Egon von Greyerz On The Hidden Crisis Behind Silver’s Price Surge

In the following clip, Egon von Greyerz explains why the precious metals market has entered a fundamentally new and unprecedented phase.

One which is driven not by speculation or momentum trading, but by deep structural imbalances between physical supply and an unprecedented physical demand.

Persistent supply deficits in silver over several consecutive years, combined with rapidly rising industrial demand from sectors such as solar energy, electric vehicles, electronics and defense, have created a physical shortage in the last 5 years that paper markets can no longer mask.

At the same time, the volume of outstanding paper contracts in London and New York now vastly exceeds the amount of physical silver available for delivery.

Von Greyerz warns that this imbalance marks a critical turning point, as silver transitions away from a manipulated paper-based system into a genuinely physical market, where price is ultimately set by scarcity, not leverage. 

Watch Egon explain why manipulation fails when physical precious metals run out…

Here are some key excerpts from the full transcript: (emphasis ours)

…this is a fundamental change. Some viewers might remember the late 1970s when silver quickly climbed from a few dollars up to $50. This was primarily speculation by the Hunt Brothers.

[01:44.7] And of course, the market could quickly sell enough paper silver to crash the price. And it didn’t stay long at $50. This time, any selling that is attempted by bullion banks fails ,and we’ve seen many times being sold in the evening and, within a few hours, it’s back up again.

[02:06.0] And this has happened last week again. Friday evening was sold off and then quickly went up to $90. I think we’re quickly going to see $100 and more already in the Far East and in Australia, like the Perth Mint, selling now silver at over $100.

[02:25.0] So the price in London and in New York will have to follow. So what does that mean for the ordinary investors? Well, it clearly means that silver is just starting the move, and we are going to see, as I have stressed many times, we are going to see multiples of the current price.

[02:44.8] Will it correct? Of course, silver always corrects, but this is not a normal market because it’s now turned into a physical market, which is it should always be rather than the manipulation that we have seen in paper markets. [03:00.0] So physical demand has gone from 10% of production to now 50% in the last year. That is a massive increase in demand, obviously stemming from solar panels, electric cars, electrical products, electronic products and also of course from defence contracts.

[03:18.4] Every missile uses quite a lot of silver, and all other electronic products and weapons use a big amount of silver now. So the demand is there on the physical side, and the demand is there on the investment side, and the production just isn’t there.

To satisfy this demand, we’ve had deficits for the last five years.  Those deficits are going to increase. This is why there will be constant demand for silver, and it is probable in the next year or two that there’ll be failure in some markets. Whether that will be in the London market, and some bullion bank will go under. Whether that will be on Comex, we don’t know.

[03:53.9] But the risk is very high.

So it is obviously absolutely important for investors to hold nothing but physical silver, buy physical and hold it outside the banking system, not within the banking system. Don’t buy ETFs, don’t buy any futures, hold physical silver and keep it in a safe storage, in a safe vault like we do for clients, and keep it outside the banking system.

[04:19.7] Now, there are of course many other factors that influence the price of the metals. Gold is also going up, but as I have made clear for quite a while, silver will go twice as fast as gold in the coming years. Now the gold-silver ratio has gone from over 100 to about 50.

[04:36.4] Now the long-term ratio is probably going to be around the 15 level initially, but I wouldn’t be surprised to see even lower than that, that being a natural level. But now I think the demand is of such magnitude and the supply so minuscule.

…

Now I’m absolutely convinced we’ll see $10,000 for gold. What does that mean for silver? If you take the gold-silver ratio at 15, which is an historical quite important level, then you divide 10,000 by 15, you get 666.

[05:38.3] So, a minimum we would see with silver, in my view, is $666. 

…

But remember, you are not buying silver or gold for speculative purposes or to make money.

[08:16.2] You are buying it to protect your wealth against the total destruction of wealth that we’re going to see in the next few years. That is a destruction of paper wealth that is now, at levels which are unprecedented in history, because money printing has been unprecedented, and lending has been unprecedented.

[08:35.2] Countries will go bust, banks will go bust in America, in Europe. Whether it’s due to property market, whether it’s commercial markets, or people not being able to pay their loans, it doesn’t matter. Many banks will go under. Governments and central banks are going to print unlimited amounts of money, and therefore, the value of your dollar, your euro or your pound is going to collapse.

[08:58.6] And that would be reflected in a much higher gold price…