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  I'm Charlotte Mloud with investingnews.com and here today with me is Peter Kraut, editor of Silverto Stock Investor and Silver Adviser. Thank you so much for being here. Great to have you. >> Always fun, Charlotte. Thanks for having me. >> Yes, it is always fun, especially when we have such exciting silver price activity. We're catching up from our conversation I think just over a month ago during a very exciting tripledigit time for silver and >> exactly >> we had talked about a correction at that

time which we got in pretty short order. >> We sure did. >> Now we're coming back up. So help help situate me there. Maybe let's talk about that correction. What happened? Was that just natural? How did you see it? >> I I mean you know we talked about it. It was expected. I wasn't the only one who thought that was going to come. The rise was just too fast. not sort of sustainable. And uh we had a quick drop from, you know, for perspective from about $120 pretty quickly to intraday about $67.

That's that's dramatic. It was fast. Stabilized a little bit around 70 and then moved sideways sort of 70 to 80 and now we're into the 90 range and we're above 90 the last couple of days. It's been it's been tremendous and I I mean I'll admit I'm I'm a little bit surprised. I thought we would have it consolidate a little bit longer before starting to get to these levels. Who knows? Will it stay around 90? I think it's it's very possible because um the

market is so tight. So many people are paying attention. So many people feel like they may have missed out. So um it in a in a maybe a similar way to last year when it was just such what I saw was just such relentless buying all through the spring, summer, and fall. anytime you had the smallest dip, it was being bought. And you could see that because the the pullbacks were very small. They were very short-lived. The only time we had a more extended pullback was when it went through $50. And I think that was just such a big

milestone that lasted maybe a two to three weeks or so and then it really took off from there. Um there's there's just I think there's just so much pent up demand. Uh it it it's it's not all that surprising. Okay. Okay. I think that helps to help us understand where we are right now. So maybe some more consolidation at this point, but I wonder if you can help me take a step back and situate us in terms of where we are. You sent me your slides for your presentation, which has already happened

today here at PDAC. And you have a chart that shows >> the awareness phase and then the new paradigm. And I I can't show it here, but it's way it's way higher. >> Exactly. And it's interesting because in that presentation, the previous chart shows silver over the last couple of years. And it shows that parabolic rise that we just had, you know, silver going from maybe $24 two years ago to $120 at the end of January and then this then this drop that we had in the last, you

know, few weeks. And um if you look at the at the slide that comes after and it shows what maybe you know is the pattern for any asset in a bull market where you've got this stealth phase, the smart money is the really the first money that gets in understands the potential. Um and then eventually you get the awareness phase. Um in retail investors start to to to be aware. They start to see the price moving up and and become more interested and and start to participate. And then interestingly

enough in this awareness phase you if you look at that chart you get this this small pullback. Um and it's called a bear trap. And I think that's what we just lived through in the last couple of months when silver ran up to 120 and then had this quick correction. I think that was that pullback that bear trap in the um in the awareness phase. And it's a lot more pronounced if you look at the silver price versus the way it looks and this but this is a generic chart to to look at any asset class really. Um, and

I think really what it signifies is that you've got people who came in late to silver, maybe bought at $80, $90, saw it drop to 60, $70, panicked, sold out, will probably never come back and um and think it's a new bare market in silver and yet we're back at 93 from 70. So that really is uh I guess a fair demonstration of that kind of pattern in the the bear trap in that chart. Um I think it's start it's really playing out that way. What I will say is that after the um after the uh awareness phase then

you get the the mania phase and in my view uh in that chart that's a gener generic chart it looks like it happens relatively soon. So maybe over the next couple of years it it may play out that way. Um I just think that uh silver's got a much much longer way to go ultimately in this secular bull market. So you may get some kind of a a dramatic runup over the next couple of years. I don't know for sure. Um but I don't think that will be the end. Uh I I think that the a the ma the if you want to

call it the awareness phase, we're still early in it. And then ultimately the mania phase is several years out. So I think it's if people want to start you know getting involved my view is that um I don't think it's anywhere near too late. >> Very reassuring I think and I wonder so when we're looking at the silver price what is there a particular trigger you have in mind for the next leg higher? I know there's so many things at play >> right. So, um, frankly, if you just look

