um because of the of the cash coming in that will feed all these different avenues they have to uh to expand. Do you think now again with silver prices the way they are and the markets conditions obviously favoring commodities that we'll see more back in Latin America like Colombia, Peru, and places where we kind of felt stalled a little bit for a while. >> I do. Yeah, absolutely. That's that's a good point. I think that uh people will start to have to look a little more widely um you know rather than sort of uh you know North America, Australia and frankly if if you think about where you find silver there aren't all that many places. Um, and so you're right, the sort of western, if you look at a map in sort of the western uh side of uh North America and then uh South America is where most of the gold is, sorry, the most of the silver is. And so um that's why I think people have to look more towards places like Colombia um Bolivia which by the way is in the middle of uh of an election and it's looking actually favorable that they may be leaning uh favorable for mining that they may be leaning more to the right. Um and one of the companies I know of that is actually looking to go public soon is a Bolivian Explorer has some very interesting projects. Um, and so I've become more favorable. In fact, I have been for a couple of years. But the way I've seen things play out, I think that, um, if it continues to lean right and that works out to be the case in Bolivia, then that will be a new sort of untapped mostly untapped jurisdiction that uh, will probably have get a lot more attention. Um so yeah I mean as I say Colombia, Bolivia, Chile, Argentina has really turned around. There are two plays there. Abraas and Argenta, both of which you have tremendous silver projects. And now because of all the changes that the new president Malay has brought in, um are looking a lot more attractive and uh so yes, um we're going to start looking south, I believe, uh for silver and uh we're going to find a lot more of it. >> Well, Peter, it's always such a pleasure having you on the show. For anyone that's possibly new who doesn't know who you are, do you want to just quickly mention your newsletter and then where they can find your book as well because I feel like your book is a mustave for this year. >> Thanks, Cali. Yes. So, uh, so my newsletter is Silverstock Investor. You can go to silverstockinvestor.com um, and you'll find out more about it there. Um, and then my book is The Great Silver Bull, which you can buy on Amazon. And uh, you can you have that available in print or in Kindle. And so I'm active on Twitter. Just look for Peter Kraut. I'm active on LinkedIn. You can connect me with me there. Um, and yeah, I mean, you know, here here's what I would maybe leave people with is is that silver is a small market. Silver is very much in a in a tight under supplied market. It's kind of a perfect storm for this metal and it will be by all indications it will be for the next I would say at least 5 to 10 years probably possibly longer. Um so you know it being a small market means it's also uh more uh volatile but I don't see the volatility as a reason to stay away from it. In fact, I see it as a reason to be attracted to it. And that by that I mean that there's something for everyone. You know, you could be the most conservative investor and then but silver has a place for you. And that could be just owning some physical silver. And if you're uh uh uh you have a much higher risk tolerance, then you can go towards the silver juniors that are exploring for silver and get a lot more alpha, you know, with with your investments. More risk of course, but you can weigh that in different ways. You can counterbalance it by perhaps having more cash or having more physical silver. um you know buying in trashes when you buy into these small juniors um and take profits when they double which is something that you know we've managed to do actually just in the past week in two companies and these were big companies uh we took profits in two companies that doubled just in the past well I'm not saying they doubled in the past week but we took profits in the past week one of them doubled in a matter of months and one of them doubled over the last two years these are larger silver producers so um it's it's a very very healthy environment for this metal And it will continue to be strong in my view for quite some time. [Music]