Exposed: Silver's True Scarcity & What It Means For Future Prices | Peter Krauth

Seven out of the nine last bull markets, silver outperformed gold, so it tends to sort of catch up and then outpace gold. I wouldn't expect it to be necessarily different this time once again. This is Kaiser Johnson with Liberty & Finance, and these are the Miles Franklin Weekly Specials for August 11th through August 18th, 2025, while supplies last. First this week, one ounce assorted silver rounds are just $1.49 over spot per ounce. Next, 10 ounce silver PAMP bars are just $2.99 over spot per ounce. 90% silver assorted US half dollars are just $0.99 over spot per ounce. MS64 gold US St. Gauden $20 coins are just $180 over melt per coin. One ounce gold RAND refinery bars are only $65 over spot per ounce. And finally, one 10th ounce platinum UK Britannia are just $34 over melt per coin. To order our specials or any of the many other options we have available, call us at 1-888-81-LIBERTY. That's 1-888-815-4237. We're available after hours and on weekends, and we look forward to speaking with you. Hey everyone, this is Elijah K. Johnson with Liberty & Finance, and back with us today is our good friend Peter Crouch from SilverStockInvestor.com. Peter, thank you so much for joining us today. Hello, Elijah. Always a pleasure and happy to be here. Well, it's great to have you today. I did want to discuss the silver market. Now, obviously we have seen over the last few months a good breakout in silver, and it's really, it went to $39 an ounce right now. It's around 37 or 38. We've seen quite a bit of a consolidation though over the last few weeks, last month or so. Your take on where we are right now. So, I think that, I mean, I actually hope that this consolidation will continue a bit and that we may even see a bit of a smallish correction. I think that would be the healthiest thing for this market. It is quite solid and quite strong, and I do believe that it's very healthy. You know, the last few times that we were at these price levels, if we look back a decade or a decade and a half almost, things had gotten ahead of themselves. And then after that, it was in correction mode around, you know, those high 38s or even 30s. So, this time we've gotten there much more gradually, and I think this is a clear sign of a growing bull market and much higher prices to come. But as you said, we ran up, you know, 30, 32, 34, 36, 38, up to 40, even in the futures prices. And now we've corrected back to 37 and change. Again, I really think that we're due for at least consolidation. My ideal would be to see a little bit more correction, frankly, a couple dollars off of the price would be very healthy. That may, you know, take a little while longer, a few more weeks, maybe a month or two, probably not even that long. But that would be the best thing, and then we would probably continue to head considerably higher through the rest of the year. And what kind of prices do you expect going into your end? So, I think that we're going to see probably something along the lines of, and it's not a stretch, but $40. I mean, I've been saying for probably since at least the beginning of this year, $40 was very likely at some point in the second half of 2025. You know, it was less obvious back then. It's more obvious now since we've all already touched it. But that was my feeling then, and I think it's very realistic still. I also think that, you know, things pick up and they could well for, you know, different reasons, some black swans and some gray swans to come would potentially bring silver to perhaps $45 sometime before the end of this year. Not sure that it would necessarily stay there, but, you know, the all-time high of $50, I think, is very much within range, but probably at some point only next year. That's been my expectation for some time, and I still feel that way about where silver could be going. Now, one of the drivers that we're seeing is a structural deficit we've seen for many years now. Did you want to discuss this and kind of what we're seeing at the moment? Some people are skeptical. So, I think some of the skepticism comes from the fact that, you know, we're not seeing industry struggling at the moment to get silver, but obviously there are above-ground inventories. So, what is the story on the structural deficit right now? So, the structural deficit, according to the Silver Institute, is pretty significant. It started back in 2021. I'm looking at their numbers right now. There was a deficit of about 80. So, again, for your readers to just get a very big overview, the silver market is about a billion ounces a year of supply, and demand currently in the last few years has been from 1.15 to 1.2 billion ounces. So, we're using up about 15 to 20% more than we're producing every year. Or when I say supply, really supply is about 85% from mining, about 850 million ounces, and about 150 million ounces come from recycling. So, total billion ounce supply every year, total demand about 1.15, 1.2 billion ounces a year. So, this shortfall of anywhere from 10 to 20% that we've seen over the last four years and is forecast to be sustained again this year, that's going to mark the fifth year in a row that we've been going through a structural deficit. Elijah, you and I have talked about this before. Where is the silver coming from? How can you run a deficit this many years running? And so, last year, I started to dig into that, and I came to the conclusion that especially industrial consumers of silver, which absolutely need their silver, investment demand is one thing. Although, if people really want silver, they're going to pay for it and probably find it somehow. But the industrial applications, in many cases, are either very difficult to substitute or it's irreplaceable. So, that's very much the case in a lot of silver applications. So, as