on a technical basis to to to take out this all-time high of $1, say $21 or so, which was, I think it was the 28th of January or 29th of January. Um, that would, you know, if we take out those levels and we and we stay above that for a couple of days, that would be a trigger for me. on the technical side. I think that that will say, okay, you know, the bull market is is clearly back on and we're gonna keep trending higher from there. >> Okay. So, just and that's just purely looking at the charts. Okay. Any

anything on the more fundamental side that you think could kick it off? >> So, uh the fundamental side just stays very bullish and I think so much of it is driven by industrial demand. Um, you know, one of the charts I had shows industrial demand over the last 10 years. And what I think is really important for people to realize is that 5 years ago, half of industrial demand, uh, sorry, half of all of silver demand was taken up by industrial demand. You go back two years, 2024, that already rose to 65%.

So industrial demand is becoming a bigger and bigger and bigger portion of overall silver demand. That's interesting in itself and it's and it it's interesting because it I think it means that these higher silver prices are relatively sustainable because the demand is so strong. We're still in a deficit position. The silver institute seems to think that that deficit's going to shrink. I I don't quite agree. Depends, you know, it always depends on how you look at these numbers and what you put in which

category and so on. I don't think the deficit will be as as small as they're saying. I think it'll be considerably larger. I think they think it's going to be about 67 million ounces or somewhere around there. I think we're going to be a lot closer to probably 80 or 100 million ounces once again for 2025. But um the takeaway for me from this uh growth of industrial demand in the overall demand picture means that less and less silver is available for investment. So if you want to go out and

buy coins and bars, um you only have about a third of overall silver that's brought to the market every year. That can change for different way in different ways, but overall about the third. So I think what we saw last last fall with this dramatic runup and into the end of January was that investment demand came back in a big way. There really wasn't all that much silver available. And that that chart explains it because it shows you that industrial demand is taking up so much of the silver that when investment demand comes

back in a big way and there's less silver available for it, it just puts a big squeeze on the silver price and it and you get this volatility like we did uh just very recently. >> Well, and talking about this recent price action, one of the points I wanted to bring up, I started to hear a lot about backups at refineries and the issues they were having. Can you weigh in on what was going on there and what's happening at this point? >> So that's interesting too because you

know you've got uh the bullion dealers in the west from what I'm I speak to some I also hear otherwise that in the west at least and and in different ways that's corroborated frankly is that uh they're doing more buying of silver than they are of selling. So it sounds counterintuitive because the silver price has gone up but that's in the west. So they're buying back a lot of silver. I think that people, you know, may have owned it for, who knows, 10 years, 30 years, 40 years, and are

finally seeing it back at $50, which was the all-time high, and they probably said, "I've held on to this stuff for so long, I can get my money back, you know, pre-inflation," which is, you know, obviously not quite getting their money back. Not even close, but they feel like they're kind of, you know, it's time to get back out. And they they're selling it. And especially when it went well beyond that to 70, 80, 90, $100, uh, a lot of people decided I'm selling my silver. I want to just cash out. And so

I think that's, um, the wrong decision. I think it's, you know, you need to be patient in these markets. And I think that you will be rewarded. Um, but the investors in the east are a lot more astute. So in India, in China and South Korea and Singapore, I mean they're buying silver and uh they're hanging on to it and uh that's where the bullion dealers are doing a lot more selling than they are buying. They're having to actually ration uh minimum order sizes. They're having to have 24-hour customer

service uh people uh available. They're having to hire people. they're just selling so much of this of this metal because um as I say, I think they're smarter, more astute investors and they're doing the buying and we're selling it to them. So >> yeah. Yeah. Essentially, I think that's a really interesting dynamic to look at. And again, talking about when the silver price went up so high. So we already talked about you have a particular idea of when you would sell physical silver,

