Is Silver’s Bull Market Over?

January 3, 2014

With a nearly 65% decline you could be forgiven for thinking that the best run is behind the white metal. I have to admit the price action has been discouraging. It is one thing to be down over 60%- after all, we saw silver decline by this much in 2008, but that decline only took about 8 months—whereas this decline has taken over 2 and a half years.

Beneath the surface, however, certain events in 2013 gave silver investors signs of hope. The surge of silver into India—with imports bumping up against 2008 highs- is just one of several positive factors for silver. Following India’s lead, we now hear that Turkey is importing silver at its fastest pace since 1999. Although the final numbers will not be in for a while, most analysts felt that solar demand increased in 2013, which is just one more reason for the white metal to move higher.

And then we have all of the other reasons for silver to continue its upward climb, as we head into 2014: new ETFS, Chinese demand, solar industrial demand, higher inflation, a Federal Reserve who might not be in charge of the world, a popping equity market, declining mine supply, increase jewelry demand or overall world demand from the growing emerging world—any one of these things could be the catalyst to send us higher again.

Many analysts in the financial community, working in the paper world of broker dealers, Wall Street banking houses, or hedge funds, are all too quick to call an end to the bull market in precious metals, as well as the to the bear market in equities. Many analysts are now trumpeting a new “secular bull market” in stocks, still high on the astounding gains of 2013. These same analysts look at the ability of the silver futures market to control the price and believe that the paper pushers will always be able to knock the price of silver lower in the years ahead.

But analysts who only focus on silver as a paper asset underestimate the demand for silver as a real asset from millions around the world. And unlike the last bull market in silver—from 1963 to 1980—many, many more people can own physical silver. Silver as an investment was more or less impossible for people in China, the former Soviet Union, and many parts of Eastern Europe—just to list three large parts of the globe- in the 1960s and 1907s. It is not an exaggeration to say that the silver supply has by far lagged the growth not just of people on this planet, but more importantly of investors on this planet who can now access silver in some form.

And clearly, someone this year was in fact interested in acquiring tangible assets and alternative currencies. Ask any high end art collector, or anyone in the jewelry or gemstone business, and they will tell you all sorts of stories of very strong demand. I also can’t leave out bitcoin in this regard, which went up something like 1,000 percent this year alone. The debate regarding what is and what is not a currency is an important one, even if you believe as I do that bitcoin is a strategy by certain elites to shift demand for real private wealth (like gold and silver) into an “accepted” currency that can be monitored by the state- or at least shut down with an internet kill switch.

Nonetheless, the change toward hedges, toward alternative forms of wealth can be seen in many places, and I would not let the paper pushers discourage you when they trash the paper or electronic price of silver.

Finally, the whole idea that we can constantly increase silver mine supply is another idea that is often touted by those living in the paper wealth paradigm. Resources to them exist in nearly limitless quantities and we can always rely upon new technologies to drill deeper and move ever larger quantities of dirt to find this shiny white stuff called silver. Likewise, these same analysts assume that oil can be easily found in enough quantities to satiate global demand, ignoring the fact that the price of oil nonetheless inched all that much closer to its 2008 all time last year, with an annual average in 2013 of around 92 dollars a barrel. The assumption that energy will allow for miners to continue to push lower on the ratio of metal to rock out there is one of many that will likely be proven wrong in the years ahead. And I haven’t even talked about strikes at mines, wars, or other social or political impediments that can retard the growth of silver mine supply. Throughout history, the growth in silver output has stagnated at times for centuries—for us, since the 1940s, silver mine supply has steadily increased. Might we be at a tipping point, where we finally see a peak in silver, if not for a century, at least for decades?

Let me remind you in a world of infinite electronic “money” that there is less than a third of an ounce of silver per person on the planet (current cost of 7 dollars).  In a world where debt doesn’t seem to matter, where paper appears to be king, you might want to hedge your bets if you wonder how long the paper party can continue.



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Ryan Jordan currently teaches U.S history at the University of San Diego. He has previously taught at UC San Diego, Lafayette College, and Princeton University, where he received a Ph.D in 2004. His book, "Silver- The People's Metal," published in 2012, recounts the past, present, and future of the silver market.  Visit Ryan's blog:

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