WEBVTT 00:00:00.000 --> 00:00:02.339 Welcome back to the deep dive. Anyone watching 00:00:02.339 --> 00:00:03.919 commodities this year? Well, you know, we have 00:00:03.919 --> 00:00:07.000 to talk silver. It's just been on an absolute 00:00:07.000 --> 00:00:11.320 tear through 2025. I mean, surging past all expectations, 00:00:11.560 --> 00:00:13.699 making massive headlines. Yeah, it really has. 00:00:13.759 --> 00:00:17.239 And this isn't just a momentary blip. It feels 00:00:17.239 --> 00:00:19.920 like a real fundamental shift in the physical 00:00:19.920 --> 00:00:22.980 market. OK, let's unpack this. Our goal today 00:00:22.980 --> 00:00:25.719 is to figure out why. Sources are pointing towards 00:00:25.719 --> 00:00:29.059 this complex interplay, right? Structural supply 00:00:29.059 --> 00:00:31.539 deficits, huge industrial demand, and these crazy 00:00:31.539 --> 00:00:33.460 logistical challenges. We want to cut through 00:00:33.460 --> 00:00:35.939 the noise, get to the basics of silver's new 00:00:35.939 --> 00:00:38.219 reality. And I think that reality starts with 00:00:38.219 --> 00:00:41.020 silver's unique dual nature, doesn't it? For 00:00:41.020 --> 00:00:43.140 investors, yeah, it's often seen as a safe haven, 00:00:43.280 --> 00:00:45.439 maybe follows goal. Traditionally, yes. But for 00:00:45.439 --> 00:00:47.479 industry, it's absolutely critical. You said 00:00:47.479 --> 00:00:50.119 it, almost 60%, nearly 60 % of silver consumed 00:00:50.119 --> 00:00:53.939 in 2025 goes into industrial uses. Wow, 60 %! 00:00:53.420 --> 00:00:56.520 So this deep dive, it's really about what happens 00:00:56.520 --> 00:00:58.719 when that industrial engine and the investment 00:00:58.719 --> 00:01:01.299 side both fire up at exactly the same time. Right. 00:01:01.420 --> 00:01:04.439 That's the core conflict, isn't it? So our job 00:01:04.439 --> 00:01:07.540 here is to give you a clear, fact -based look, 00:01:07.959 --> 00:01:11.439 connecting these big global trends, especially 00:01:11.439 --> 00:01:14.780 this huge green energy push, with what's actually 00:01:14.780 --> 00:01:16.700 happening on the ground, the stress in the physical 00:01:16.700 --> 00:01:19.260 market. OK. So let's start there with that industrial 00:01:19.260 --> 00:01:21.439 engine. Where's all this demand coming from? 00:01:21.519 --> 00:01:24.359 Why is it picking up speed so, so fast? Well, 00:01:24.540 --> 00:01:27.159 the acceleration is pretty staggering, really, 00:01:27.420 --> 00:01:30.760 because silver is just indispensable for so many 00:01:30.760 --> 00:01:33.519 of these future -facing technologies. We're talking 00:01:33.519 --> 00:01:36.620 solar PV, obviously, is the big one, but also 00:01:36.620 --> 00:01:40.260 electric vehicles, advanced electronics, 5G infrastructure, 00:01:40.359 --> 00:01:43.060 even complex medical devices. Basically, if a 00:01:43.060 --> 00:01:45.700 technology needs top -tier electrical and thermal 00:01:45.700 --> 00:01:49.480 conductivity, It needs silver. And demand's strong 00:01:49.480 --> 00:01:51.340 across the board, but it really feels like solar 00:01:51.340 --> 00:01:54.200 is the one just warping the whole picture. It 00:01:54.200 --> 00:01:56.920 absolutely is. Solar PV demand for silver, it's 00:01:56.920 --> 00:01:59.819 growing consistently over 12 % annually right 00:01:59.819 --> 00:02:03.159 now. 12 % year on year. That's huge. It is. Yeah. 00:02:03.180 --> 00:02:04.939 And to really get a sense of the scale, just 00:02:04.939 --> 00:02:07.079 look at China. They're the powerhouse for solar 00:02:07.079 --> 00:02:10.780 manufacturing. In 2024 alone, they expanded their 00:02:10.780 --> 00:02:15.020 solar capacity by something like 45%. 