right? >> I wonder when it came to silver stocks, did you take any profits or or no? Because I know you see them as a huge So, so in in the long term, I do see them as very much the opportunity. In fact, I think that and we talked about this the last time. I think this is the next opportunity in the silver space is the silver miners. And I continue to believe that um profits. Yes. uh you know in I have uh a paid newsletter and in that newsletter I I told uh subscribers I said you know we've had uh

out of about 30 positions or so most of them have at least doubled last year many of them are up five times we had one that was even up eight times and so uh thankfully right around 28th of 29th of January I put out an alert and I said okay it's time to take some profits and that was right right the day of the day after that peak And so uh to different degrees depending how much some of these stocks had run up we had taken anywhere from 50 to uh from from about 30 to 50% profits on some of the names and that was not even you know

that allowed us still a multiple of gains left in those stocks even after taking those profits. So um it it's been it's been a good year. >> Yeah. Yeah. That's really interesting. And then I imagine if they went down far enough and you still like them you would come back in. Exactly. And so that's something that I do as well. And so u there have been a lot of new subscribers to the uh to the to the newsletter. And in the last several uh letters I've said that, you know, here are some of the

names that relative to the other uh names in the portfolio have not quite had the same runup. Um they're, you know, they've had some decent gains, but on a relative basis, they're they're undervalued. And so those are the names that I figured uh offer the the more sort of upside at this point and I continue to do that because you know there's some people are new to the space and they're they're looking at the their different options are trying to decide well where should I put money to work

and uh wherever it looks at least for me the most sort of uh undervalued on a relative basis made the most sense. So I I you know I give suggestions in that way. >> Yeah. Yeah. And you're not the first person to say they've seen an increase in subscribers. So just a a small question. Do you have a sense of who these people are? What's the profile there? >> So they are for the most part they are retail investors. Um I think one of the reasons for that is because the majority of the holdings in the

portfolio are sort of juniors or midcaps. Um those tend to not be the kinds of companies necessarily that the big institutional investors will buy. They they have minimum requirements. They have to be listed on major exchanges. They have to have minimum volumes trading. Uh and that's an advantage for us. And I've I've said this before, you know, at at talks that I've given is that we don't have to play in the same uh in the same pond as you know this as as the big guys. and and uh

that that's good for us because the leverage on some of the smaller names if people you know are willing to accept volatility is often a multiple of what you get with this larger caps. So uh it is for the most part retail investors but we know that we do have a few fund managers and um and institutional investors and family offices that subscribe to uh to our research. >> Well I like to hear that the retail side is coming in as well. That's that's very encouraging and interesting. So for

silver, we've done a pretty good job, I think, looking at the industrial side, the supply demand there. You had another slide in your presentation that covers more of the the precious angle for silver, looking at what stood out to me was this Fed triple mandate. So we've heard of the dual mandate. So what's going on there? >> Exactly. So, you know, we we all or or you know, anyone who sort of follows closely enough uh what goes on with the Fed, what goes on with Treasury and so

on in in uh the US, but not just in the US, but let's say specifically that's, you know, the the big gun, so to speak. Um we're we all sort of know the Fed as having what we call a dual mandate. So, that is price stability and aiming towards full employment. And that's a a difficult balance all of the time because these are kind of conflicting uh sometimes they're kind of conflicting uh goals. But if you look at the Federal Reserve Act of 1913, they actually have a third mandate. And so it's not for me

it's not a dual mandate, it's a triple mandate. And it's in there. And there that third mandate is moderating long-term interest rates. So, what's interesting about that is that the Fed actually most of the time they play with short-term rates, the Fed funds rate. When we hear about, you know, Feds uh rates being raised or rates being lowered, rates being cut, that's what they're doing. They're cutting what we call short-term rates. And so most of the time uh when the Fed moves rates

around, it affects short-term uh bonds or or the return on short-term bonds. And they have limited tools, although it's in their mandate, the third mandate, they have limited tools in terms of what they can do to affect long-term bonds. Um but they do have a tool and it's called yield curve control. And they don't use it very often, perhaps once every few decades or so. The reason that's important is because in the last year, the yield curve, and this does get a little technical, but the yield curve is if you

