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  I'm Charlotte Mloud with investingnews.com and here today with me is Ted Butler. He's an independent analyst who writes for so many publications we will list them. The Engle We Trust report, Sound Money Report, Silver Adviser, and The Morgan Report. And hopefully that is all of them that I got correct. >> You got it perfectly correct, Charlotte. Thanks for having me. Nice to have you back. We're here at PDAC. We've made it essentially to the end of day two at this point. Hopefully, you've been out

and about. I've been stuck here. How has sentiment been feeling to you at the show? >> Well, it's actually been incredibly positive. I was here 2 years ago. That's the last time I was here. And I actually feel that the energy is more palpable. We're starting to see more uh generalists. We're seeing more institutions here. We've had conversations with quite considerably large hedge funds as well. And I feel the we're not by no means at the champagne bottle popping uh you know

blowoff top of this market yet, but we are no longer at the bargain basement prices that we saw maybe 2 3 years ago. So we're somewhere between those two extremes. I would still say that we're not even halfway yet. I do believe that when we think about where silver is and we can talk about uh that exact contextualization later, I think we're probably about a third or a quarter of the way through. >> I think that's essentially what I've been hearing from people in terms of

where we are in this move. And yes, let's let's take a look at silver. Let's hone in on that. It's been a while since we last spoke, so we need to catch up on a lot in silver. I was wondering if you could walk me through that move from $50 to past 100. It was below 50 the last time we talked. I know you were expecting triple digits, but perhaps not this soon. >> No, not this soon. Um, I'm obviously happy to see silver at these prices because ultimately the silver stock m

the silver mining companies at these these silver prices are making maybe 70 to 80% margins, right? Which is far better than even the best companies blue chip wise like Visa and Mastercard, right? So in that on that basis, I'm happy. But it's certainly been a rise fueled by different um aspects of silver silver demand. We've had industrial demand as the basis of that that silver demand almost like a price floor uh in in some sense and in my understanding that's going to maintain despite the

higher prices. Solar is is appearing to be resilient. I've had many conversations over the last few days that suggest that's the case. Of course, also we've had the investment demand and there's speculation um you know there's been arbitrage opportunities um from from the the differential in the price in China and and and in London. Um there's been uh spot price future prices dynamics that's influenced things. There's been backquidation. Um we we've seen a real um explosion I guess in

silver investment demand that's probably provoked this um scale of reaction and I would imagine some generalists have come in and fueled that as well. Um but a lot of this for me is is the response from five years of fundamental deficits. This was a a a bullish case that was grounded in fundamentals that has since been taken to a new level by speculative interests. But at the same time I maintain that we are still relatively early in how far this bull market could go. And the reason I believe that is if we look at

the 70s as a guide for today, the price of silver as a cumulative return from 1971 to 1980, we were around I think it's 400%. Right? Maybe even 300 and something percent. But we're only around 130% today on a cumulative return basis. And uh so I I'm talking from the 2024 breakout up until 2026 today. So we're roughly where I would say we're at the end of 1973 where silver was in the 70s and we're probably going to see a period of high level consolidation. I would imagine between maybe let's say 170 $100

and maybe $70 over the next few years. I actually do believe that we don't need higher silver prices. I don't want an explosion because it's not sustainable for the market. What I would like to see is the high level consolidation and I think that brings a lot of certainty to producers, certainty to the juniors and developers and um ultimately we will have that blowoff top but I don't think we're there yet. I think that's a few years away. >> Yes, I think that answers one of the

questions I was going to ask which is where you see the silver price going from here. So you're expecting some consolidation so we can all believe this is real. During that consolidation, do you anticipate spikes like we've seen this past January or or just, you know, more of a calm market? >> Silver is always volatile and uh volatility for me is is what makes silver such an opportunity an opportunity ultimately, right? And um you know, I don't expect to see that volatility decrease unfortunately. So,

if you don't like uh the the volatility, then maybe your stomach isn't right for the silver market. It's the devil's metal. We all know this. But at the same time, I think those who are prepared to wait for the opportunity um over the next the course of the next few years, they will be looking at a higher silver price because of the the backdrop that we've got here. Charlotte, it's it's obviously the US dollar is a is a is a fantastic part of that. Um and its ultimate demise and the way that Trump

is wanting to increase military spending and and ultimately that feeds into silver demand too. You know, I'll just take a a moment to talk about this that, you know, in 1943, the US war production board cited that silver produ silver demand from military applications alone would need to be 200 million ounces. That's the same as what solar panels consume today, which is 20% of the market, right? So you think about I'm not saying it's going to reach 200 million ounces again today, but you

think about with everything going on in Iran with not only the retaliation that that will propose from from China who and Russia who've condemned this move by the US to bomb Iran and you look at Taiwan that could potentially be a next phase of this conflict that you know ultimately uh plays out between these global powers that feeds into higher military demand and higher military uh spending sorry uh necessitates higher silver usage because silver is a is an industrial metal. It's the most