45%. In 00:02:15.020 --> 00:02:17.969 one year. Yeah. That single year's expansion, 00:02:18.050 --> 00:02:22.050 it drove a massive, really measurable chunk of 00:02:22.050 --> 00:02:24.370 total global silver consumption. That's such 00:02:24.370 --> 00:02:26.750 a critical point, because you hear about the 00:02:26.750 --> 00:02:29.389 other side too, the efficiency gains. Manufacturers 00:02:29.389 --> 00:02:32.550 are always trying to use less silver per solar 00:02:32.550 --> 00:02:34.090 cell, right? Yeah. They're getting better at 00:02:34.090 --> 00:02:35.789 it. They are, definitely. And that's important, 00:02:35.969 --> 00:02:39.250 that thrifting. But when the whole industry is 00:02:39.250 --> 00:02:42.210 expanding by double digits, 45%, like in China's 00:02:42.210 --> 00:02:45.289 case, Those efficiency savings, they just get 00:02:45.289 --> 00:02:47.810 completely swamped by the sheer volume of new 00:02:47.810 --> 00:02:50.370 installations globally. The overall demand curve 00:02:50.370 --> 00:02:52.710 just keeps climbing regardless. OK, so massive 00:02:52.710 --> 00:02:55.229 industrial pull. But before we jump to supply, 00:02:55.509 --> 00:02:57.330 we have to touch on how investment demand makes 00:02:57.330 --> 00:02:59.870 this worse. It's not just industry needing silver 00:02:59.870 --> 00:03:02.389 to build things. Investors are also soaking up 00:03:02.389 --> 00:03:04.430 supply. That's absolutely right. If you look 00:03:04.430 --> 00:03:07.849 at the global silver backed ETPs, those exchange 00:03:07.849 --> 00:03:10.180 traded products. You have evolved funds. Exactly. 00:03:10.439 --> 00:03:13.659 In the first half of 2025, they saw a net inflows 00:03:13.659 --> 00:03:17.439 of around 95 million ounces. Now, this is really 00:03:17.439 --> 00:03:20.419 crucial for listeners to understand. EDPs let 00:03:20.419 --> 00:03:22.960 you invest in silver without handling bars, sure, 00:03:23.060 --> 00:03:26.139 but they still need real physical silver locked 00:03:26.139 --> 00:03:28.659 away in a vault somewhere to back those shares. 00:03:28.840 --> 00:03:31.180 So those 95 million ounces, they're now sitting 00:03:31.180 --> 00:03:34.590 in a vault secured. They're not available for 00:03:34.590 --> 00:03:37.349 a manufacturer who needs them next Tuesday for 00:03:37.349 --> 00:03:39.949 circuit boards or solar panels. Precisely. It 00:03:39.949 --> 00:03:42.250 directly shrinks what the industry calls the 00:03:42.250 --> 00:03:44.629 mobile silver supply, the stuff that's actually 00:03:44.629 --> 00:03:46.949 available for real world use. It's like a double 00:03:46.949 --> 00:03:49.030 whammy then. Pressure from industry, pressure 00:03:49.030 --> 00:03:51.210 from investors both pulling on the same limited 00:03:51.210 --> 00:03:54.310 pool. Exactly. OK, so if industrial demand is 00:03:54.310 --> 00:03:57.050 this powerful engine and investment is adding 00:03:57.050 --> 00:03:59.939 fuel. Where's the breakdown? Let's pivot to supply 00:03:59.939 --> 00:04:01.539 because this is where the structural problems 00:04:01.539 --> 00:04:03.879 really seem to be hitting the market hard Here's 00:04:03.879 --> 00:04:05.800 where it gets really interesting Yeah, this is 00:04:05.800 --> 00:04:09.740 key because the problem isn't really a lack of 00:04:09.740 --> 00:04:12.159 wanting to mine more silver with prices high. 00:04:12.159 --> 00:04:14.699 It's more fundamental It's a failure of the structure 00:04:14.699 --> 00:04:17.100 of silver mining itself. That's a really important 00:04:17.100 --> 00:04:20.040 distinction The biggest structural