far as I'm concerned, industry has been able to tap into these secondary supplies of silver, which maybe for about a decade prior to 2021, we were on balance producing more silver than we were consuming. And that has flipped completely. So, this excess silver had been accumulating in inventories, which are mostly at least identifiable inventories are the COMEX, the LBMA and Shanghai. Those are the big ones. You've also got private hordes of silver, silver that's owned privately, which accounts for probably a few billion ounces as well. So, I think what's been happening is that these industrial consumers have gone to these secondary inventories, the futures markets, and even to some extent to the ETFs, and have been basically drying down from there. So, they've been able to access, I'm going to say, excess supply, because this is above-ground inventories that are just sort of sitting there. They've been able to access this supply, draw it down, buy it at prevailing market prices, without putting pressure on miners and recyclers to bring additional supply to market. And I think that's why we haven't seen silver really, truly break out, go beyond sort of this $45, $50 level, which will be the true ultimate breakout. So, that's where I think the supply has come from, and it hasn't, as I say, put tremendous pressure yet on the silver price. But I do think that that's coming, and that's really what makes silver very undervalued, and perhaps one of the most undervalued assets right now, and bodes very well for the future, both for the metal and for the miners that look for it and produce it. And as we talk about industrial demand for metal, I mean, this just seems to be increasing, right, with more green energy, with the development of AI and all of that, more electrification of the economy. Your perspective on that, will the deficit just continue to get worse? And as these above-ground inventories are drained, I mean, what does that mean? It seems like prices have to go higher if those trends continue. Yeah, so absolutely. Industrial consumption has been going up. The Silver Institute is forecasting that this year it's going to be slightly down from last year, total industrial consumption. But consider this, total supply last year, if you forget about secondary inventories, just supply from mining and recycling of just about a billion ounces, yet industrial alone was 680 million ounces. So 68% of all of the mined and recycled supply went strictly to industrial uses. And photovoltaics, which is solar, represents 20% of demand of all of the supplied silver every year. So this one application is 20%. The Silver Institute thinks that we're going to see the demand from solar for silver kind of flatline and industrial demand as well overall, more or less flatline this year from last year. I think that's going to turn out to be wrong. I think that they're underestimating the demand. I can point to things like, well, you talked about AI and data centers. I saw some numbers recently about solar installations in China. And because of government stimulus, it's gone through the roof in the first half of this year. And it's gone well beyond. I think that the first half of this year has already surpassed last year, all of last year in Chinese solar installations. And as we know, they're the biggest producers of solar, the biggest installers of solar. So that really suggests that demand for solar will continue to go up and the required silver along with it. The other part of your question, I'm trying to remember. Yeah, no, just that if trends continue, it seems like prices have to rise from here. Yeah. So that's an interesting point. There's always this argument that we're not going to have silver. There's plenty of silver that's being held by private investors and that they will, so to speak, dishord their silver as the market requires. And I don't disagree with that. I guess where I disagree with some observers or analysts is the price level at which these people are going to be willing to sell their silver back into the market. And these are many cases what we call stackers, silver stackers. And they're adamant about buying and holding onto their silver. They're not prepared to let go. Many of them will not let go at any price. But I'm willing to admit that you will gradually get high enough prices that will have them sell their silver back into the market and help provide supply. But I don't think it's at $33 or $35 or even $38. I think it's going to be a lot closer to $45, $50, $60 and $70 that we're going to see that supply come to market. And that speaks to your question, which was what that's going to do for silver. Well, I believe that we will get this demand met to some extent at least, not fully probably, but to some extent it'll be met, but at much, much higher silver prices. And that's where silver needs to go if you look at these structural deficits, because these secondary inventories are down about 70% over the last four years. And there's no sign of that ending. In fact, the Silver Institute themselves have said that, that was I think in this year's annual silver survey, they said that they thought that we're going to see the structural deficits continue for at least the next five years, and that we would probably see new record deficits being set along the way, because mine supply has just been completely incapable of bringing out any meaningful new growth to silver. We peaked in 2016 at 900 million ounces of silver from mining. Today, we're at 835 million ounces, and yet we're facing bigger deficits than we've ever seen. So, it's tough for the industry, but it's fantastic for investors. And we talked about the outflows from the ETFs. How much of this do you think is from maybe big money really taking silver off the exchanges and hoarding it themselves versus just industry needing silver to