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 [Music] I'm Charlotte McLoud with investing news.com and here today with me is Peter Kraut editor of silver stock investor and silver advisor thank you so much for being here it was a pleasure Charlotte thanks for having me really good to be catching up with you here at pdac and it it's not too long after our last conversation in Vancouver but there's so much going on so we'll we'll see what we can get through today I thought we can start with some some timely news so I've

been talking to a lot of people about this flow of gold from London to New York but I watched your presentation yesterday and you said Silver's also in motion there so what is playing out there maybe you can talk to us about the silver side so um ever since uh now president Trump has been talking about imposing tariffs on other countries um and that is you know for manufactured goods as much as it is for resources uh there's been there have been absolutely outsized historic amounts of metals

flowing gold and silver from London mostly out of London where where the the larger inventories are to somewhat to Shanghai but especially to to to New York on the comx and so the thinking there is that you know anyone who needs to make delivery of silver in the US wants to get its its silver into US borders so that um they're not slapped with tariffs because if you can imagine having to you know pay 25% more for your silver from one day to the next it could wipe out some banks it could wipe out

some Traders and so we've seen these huge flows of silver into the us a lot of it is actually being taken in physical delivery so it's not just going onto the exchange but some of it's just going into Direct into large private vaults so we've not seen this really happen before that comx is not meant really for a delivery type exchange like the Shanghai is and so um we're seeing that and if we can talk about gold for a moment the the uh the uh the lbma is now saying that when normally it would take

them a few days to deliver gold they're asking for four to six weeks so a colleague of mine and other newsletter writer Chen Lynn is saying they're technically in default because they should be able to deliver let's say within at least a week or two weeks and now we're well beyond that um so you know they they try to downplay it but it is it is it's not that the silver is I mean there is a very tight silver market we can get into that but it's not that this is tightening the supply it's just

that it's shifting it around and since a lot of it is being uh delivered to physical uh to to to vaults to even to private vaults um a lot of this silver is in some way coming off of the market not being made available for delivery and so just um the end of um just saw the numbers for the lbma they had the single largest draw down it was something like 71 million ounces came out of the lbma um for the month of January it was the single leg largest draw down monthly draw down they've had

since they've been tracking numbers back a decade so again these are very big movements and something to keep a really close eye on because it's it's making the silver market very tight and what we're seeing too is that um Traders and people who are consuming the silver like industrially for example they really obviously need in that case especially the physical silver it's not just exposure to the silver price one way or another they actually need the silver and so we've seen the the the premiums

go up there's something called efp exchange for premium um and the pre premiums to have physical silver versus owning the silver through a uh a Futures a Futures Contract have gone way up so um all these participants are are starting to really want to get their hands on the actual physical silver and that's what you know there's there's a lot of talk about a lot of silver being leased out having multiple claims on it this is this is really starting to um squeeze things and and get uh I guess

the uh the silver market to pay a lot more attention to what's going on yeah I think it's it's very interesting to hear you explain it and a little bit more on the the Tariff situation so there's a lot of uncertainty we'll we'll see how this plays out but so we we don't know right now if if silver and gold will be included we're still waiting to to find out so so the resolution of this situation that that could resolve it or if there is no tariffs that's right that

that would be but if not then then this continues exactly exactly and so I mean if I'm you know pushed to give an opinion I do think that the uh the the the tariffs thing will will be resolved I think that there's enough pressure um you know on the administration in the US internally from manufacturers for example to say you can't do this you're killing our Industries as well you know by making us pay there's a lot of um resources that they really do not provide enough of internally in the US

they absolutely have to import and so any of the industries that have to import these things aluminum for example um you know forestry Products there just simply isn't enough coming from the US uh this makes their product from one day to the next a lot more expensive and so they have they they have to pass it on their prices have to go up they can only you know eat into their margins so much and um they're I I think they're just not going to sit back and let it happen I'm sure they're putting pressure on the

administration I think we're going to see resolutions 11th Hour resolutions backing off time will tell tomorrow uh what are we today the the 2nd of March March 3D 3rd already so here we are I'm losing track tomorrow is the day that we're supposed to know if they actually get applied or not so we'll we'll find out later uh your viewers will see this after so hopefully I'm right but I think I think it will be resolved for me that does I'm not sort of looking at the the silver market from

that perspective it's I wouldn't even call it a bonus you know it's it's just throwing things too much out of whack uh we don't need these these uncertainties the world and these markets have enough uncertainties as it is um we need uh resolution we need calmness we need predictability and I think that if you if you were to remove completely this whole tariffs uh uh characteristic or or uh you know um uh influence or driver right now you still are in a situation you're have very very tight silver

markets that look like they're going to continue to be very tight for years to come and so uh the picture is very bullish one way or the other yeah I think that's a good way to to put it into perspective so thank you for for framing it that way and a little bit more on tariffs I want to bring it up um cuz you had mentioned in your presentation yesterday we've got inflation it's slowly taking up these are projected to be inflationary I'm wondering your your outlook for inflation in 2025 and maybe we talk a