issue as our 00:04:20.040 --> 00:04:23.100 sources highlight is that silver is mostly a 00:04:23.100 --> 00:04:26.160 byproduct? Think about this. Only around 30 % 00:04:26.160 --> 00:04:29.000 of the world's silver comes from primary silver 00:04:29.000 --> 00:04:31.740 mines. Mines actually focused on silver. Right, 00:04:31.860 --> 00:04:35.040 which means the other 70%, the vast majority, 00:04:35.139 --> 00:04:37.680 it's just recovered alongside other metals when 00:04:37.680 --> 00:04:40.040 miners are primarily going after gold or copper 00:04:40.040 --> 00:04:43.040 or lead or zinc. And that has huge consequences, 00:04:43.060 --> 00:04:45.660 doesn't it? Like if silver prices jump 50 percent, 00:04:45.740 --> 00:04:47.980 a dedicated silver mine. OK, maybe they try to 00:04:47.980 --> 00:04:50.259 boost production. Maybe, yeah, if they can. But 00:04:50.259 --> 00:04:53.259 the huge copper mine, where silver is just, you 00:04:53.259 --> 00:04:55.300 know, a small bonus, they're only going to increase 00:04:55.300 --> 00:04:58.339 output if copper prices make sense. The silver 00:04:58.339 --> 00:05:00.660 price surge is almost irrelevant to their main 00:05:00.660 --> 00:05:02.720 business decision. Exactly right. That production 00:05:02.720 --> 00:05:05.480 structure, it severely limits how quickly global 00:05:05.480 --> 00:05:07.620 supply can actually respond just to high silver 00:05:07.620 --> 00:05:09.920 prices. It's not linear at all. And you see the 00:05:09.920 --> 00:05:12.069 result in the deficit numbers. Let's talk about 00:05:12.069 --> 00:05:14.110 that deficit because it really puts this price 00:05:14.110 --> 00:05:16.910 surge into context. The market's been in a structural 00:05:16.910 --> 00:05:20.209 deficit every single year since 2021. This isn't 00:05:20.209 --> 00:05:23.629 just a blip. It's systemic. Supply just hasn't 00:05:23.629 --> 00:05:26.490 kept up with demand year after year. And that 00:05:26.490 --> 00:05:30.029 shortfall, cumulatively, is now getting close 00:05:30.029 --> 00:05:34.420 to 800 million ounces. Wow. just to put that 00:05:34.420 --> 00:05:37.180 in perspective, total annual global mine production. 00:05:37.459 --> 00:05:39.839 It's somewhere around maybe 850 million ounces 00:05:39.839 --> 00:05:41.879 currently. So we've basically burned through 00:05:41.879 --> 00:05:45.040 almost an entire year's worth of global mine 00:05:45.040 --> 00:05:47.259 supply over the last few years because of these 00:05:47.259 --> 00:05:49.220 persistent deficits. That's the scale of it, 00:05:49.220 --> 00:05:51.740 yeah. It's a huge hole in available inventory 00:05:51.740 --> 00:05:53.879 that you just can't fill quickly. And on top 00:05:53.879 --> 00:05:56.040 of that structural byproduct issue, you've got 00:05:56.040 --> 00:05:58.579 all the usual mining headaches, right? Chronic 00:05:58.579 --> 00:06:00.699 underinvestment in finding and developing new 00:06:00.699 --> 00:06:03.339 mines that takes... years, a decade sometime. 00:06:03.699 --> 00:06:06.339 Long lead times. Declining ore grades in existing 00:06:06.339 --> 00:06:08.199 mines, meaning you have to dig up and process 00:06:08.199 --> 00:06:10.519 more rock at higher cost just to get the same 00:06:10.519 --> 00:06:13.180 amount of silver out. Plus, tougher environmental 00:06:13.180 --> 00:06:14.980 rules. It's like a perfect storm holding back 00:06:14.980 --> 00:06:17.740 new supply. It really is. What's fascinating 00:06:17.740 --> 00:06:20.500 here is how this fundamental imbalance, these 00:06:20.500 --> 00:06:23.540 structural supply issues, crashing against massive 00:06:23.540 --> 00:06:26.480 demand, how it actually shows up in the day to 00:06:26.480 --> 00:06:29.000 day market mechanics. You can almost, well, you 00:06:29.000 --> 00:06:30.879 can see the strain in the market data. You're 00:06:30.879 --> 00:06:32.879 talking about things like backwardation, right? 