Chris Marcus thinks something is fishy about the silver market. It’s not just that the the US Mint has been unable to meet physical demand, or how the reddit community r/wallstreetbeats tried to short silver in the same way they did with Gamestop in January 2020. Or that inflation hasn’t moved the needle on silver in the past few decades, in the same way it has for every other good or resource on Earth. It’s a combination of all those factors, and then some.
“These days, not even [precious metals enthusiast] Eric Sprott could buy $5 million worth of silver,” says Marcus, the author of The Big Silver Short: How The Wall Street Banks Have Left The Silver Market In Place For The Short-Squeeze Of A Lifetime. “I’ve been talking to retail and wholesale bullion dealers and they are all telling me about delays in getting silver bars. Retail, sure, that’s understandable this month, but wholesale?! That’s unheard of.”
Marcus, who also runs Arcadia Economics, says he hasn’t seen this level of panic buying in ages, and he likens the silver frenzy now to what was explained in his favourite film The Big Short. “Every time I watch that now, I see it in a new light. Look at how those bonds were going back to the banks but they could make up whatever price they wanted for insurance contracts, even if the bonds were on fire. I’m seeing something similar here with silver.”
On why the price of silver hasn’t moved significantly due to inflation, Marcus notes that “something is not right when the silver price is half of its 2011 high and half of its 1980 high before debt was even a trillion dollars in the US and before people were silly enough to call it quantitative easing. How can the silver price go down 10 per cent when on a single day SLV saw panic buying?”
In an article where he was interviewed about his view on silver after this panic buying, Marcus discusses how in late January, 34 million ounces were added to SLV, an exchange-traded fund that aims to reflect the price of silver. That was followed by 20 million ounces on February 1 and 61 million ounces on February 3.
Comparing those numbers to silver supply and demand statistics from the Silver Institute, Marcus believed he doesn’t know anyone who thinks it’s possible for that amount of metal to be added to SLV.
“It hit me last night — the only way that we know if there’s anything in there is based on the word of JPMorgan, who’s the custodian of SLV who just got fined a billion dollars for manipulating … the precious metals — and Treasury markets I might add — hundreds of thousands of times,” he says.
Marcus thus encouraged silver-focused investors to be cautious.
As we noted in our previous post, now is not the time to rush into precious metals investment without first understanding its nuanced landscape. Consulting a reputable gold seller such as GBS, who employ experienced precious-metals specialists, can provide investors with detailed information on the options available when seeking to get into silver.
As for projecting where the price of silver may go, Marcus can see it vaulting over $50 to $60 and perhaps even triple digits before coming down again. “That’s what happen when you stuff a beach ball under water for decades while hyperinflating currency at same time.”
He goes on to say his skepticism about markets today are influenced by his past work at bond rating agency Moody’s and seven years as an equity options trader for Susquehanna International Group on the American and New York Stock Exchanges.
“I left Wall Street because I saw how everything could be manipulated, could be undervalued.”
Because of this manipulation and complicated outlook on silver, potential investors would be wise to heed the advice of Max Smirnov, president of GBS: “Now is the time to educate people about bullion because folks are getting into it without knowing what they’re doing. They’re going to lose their shirts if they don’t learn about the market.”
GBS offers free bullion consultation to anyone in Canada interested in learning from the team’s precious-metals specialists. Get all the details about premiums, buying and selling silver and gold, terms, the latest silver news, and much more.