look at the shape of the curve on what short-term bonds yield and what long-term bonds yield. So that means, you know, if you have a bond that comes due in a year versus a bond that comes due in 30 years, the 30-year bond is going to pay you a higher interest, which is fair because your your money is at risk for a longer period. So investors will demand a higher rate of return, higher interest rate. Well, what the Fed wants is and Treasury wants is for that you that that curve to be flat flatter and and and in the last year it

has gotten a lot steeper. And it's a problem because what it means is that when they go out and borrow money, you know, uh issue bonds, they get the cash to pay for their favorite programs. Um and they're borrowing on the long-term end. So they're issuing, you know, 20, you know, 15 10 20 30 year bonds. um they have to pay a higher interest rate because the market So what's interesting about this change in the curve is that it has gotten steeper because the market is now demanding a higher return on

longerterm bonds. Why is that? It's because they see inflation staying high. So they figure if I'm going to lend my money out for 20 or 30 years, I want to be compensated for that. And because I now as the market now expect inflation to stay high well over that length of time I want to be I want to be compensated for my risk and I think inflation will stay high. I'm demanding a higher rate on those bonds and that is difficult for the Treasury to manage because as they have to keep issuing

bonds um they themselves will have to pay a higher rate. So the whole yield, this is convoluted a little bit. I'm sorry for that. But the whole uh point of it is that by using yield curve control, the Fed's tool is to go out issue uh um print a lot of money to go out and buy long-term bonds. And when they buy long-term bonds in a big way, it's it pushes down the return on those bonds. It brings the interest rate down and that makes it easier for the government to repay its debt because it

can issue bonds at a at a lower rate. So, but it's very inflationary and it's not good for savers. So, it's what I call financial repression and I talk about it that in my book the great silver bull. It's one of the chapters. Uh it's it's you know it's it's worth understanding because um there are ways that people can can counter those those difficulties and precious metals is is a great way. I think it's okay to get a little bit convoluted. It's important to

understand and if I know anything about silver focused investors, they don't mind going down the rabbit hole a little bit. >> And on that note, I know that there's a lot of concern right now about what's going on with the CME Group last week. There was another issue. I think we talked previously about the one back around American Thanksgiving. So, >> can you share your thoughts on what was happening? >> Well, um, >> should we worry? Well, uh, look, I don't know that we'll

ever know for sure, but from what I read, um, it was that there was a technical issue and, uh, it was natural gas futures, some, uh, I think base metals and precious metals futures stopped trading >> and it was at at a point when, um, it was very, uh, let's say precarious for the market. um you know if uh I don't follow those futures to be honest I don't follow them that closely but um from my understanding it was at a point when it where it was very difficult for the market and it could have become

problematic uh if uh holders of those contracts had wanted to take delivery and so uh it was it it looks like it may have been is the thinking a way out of that and so Again, we will never know. The timing is just looks very coincidental. Let's let's let's put it that way. >> Yeah. Yeah. Well, I think a lot of people would agree with that. And I was wondering I don't I think you're right. We won't know if there's anything nefarious going on. But maybe that makes

people less likely to want to trade there. Maybe they want to go to other platforms. Well, that's a very good point because if you look at uh I just read that in India they're going to move away from LBMA pricing right >> on gold. Asia is deciding we don't need we don't need these institutions to to run our our markets. Um the Shanghai uh um uh futures exchange uh is a a delivery uh purpose exchange. It's not uh like it is in the west uh with the CME for example. Uh this is basically paper moving around

there. It's if you you you can buy these futures but the metal has to be there to back it up. So it's very different. It's much more realistic and so and those prices are higher than we than they are in the west. So I think it's just a matter of time before most of the world comes to terms with the fact that um it it looks like games are being played whereas in the east they're taking this market much more seriously and that uh pricing is going to shift gradually towards what what the way they price

these metals. >> Yeah. Yeah. You already said how we're essentially selling our silver over there. Now we're going to use those systems. So what are the consequences for the west? It sounds pretty good if you're in the east. >> Well, um that depends what you do. If you're in the west, if you maintain exposure, um then you're probably okay. If if you um you know, you you follow sort of the the established ways of of uh pricing these markets and so on, um you will probably lose out. You you will

uh you'll be basing yourself on what are considered eventually unrealistic prices. And frankly, I think that uh these western institutions will have no choice. They will have to uh adopt similar mechanisms in order to have more fair and more transparent pricing uh because it'll it'll be dictated to them. They'll become meaningless essentially otherwise. >> Yeah. Well, this is a story certainly. I'm sure we'll we'll follow it and and talk more about it in the future. I will