conductive metal in the world and so it's going to be used in these military applications. >> Any thoughts on replacement in this type of or substitution I should say in these types of applications? That's a a concern I've heard a little bit more about as the price goes up and I think you were mentioning you were having some conversations even here about that. >> Yes. And it absolutely does happen. Thrifting does happen in the solar panels and we do see more copper usage

happening. Right. But at the same time, copper is not as good as a as a material for solar panels as silver. It corrods quicker. So in that case, you may uh that the market may shift to copper, but then two, three years later, they might need to replace that copper because it's corroded. In which case, you would have been better off using the higher price silver in the first place because it saves you money in the long run. Now, it's that's just an example. So, so that's not exactly going to play out

like that, but it's it's an insight as in to say uh that that silver higher silver prices do not necessarily mean that industrial demand is going to fall because it's so important and so irreplaceable in in most of these applications that it maintains. >> Very very interesting. And I wonder if we can talk a little bit more about China's role in the silver market because one of the themes that I've been hearing a lot about is that of the metal moving essentially from west to east

because the demand there is so strong. How how significant is China right now? What role do you see it playing for silver moving forward? >> Yeah, China consumes so much silver. Um it's the biggest consumer and I think that's reflected in in the higher price over there because it's more important for the industry. Um it's using all things from solar to EVs to AI and different data center applications which we'll get more granular this year about in in the in goal with trust report

which comes out in May by the way and uh so for solar I think it has like 60% or 80% of the market. It's it's a massive influence and it will probably stay that way. You know EV roll out in China is far greater than it is in in the in the west in the US if you look at the the the numbers. Uh you look at companies like BYD um leading battery makers globally um you look at CL another Chinese company you know there's obviously Tesla on the US side but the Chinese companies dominate this space I

think they will continue to do so >> and what about the west I I know I just mentioned the metal is flowing from the west to China but we had talked about perhaps the $50 level being a time when people wake up and they they have a new interest in silver. Are we seeing that or to what extent are we seeing that over here? >> I think we are seeing it. I think that the the retail investor is starting to show more interest in silver and just certainly from the conversations that we've had on the floor today. Um I'm

seeing more younger faces, more retail investors, people who've come from AI, uh who who just actually weren't even aware of the case for silver a couple of years ago who've seen resources and they've been compelled by the investment case, right? And so on the ground it's it feels that way. In terms of ETF inflows, I think it's it's has started to pick up recently. Um but we've obviously had that big big rise and so I don't expect to see the increases maintain at that level of volume. Uh and

I think like I say that's why I'm calling for consolidation now in a somewhat conservative way. >> Right. And although you're expecting consolidation, I want to talk a little bit about silver's volatility because that is so important, especially if you're a new person coming in, you have to know that that is going to happen. And I wonder for you, so for example, at the end of January when we saw the big spike up in silver, how were you playing that? Is that something that you traded?

Did you take profits? What was your approach? >> So, uh, my physical silver holdings tend to say the same because I believe in the the overriding case for currency debasement. Uh what I will say is that the silver stocks that I I I wanted to hel hold um that was a moment to to realize that you know to to maybe take a few profits you know like just just trim right I'm not talking about this is over I know Rick Rule has has sold a lot of his silver stocks already me at 25 years old I have a totally different time

horizon right and and that really ultimately means that I have a different risk tolerance right so I'm I'm more prepared to hold silver stocks uh for the long run and and I think um in terms of silver you just have to be wary that you know we are elevated prices as I said I'm not expecting the price to go up um extremely much higher from here in the short term um but it but in January it was a reminder that yeah some people might want to rotate into gold at that time if if you have a a higher risk

tolerance right and uh and and actually a 50 to1 gold silver ratio which where it was was where it was at the time that's the average of maybe since uh 1900 uh sorry even even yeah 1900 and so we've gone from 90 to1 to 50 to1 and if you're saying that at that point silver was fairly valued relative to gold maybe it makes sense to to trade some of your silver into gold you know >> yeah I think this is a good reminder to personalize your approach and the other thing while we're talking about the

silver stocks we wanted to we said before we turned the camera on we want to talk about jurisdictional risk when it comes to the companies and Mexico is really in focus right now. So, a lot of I think a lot of people have told me today, well, you can't really be in the silver industry if you don't have Mexico exposure. So, how are you feeling about the company or the country right now? >> Yeah, I think it's really important to apply a nuance perspective. In other words, what happens in one state is not

necessarily going to impact a state that's hundreds of kilometers away. Um, we know there have been incidents that have happened there recently. We know there's been a rise in violence, but at the same time, the good quality management teams navigate that, you know, and if you look at the track records of great teams, uh, like I say, they they find ways to to um derisk and and the right companies do that. We cover those companies at the Silver Adviser and we hope that um that we trust in those management teams to

navigate that that those difficult periods. Um, but I think as as you mentioned, Charlotte, as a as a silver investor, with Mexico producing 25% of global silver production, you can't ignore Mexico. You can't put it on the back burner and say, "I'm going to I'm going to ignore it completely." You could, but you're probably going to limit your your upside. And I think that's the big thing with Mexico here. It's the riskreward. actually a lot of these companies which have nothing to do