make products? So, that's a good question. I think that my feeling is at least for the most part, since the inventory started to come down from early 2021 in silver ETFs, I think that most of that was probably the big industrial consumers, they had to get it. They were able to get some of it off of the exchanges. And there might have been some private inventories that we can't necessarily track, we're able to flip it and sell it to industry. But I do think industry was consuming most of that. I'm not sure that there were that many private investors necessarily turning in their units of silver ETFs to get the physical silver. There probably was some of that, especially if they wanted to get significant amounts, because that was certainly one way to do it. But it's interesting to see that the silver that's held by ETFs bottomed towards the end of last year. And we've started to see that climb again. So, the total, the peak in silver held in silver ETFs globally was about 1.2 billion ounces. It bottomed around 900-950 million ounces I'm going to say towards the end of last year. We've seen that start to climb again. In fact, I like to look at the numbers from SLV ETF, which is the world's largest ETF. It's very significant. It carries about half of all of the silver worldwide in terms of ETFs. And so, we saw that go through some interesting gyrations over the last couple of years. I'm actually looking at a chart of it right now. And interestingly, it bottomed right around, I'm going to say, June of last year, around 410 million ounces. It quickly ran up to about 480 million ounces. And then interestingly enough, before that, by the way, from early 2021, it just kept falling, falling, falling, falling from about 500 million ounces to about 400 million ounces. So, about 100 million ounces got sort of sucked out of SLV alone. As I say, it started to rise through the second half of last year, peaked around November or so, quickly dropped off. Now, what I find interesting about that is, if you think about the timing, that's when we started to hear about things like, that was right after the election in the US. That was when we started hearing about the possibility of tariffs. Nobody knew for sure on what kinds of commodities or other things that these tariffs could apply. And there was concern. So, a lot of silver flowed into the US. And you see a similar sort of sell-off in the silver holdings of SLV in the fall of last year. And that bottomed right around the beginning of February. So, right around after Trump was actually inaugurated. And then we started talking more about these tariffs. There was some clarity, I think, shortly after that. But then the holdings in SLV ETF have absolutely soared again. From there, they were 430 million ounces at that point. And today, we're well above 480 million ounces. So, the silver holdings, the physical silver held at SLV does not move that in as much lockstep as the silver price itself. But it's interesting if you look at what goes on macroeconomically, and you look at the silver held in that ETF, you get some clues as to what's going on and why you might have significant amounts flowing in and significant amounts flowing out and that cycle sort of repeating. But we're certainly clearly in a new upward trend in terms of ounces held by SLV since the middle of last year. So, over the past year or so. Now, what about the safe haven demand? I know a lot of people go to gold when people think about inflation, right? There's this whole struggle between Trump and the Fed right now. And the possibility of Trump appointing kind of a more dovish Fed chairman in the near future. So, what is your perspective on all of that and how inflation could impact safe haven demand for silver and not just gold? Yeah, so that's interesting. If you look at the forecast for investment demand of physical silver, I'm looking at the numbers from the Silver Institute again, and they see a little bit of growth, sort of moderate growth over last year. It was 190 million ounces of coin and bar demand. They see it at 204 million ounces for 2025. I think that's actually going to be, once again, an underestimate. That's only 7% growth. I think that if you look at different places like India, China, Turkey, Egypt, and then if you look at even the West, the amount that there's been of sales of physical silver at places like Costco, Walmart, and so on, I think that we're going to see that number is going to turn out to be much too low, about 204 million ounces going to physical investment this year. What's interesting too is that if you, because the way the Silver Institute presents their numbers, they show total supply and total demand. However, the investment of silver that goes into ETFs is shown outside of those two numbers in terms of the balance. If you exclude silver flowing into silver ETFs, then the deficit, the structural deficit that they're forecasting for 2025 is going to be 117 million ounces. However, and I think frankly that it's a little unfair to not include the silver that goes into ETFs because by the same token, silver that gets purchased physically as opposed to buying ETFs, their argument is that that silver is not consumed and that silver can easily flow back to the market to be consumed if necessary or whatever. Well, you can say the same thing for physical silver. It's not consumed if it's bought for investment purposes. It's purchased and that could easily flow back. So, I feel it's more fair to include silver that goes into silver ETFs in terms of overall demand. So, they think that that's going to grow pretty significantly. They said it was 60 million ounces last year. They think it's going to be 70 million ounces this year. Again, I think that's going to be an underestimate. But here's the really interesting part. If you leave out silver in silver ETFs, then as I was