00:06:33.519 --> 00:06:36.060 That's a bit technical, but it's a really critical 00:06:36.060 --> 00:06:37.980 distress signal people should know about. How 00:06:37.980 --> 00:06:41.579 can we simplify that? OK, so backwardation. Basically, 00:06:42.180 --> 00:06:45.750 it happens when The spot price, the price for 00:06:45.750 --> 00:06:48.129 getting silver delivered right now is higher 00:06:48.129 --> 00:06:50.889 than the futures price for delivery say three 00:06:50.889 --> 00:06:53.689 or six months down the road. Think of it like. 00:06:54.459 --> 00:06:56.800 a sudden local gas shortage. You might be willing 00:06:56.800 --> 00:06:58.800 to pay an extra dollar per gallon today just 00:06:58.800 --> 00:07:01.199 to fill your tank immediately because you're 00:07:01.199 --> 00:07:03.180 where you might not find gas tomorrow at any 00:07:03.180 --> 00:07:06.220 price. Got it. So the fact we're seeing persistent 00:07:06.220 --> 00:07:08.920 backwardation in silver, that tells you there's 00:07:08.920 --> 00:07:11.480 an acute physical shortage. Buyers desperately 00:07:11.480 --> 00:07:13.560 need the metal now and are paying a premium for 00:07:13.560 --> 00:07:16.439 that immediate access. Exactly. And that pain, 00:07:16.439 --> 00:07:18.740 it shows up in other ways, too, like the cost 00:07:18.740 --> 00:07:21.879 to borrow physical silver, the lease rates. They've 00:07:21.879 --> 00:07:24.639 surged. especially in London, which is a major 00:07:24.639 --> 00:07:27.339 physical hub. What does that surge mean? It basically 00:07:27.339 --> 00:07:30.079 reflects a queue. A line of industrial buyers, 00:07:30.199 --> 00:07:33.060 maybe investors too, all scrambling, fighting 00:07:33.060 --> 00:07:35.519 for access to the limited physical bars available 00:07:35.519 --> 00:07:38.259 to borrow. It probably also widens the bid ask 00:07:38.259 --> 00:07:41.240 spreads too, I imagine. Makes trading more expensive. 00:07:41.399 --> 00:07:43.980 Definitely. When market makers get nervous about 00:07:43.980 --> 00:07:45.819 whether they can actually find the physical metal 00:07:45.819 --> 00:07:48.399 to deliver if someone buys from them, they charge 00:07:48.399 --> 00:07:51.100 a bigger risk premium. Makes the market jittery. 00:07:51.240 --> 00:07:53.800 more costly to transact. And then there are the 00:07:53.800 --> 00:07:55.680 pure logistics you mentioned earlier. Silver 00:07:55.680 --> 00:07:58.540 bars, they're heavy, bulky. Yeah, not easy to 00:07:58.540 --> 00:08:01.079 move around quickly or cheaply. And this combination 00:08:01.079 --> 00:08:03.759 of strong demand in specific places plus tight 00:08:03.759 --> 00:08:06.139 inventories in vaults, especially London, you 00:08:06.139 --> 00:08:08.600 mentioned it's led to something unusual. Well, 00:08:08.860 --> 00:08:11.240 sources are indicating a significant uptick in 00:08:11.240 --> 00:08:13.720 using expensive air freight to move silver between 00:08:13.720 --> 00:08:15.800 major hubs like between New York and London. 