Why can’t SLV source enough silver?

The availability of silver is not the cause of the issue. It’s the availability of silver at current prices…

Samuel Briggs via Kinesis

Why can’t SLV source enough silver?

Andrew Maguire explains why SLV can’t source enough silver bars to meet demand.

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Andrew Maguire believes significantly underpriced silver is behind BlackRock’s admission of potential difficulties in acquiring sufficient silver for iShares Silver Trust SLV).

What’s happening with SLV?

The SLV prospectus now reads that BlackRock “may not be able to readily acquire sufficient amounts of silver,” required for the creation-redemption process behind the silver ETF.

From a wholesale perspective, the statement translates as “SLV is unable to source enough wholesale 1000 oz silver bars to fill its baskets,” according to Andrew Maguire. As Andrew Maguire sees it, the availability of silver is not the cause of the issue. The precious metals expert attributes the shortage to the lack of “availability of silver at current diluted prices.”

What’s the wholesale price of silver?

According to the wholesaler, there are “ample wholesale 1000 oz silver bars to supply to really fulfil every incoming SLV by order,” however, “the price would have to be significantly higher.”

The precious metals expert believes that “every single ounce of SLV demanded could be easily fulfilled in allocated form at a true supply demand global wholesale offer price.” Andrew Maguire added, “if the price of silver was allowed to reflect true global supply demand fundamentals thousands of tons of physical silver could flow into the SLV.”

However, the precious metals expert estimates that meeting current demand would require a silver price of “at least $30 – $40 per ounce.”

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The opinions expressed in this publication are those of Andrew Maguire and do not purport to reflect the official policy or position of Kinesis.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.