with incidents that have happened in recent days um they have their share prices have have fallen off you know and that they're trading at a discount but I think to me that presents more of an opportunity to to ultimately um get at these companies at a discount to what they were trading at formally before certain incidents happened. >> Right. Right. They all essentially get painted with a a broad brush. >> Yes. Well, and while we're talking about jurisdiction, I believe you wanted to

mention this might be a little bit outside of silver, but opportunities in Latin America. So, what what is on your mind there? >> Well, I'm based down in Paraguay. I have been for a few months now. Um, what I'm seeing in Latin America right now on the on the ground is and in the political sphere is is actually a shift towards the right. Uh it began I guess with Malay a couple of years ago and he's introduced some really promining policies such as the RII act which ultimately um incentivizes investments

over $200 million in Argentina with tax breaks and FX incentives and so that kind of um opening of the doors to mining investment in in Latin America is happening and it's actually influencing um the the countries surrounding Argentina. So it began in Argentina but now last year we had Bolivia swing right, we had Chile swing right and actually that's again creating a lot of opportunities for particularly silver mining companies because Chile has uh although a lot of it's a byproduct of of

of copper mines Chile is one of the top five silver producing countries in the world and so is Bolivia. So the fact that these countries are now, you know, um, shaking hands, the president, the presidents of these countries are shaking hands with Donald Trump, flying out to the US, forging new relationships, uh, welcoming foreign investment. I think that's a really great backdrop and that's exactly why I'm in Latin America is to to be on on the ground whilst these uh, new new relationships unfold.

>> Have Have you been to I know you do site visits sometimes, any anywhere you've visited recently. Yeah, a couple of months ago I visited Sala in Argentina uh which uh a couple of silver companies there Argenta silver and Abra silver I I visited those projects. Uh I also visited uh in Colombia over over a year ago now silver's project and in Mexico actually I I visited two projects there minarum silver was minaram gold and coutin silver. So that was probably in the last 6 months. I've got a nice

broadbased feeling of attitudes towards Latin America and attitudes towards mining there and and generally you know the management teams that I've encountered seem very capable to handle any any risks that that are at play and and honestly you know if you look at some some companies in BC or with with certain changes in in the the permitting uh uh legislation you know the perception of risk really depends it's in the eye of the beholder right you know so someone might say there's more

risk in BC than there is in Mexico, but I guess it depends on your personal risk tolerance and uh that's uh ultimately subjective, right? >> Yes. Yes, I have heard that said before. So, it does depend on how you look at it. Just a final point on silver that I think we need to mention and that is the market manipulation concerns that have popped up. Well, they're always ever present under the surface, but especially in recent weeks with the CME Group issue, right? A lot of worries about what's going on there. How how do

you integrate that into your approach for silver? I believe that there are moments in which the stars align for these big banks and uh you know trading houses to um maybe I wouldn't say collude but I think there is there are definitely moments where um they get together to perhaps influence the price right I don't know if it's um a widecale manipulation um I think I've seen it on an individual scale you know JP Morgan have been >> you convicted for or at least had charges pressed against them if I

remember it correctly um for doing that very thing and they call it spoofing and uh you know it's um it does happen but I think fundamentally it's not going to change the direction of the silver price. I think it may have some create some more short-term volatility and we've certainly seen that over the last few months. But the fundamentals for me serve as the principal determinance of the silver price, right? And as long as there is a supply deficit, which there still is, and the silver institute is

predicting in 2026 that there will be 67 million ounces of silver in deficit, as long as that exists, the the manipulation concerns and the spoofing in the short term is kind of background noise to me. And so that would be my way I'd answer that. >> Very very fair way to look at it. And we will wrap up wrap up here. I'll send you back out onto the the show floor unless you had any final thoughts you would leave investors with. >> I think what I would say is since 2022, which is ironically when I withdrew from

my masters in finance course, there was an inflection point. You know, um since that point, the 6040 portfolio has outperformed considerably relative to gold and silver. It's you look at the um the the the base the the 60/40 portfolio um fund which I think is a Vanguard fund and the the name um this has just slipped my mind at the moment. It was something like a 12% increase and gold and silver of course up like 200%. And a lot of those reasons were were geopolitical risk reasons. You know um

we're living in an age where military spending is at a record high. the countries with nuclear powers um haven't haven't uh have continued to increase their capacities since 2022 the geopolitical risk index is above one and has been above that for for the last few years a new normal if you like and so that's the thing that I would be considering most is that are you positioned to to navigate this level of elevated geopolitical risk because you know it might be Iran this week it might

be Venezuela last a few months ago right but it could be Taiwan later this year you know we've got a president in the US who is um on a war path it would seem with his uh you know Pete Hexith and uh that creates a lot of uncertainty for markets and that is obviously conducive to higher gold and silver prices. >> Certainly food for thought for everybody who maybe hasn't been thinking about this yet. So thank you so much for coming on as usual. Always good to talk about silver with you.

>> Thank you Charlotte. Appreciate it. >> Of course. And once again I'm Charlotte Mloud with investing.com and this is Ted Butler.