I'm almost ready to let you go. I know you're losing your voice. You got to get back out there. for silver. I think right now it's really important to talk about what's happening in Mexico, major silver producer and a lot of risk there right now. How are you looking at Mexico? How are you handling this? >> So, you know, these are great points. Mexico uh recently has become more uh concerning as a jurisdiction. Um you know, people have seen the events in the news. At the same time, Mexico is more

than 20% of the world's annual silver supplies. It's the single by far the single biggest supplier of silver to the market, mind silver. And um I just think that you know we're talking about multi-billion compan dollar companies that operate there. We're looking at uh very important sectors for the government in terms of employment, in terms of uh taxes, in terms of all sorts of contributions that these companies make. Uh, I just think that, you know, here's an example. The the uh president

of Mexico uh asked for help from the US, said, "Will you send some Marines in to help us? Will you help them have them train some of our soldiers to be prepared to better understand how to deal with these problems?" I just think that we already see they're not sitting back. They're not letting this become a bigger issue. And uh I'm not saying that it's over, but I do think and and it'll probably flare up every so often, but I think that there's just too much at

stake to allow this to get uh bigger and to allow it to get out of control. Um and you know, you know, if it's it's you know, you have to decide where you stand as an investor. If if you look at some of these stocks that maybe have dropped, are you comfortable buying? Um, do you feel like you're exploiting? You know, if you're if you're selling, someone else is buying. There's always two sides to a trade. And, um, you can also look at it as if you're buying, you're you're being supportive of that

company, of the industry. There's always, you know, different ways to look at this. I just think that um it's it's likely, I believe, to to somewhat calm down and um I think it'll it'll ultimately continue to be business as usual. It's it's just too important for the industry and for the countries that are involved. >> Very very measured take. So, thank you for sharing. And now I will let you go unless you had any final thoughts. >> That's it. I mean, I think follow the

space. Um it's we're in a bull market and uh if I may one actually one little last uh anecdote um being in town for uh these conferences had the u opportunity to speak to uh some very very big money managers and so some of these very large funds Canadian funds and otherwise have intimated that they're actually for the first time in their history of multiple decades looking at the mining sector and they have several hundred millions of dollars to put to work. They have allocated zero. They know they need to

be involved and they're willing to go out and buy entire teams of managers, analysts, geologists so that they can buy the expertise and put the money to work quickly. and they've admitted that they would go to, you know, the big producers first because that's, you know, that will offer them volume, liquidity, uh, you know, the the listings that they need and so on, which we talked about earlier. Uh, but that will trickle down and it it speaks to the seriousness of it. And if I may, one

sort of similar anecdote is that the Beimo conference was just uh you know a week ago or so and leading up to it some of the junior miners that were going there had told me they said you know we can see who we're going to be meeting before we go to this conference and they said this is the first time we've seen these large fund managers not send one analyst like they have you know on the previous years they're sending entire teams now they're sending their geologists they're sending analysts fund

managers So this this the I'm not going to say the smart money because they're they're a little bit late, but uh the relatively smart money is really paying attention now. So I believe that this all uh demonstrates we are at the very beginning or very near the easy money I think has been made in the last couple of years, but it's going to still be relatively easy for the next several years. Um and and this demonstrates that uh some of these big players are really coming in now and uh and that should

that should you know expand uh the multiples and uh price earnings ratios over the next few years in a big way. >> Well, I love those anecdotes. Thank you for sharing and all right, we'll wrap it up there. I'm sure we'll have you back soon to go over what happens next, but thank you so much for coming on. >> Always fun. Thanks, Charlotte. >> Amazing. And once again, I'm Charlotte Mloud with investing.com and this is Peter Croach.