00:08:16.029 --> 00:08:18.649 Air freight for silver bars. That sounds incredibly 00:08:18.649 --> 00:08:21.009 expensive. Like the financial market version 00:08:21.009 --> 00:08:23.670 of overnighting a critical factory part on a 00:08:23.670 --> 00:08:27.250 private jet. Pretty much. The cost is huge. But 00:08:27.250 --> 00:08:28.910 the fact that someone is willing to pay that 00:08:28.910 --> 00:08:31.170 premium for speed tells you everything about 00:08:31.170 --> 00:08:34.070 how critical and how short physical supply must 00:08:34.070 --> 00:08:36.289 be for certain users right now. Let's just quickly 00:08:36.289 --> 00:08:39.049 circle back to that paper versus physical link. 00:08:39.389 --> 00:08:42.149 Those ETPs locking up supply. Right. It's crucial 00:08:42.149 --> 00:08:44.409 to remember it's often a zero sum game at the 00:08:44.409 --> 00:08:47.840 margin. every single ounce bought by an investor 00:08:47.840 --> 00:08:50.620 and allocated to back an ETP share in a vault. 00:08:51.379 --> 00:08:53.240 That's literally an ounce that cannot be bought 00:08:53.240 --> 00:08:56.059 by a solar manufacturer or an EV company that 00:08:56.059 --> 00:08:58.139 needs it for production. It's a direct tug of 00:08:58.139 --> 00:09:00.139 war between the investment world and the industrial 00:09:00.139 --> 00:09:03.539 world fighting over the same shrinking pile of 00:09:03.539 --> 00:09:06.350 physical bars. Precisely. Okay, moving on slightly. 00:09:06.649 --> 00:09:08.730 We should also recognize these shortages, this 00:09:08.730 --> 00:09:11.049 tightness. It isn't perfectly uniform across 00:09:11.049 --> 00:09:13.169 the globe, right? Regional demand plays a big 00:09:13.169 --> 00:09:16.169 role. Oh, absolutely. Take India. Huge silver 00:09:16.169 --> 00:09:18.490 consumer. One of the world's largest. And their 00:09:18.490 --> 00:09:21.669 demand is very seasonal spikes around festivals, 00:09:22.049 --> 00:09:23.850 wedding seasons. Right. That's seasonal buying. 00:09:24.110 --> 00:09:26.789 It drives up local premiums inside India. And 00:09:26.789 --> 00:09:30.480 it often literally pulls metal. away from global 00:09:30.480 --> 00:09:33.360 hubs like London or New York to satisfy that 00:09:33.360 --> 00:09:35.879 specific regional demand, can divert supply streams. 00:09:36.139 --> 00:09:38.559 And tying back to the main demand engine China, 00:09:38.980 --> 00:09:41.159 their relentless industrial growth, particularly 00:09:41.159 --> 00:09:43.580 in solar. Yeah, that 45 percent installation 00:09:43.580 --> 00:09:45.659 growth we talked about. That underpins this sort 00:09:45.659 --> 00:09:47.820 of baseline level of global consumption that 00:09:47.820 --> 00:09:50.679 just isn't going away. It kind of locks in this 00:09:50.679 --> 00:09:52.960 scarcity dynamic for the foreseeable future, 00:09:53.080 --> 00:09:55.659 doesn't it? It really does. If we connect this 00:09:55.659 --> 00:09:58.799 to the bigger picture. given the structural deficit, 00:09:59.059 --> 00:10:02.159 given the demand driven by green energy, it strongly 00:10:02.159 --> 00:10:04.340 suggests this volatility, this price pressure 00:10:04.340 --> 00:10:07.240 isn't just a temporary thing, it's likely to 00:10:07.240 --> 00:10:09.600 continue. So the key question for listeners is, 00:10:09.799 --> 00:10:12.389 okay. Beyond the headline price, what are the 00:10:12.389 --> 00:10:14.389 specific signals you should track? Right. We've 00:10:14.389 --> 00:10:16.429 laid out the concepts. Now let's give people 00:10:16.429 --> 00:10:18.690 the key indicators to watch. You need to monitor 00:10:18.690 --> 00:10:21.009 the physical market's health, not just futures 00:10:21.009 --> 00:10:24.570 prices. Exactly. First, I'd say watch those lease 00:10:24.570 --> 00:10:26.750 rates that cost to borrow silver. High rates 00:10:26.750 --> 00:10:29.710 mean high stress. OK. Lease rates. Number one. 00:10:29.970 --> 00:10:32.870 Second, look for that persistent backwardation 00:10:32.870 --> 00:10:36.690 in the spot versus futures spread. If spots stay 00:10:36.690 --> 00:10:39.129 stubbornly above futures, the market is screaming 00:10:39.129 --> 00:10:42.639 immediate scarcity. Got it. Backwardation. Third, 00:10:43.179 --> 00:10:45.519 keep an eye on physical inventory levels in the 00:10:45.519 --> 00:10:48.879 major approved vaults, like COMEX and LBMA vaults. 