saying before, your deficit for 2025 is forecast at 117 million ounces. But if you include the silver that's going to flow into silver ETFs for the forecast, your deficit is 187 million ounces. And that is a much, much smaller drop than is forecast when you exclude it in terms of the deficit. In other words, the deficit will be almost the same as last year if you include silver flowing to silver ETFs. Now, there's a lot of numbers and facts and figures being moved around there and it might get a little confusing. But let's just kind of keep it at this to summarize. The deficit expected for 2025 should be 117 million ounces, which is less than last year. But if you include silver flowing into silver ETFs, the deficit is expected to be very close to last year's. So, I think it's very significant and I think that it's going to have impact. And I also think that their estimates are too low in terms of not being sort of fair or aggressive enough in terms of the investment demand for silver. Think about this. We're close to all-time highs in gold. Gold is arguably, I suppose, there's different ways you can look at it, but it's not as cheap as it was. I would still consider it cheap, but it's not as cheap as it was. And yet, silver is still very cheap. And if you look at the gold-silver ratio, there's no doubt on that basis, it's still very cheap. You see gold start to take out $3,500 and $4,000 in terms of the psychological levels. People will really start to pay a lot more attention and they're going to say, you know, I'm getting one ounce of gold for $4,000, whereas I can get 40 ounces of silver for the same price. I'm not even sure if my math is right there, but it's 100 to 1. So, I think it's something like that. And they're going to start to ask themselves, if silver is at, you know, if we make it easy, $4,000 versus $40 for an ounce of silver. Sorry, it's 100 ounces of silver for one ounce of gold at that point. And so, people are going to say, you know what, why don't I just buy some silver? And I don't even have to buy a full ounce, like I would have to, you don't have to buy a full ounce of gold, but it's a lot more common. Anyways, you're getting arguably a lot more for your money. And I think that that is going to drive a lot more buying silver as well. Yeah. I mean, for the retail public, it is crazy. Sometimes, you know, when I have clients, maybe spending 10,000, which was, you know, in the past, a pretty decent purchase for the average person, but it's three ounces of gold now. I mean, it's just crazy. You just get three coins for $10,000. So, I think that that's a psychological moment for a lot of people of, you know, I should just go with silver at the time. And that's what we've seen throughout history is then silver typically outperforms. And we've seen kind of mixed performance over the last few years between gold and silver, silver taking the lead or gold taking the lead here. But going forward, if the general public is coming in, it seems like silver would be outperforming. I do believe that. Yes. And we've seen that historically multiple times. And I think it's the last seven out of nine precious metals bull markets, and you can measure them different ways. You know, they could be secular, they could be cyclical bull markets, but seven out of the nine last bull markets, silver outperformed gold. Admittedly, it did it more in sort of the latter half of those bull markets. So, it tends to sort of catch up and then outpace gold as it runs up, you know, sort of later in that bull cycle or secular market, but it almost invariably does outperform. And, you know, I wouldn't expect it to be necessarily different this time, once again. Well, Peter Kraut, we really appreciate your time today, as always. If our viewers are interested in learning more, tell us a bit about your work and where they can find you. Thanks. So, I'm pretty active on X, the former Twitter. I'm also on LinkedIn, so people can connect there. I publish a paid newsletter called Silver Stock Investor, which is published weekly, and recently launched a free letter that covers quite a few less stocks. This is all mining stocks, almost essentially, called Silver Advisor. So, if you go to thegoldadvisor.com slash registration, people can sign up there for Silver Advisor. And then, you know, if someone's more or less new to the silver space and really wants to get a good overview, I think one great way is to read my book, The Great Silver Bowl, which I published three years ago. And that really gives you a macroeconomic perspective, the role of silver throughout history, what the drivers are, how to invest in it, and how to take advantage and build a silver portfolio. Well, Peter, once again, it's been a pleasure to speak to you. We've been tracking this with you since silver was 22 bucks and probably even lower. So, it's been a wild ride and hopefully a continued wild ride from here. So, we'll have to have you back on soon as we see the story unfold. Thank you so much and God bless. Thank you so much, Elijah. Cheers. This is Kaiser Johnson with Liberty and Finance, and these are the Miles Franklin Weekly Specials for August 11th through August 18th, 2025, while supplies last. First this week, one ounce assorted silver rounds are just $1.49 over spot per ounce. Next, 10 ounce silver PAMP bars are just $2.99 over spot per ounce. 90% silver assorted U.S. half dollars are just $0.99 over spot per ounce. MS64 gold U.S. St. Gauden $20 coins are just $180 over melt per coin. One ounce gold RAND refinery bars are only $65 over spot per ounce. And finally, one tenth ounce platinum UK Britannia are just $34 over melt per coin. To order our specials or any of the many other options we have available, call us at 1-888-81-LIBERTY. That's 1-888-815-4237. We're available after hours and on weekends, and we look forward to speaking with you.