00:10:49.139 --> 00:10:51.519 Are they drawing down consistently? Inventory 00:10:51.519 --> 00:10:53.799 levels, okay. And finally, track those ETF flows 00:10:53.799 --> 00:10:56.580 we mentioned. Continued strong inflows mean more 00:10:56.580 --> 00:10:58.720 physical metals being taken off the table, essentially. 00:10:58.820 --> 00:11:01.419 So lease rates, backwardation, inventory levels, 00:11:01.620 --> 00:11:03.820 and ETF inflows, those are the kind of real -time 00:11:03.820 --> 00:11:05.779 gauges of the physical market's pulse. Those 00:11:05.779 --> 00:11:07.820 are the key ones, yeah. So what does this all 00:11:07.820 --> 00:11:10.500 mean? At the end of the day, this big silver 00:11:10.500 --> 00:11:13.919 price surge in 2025, it looks like it's fundamentally 00:11:13.919 --> 00:11:16.700 a repricing. The market is finally acknowledging 00:11:16.700 --> 00:11:19.059 silver's absolutely critical role, especially 00:11:19.059 --> 00:11:21.700 in this new green economy. It reflects those 00:11:21.700 --> 00:11:24.659 deep structural imbalances we talked about, the 00:11:24.659 --> 00:11:26.779 chronic supply deficits hitting that wall of 00:11:26.779 --> 00:11:29.340 relentless tech -driven demand growth. Yeah, 00:11:29.440 --> 00:11:31.379 and that central conflict we discussed. It's 00:11:31.379 --> 00:11:33.700 not going away easily. Manufacturers, yes, they're 00:11:33.700 --> 00:11:35.899 getting smarter using less silver per unit. The 00:11:35.899 --> 00:11:38.600 thrifting, yeah. But the overall scale of growth 00:11:38.600 --> 00:11:42.259 in solar, in EVs, it's just so explosive that 00:11:42.259 --> 00:11:44.600 total silver demand keeps climbing anyway, year 00:11:44.600 --> 00:11:47.159 after year. Which leads us to the final thought. 00:11:47.340 --> 00:11:49.340 Right, so here's the provocative question maybe 00:11:49.340 --> 00:11:52.440 for you to think about. How quickly can substitution 00:11:52.440 --> 00:11:55.700 technologies, finding other materials, or perhaps 00:11:55.700 --> 00:11:58.100 more realistically in the near term, how quickly 00:11:58.100 --> 00:12:00.620 can recycling efforts really scale up and become 00:12:00.620 --> 00:12:04.179 economically viable? Because until they do, this 00:12:04.179 --> 00:12:06.779 structural supply deficit could genuinely start 00:12:06.779 --> 00:12:09.019 to impact the pace of the global green energy 00:12:09.019 --> 00:12:11.659 transition itself. Silver is essential for it, 00:12:11.720 --> 00:12:14.360 and the scarcity seems very real and very structural. 00:12:14.899 --> 00:12:17.720 That's a fascinating and slightly worrying thought 00:12:17.720 --> 00:12:19.860 to end on connecting the dots between commodity 00:12:19.860 --> 00:12:23.139 markets and our big climate goals. OK. Remember, 00:12:23.179 --> 00:12:26.139 everyone, this deep dive, it's purely for information 00:12:26.139 --> 00:12:28.500 to help you engage in informed research. It's 00:12:28.500 --> 00:12:30.580 definitely not investment advice. Please do your 00:12:30.580 --> 00:12:32.639 own homework. Absolutely. Do your own due diligence. 00:12:32.799 --> 00:12:34.820 Keep an eye on those key indicators we mentioned. 00:12:35.179 --> 00:12:37.139 And thank you for diving deep with us today. 00:12:37.240 --> 00:12:37.899 We'll catch you next time.