little bit about what what happens with the FED in in that case right so you know anything near term obviously is harder to to predict and to get right but I do think that you know if you look at uh how consumers are thinking and how they're reacting um the uh the uh it's it's University of Michigan does a lot of research on this and they put out numbers for uh consumer uh expectations they do surveys on this and the average consumer in the US despite let's say official numbers for inflation

being right around the sort of 2.8 2.9 3% are expecting that this year it's going to average 4.3% that's almost 50% above current rate so they're not buying this 3% uh thing in terms of inflation if you look at just the month of January now I'm not saying it's going to continue at this pace but in January in the US inflation officially was up half a percent for that month if you annualize that that's 6% per year I just think that you know we've seen in inflation come down from its really high

peak in July or so of 2022 at 9% it it it dropped off dramatically we've come down to you know the sort of the mid twos I still think now that we're we're going to see 3% as the new 2% maybe eventually we'll see 4% as the new 2% I hate to say it but I think that you know it's not I'm telling you what I think but I but if you look at what the the average public that does not spend their days you know researching this stuff and and looking at at at these U at these uh forecasts

they they themselves are I think really feeling it and that's why they they see you know inflation likely above 4% this year um and if you compare it I think the best analog is the 1970s and you had what you had was three successive waves of inflation the late 60s mid-70s and then late 7s and unfortunately each successive wave was peaked at a higher level of inflation so if we had 9% as the peak back in 2022 you know you can draw your own conclusions but it's kind of scary and uh uh I think we could you know and we

can have this in in a slowing economic envir ironment so I think we're going to see a return of stagflation as well like we had in the' 70s so so um slow and slowing economies and yet inflation Staying High and even Rising which is not a great picture overall but excellent for precious metals and even resources as a whole yeah yeah I was going to ask you about that 1970s analog cuz I was in in the presentation yesterday I almost wish maybe maybe we didn't talk about that now sound's

terrible um but as you said so good good for precious metals so we've got that on our side and I thought maybe we could review your your price expectations for silver are you still I'm sure it hasn't changed very much just from a month ago but anticipating $35 mid year and then potentially moving to 40 later on I am you know we catched 35 last October we had a huge run up from February I think it bottomed around 22 ran to 35 that's like a 40% gain not surprising to see these gains being digested right now and

the silver price that kind of move sideways and consolidate but um you know the market is so tight and I think that that was one of the reasons we saw that big move is is the market or or the um participants are starting to see the tightness and the expected ongoing tightness that that was one of the things that got silver to start to move so much that's not gone away if anything it's gotten it's gotten more it's gotten tighter so I think that to revisit 35 is very realistic and and and likely in the

first half of this year um and you know I think you mentioned the FED before the FED likes to say that they don't pay attention to US debt and they don't pay attention to the level of interest payments in in the US for example but they are off the chart the US is now paying more in interest to service its debt than they're than they're spending in uh in uh in defense and so that traditionally has led has has been sort of a a turning point for an Empire so to speak and that's when we

can expect things to continue to degrade degrade sorry my voice here talking too much um so I mean the FED says that they ignore that side of things I I don't believe it I think that they cannot help but but pay attention because it's a it's a spiral for the US Treasury to have to pay and think about it the higher interest rates are and they have to they have to renew a lot of um uh a lot of debt is coming due they're going to have to renew it if even if they renew it all at at the shorter end of

the curve so shortterm um treasuries we're still at higher rates in short-term treasuries so as all of this debt comes due and they renew it uh even at Short terms and higher rates they're going to be paying more and more and more to service their debt so again I can I cannot see the the the FED ignoring that they know it's as I say a vicious it's a spiral a death spiral for the treasury I think that despite uh wanting to keep rates High because inflation is is high they're going to

resume cutting probably later this year and when you see them resume cutting if this happens the way I think it will in the face of sustained High inflation they're going to lose all credibility and I think that's going to be um a a a really obvious trigger for precious metals and you're going to really start to see funds starting to flow to the precious metals market and and things start to move in a they've already done so tremendously for gold you know where were we a year ago in Gold uh 2,000

range or 2,800 we're Lo looking at 40% returns it's silver um in the last year was up 44% the S&P was up 22% it it essentially doubled the return of the S&P so all of these indicators are are suggesting to us that the you know the the generalist investors are starting to pay attention the one I think big trigger that will make all of the difference is if we see General markets roll over the S&P has has been unable for several months now to take out its prior Peak around I think it was 6100 or so in the S&P we're

at about 59 or so today if we see it continue to stay weak and to continue to fall um you're going to start to see at least first the big money the smart money that tracks all these different sectors and they're going to move from you know what's been generating gains for them for the longest time Tech they're going to start moving to deep value and you're finding that right now in the mining industry you know fantastic stat that uh was generated by a friend and colleague at Tavi cost of

crescat he went and looked uh in his Bloomberg at if the gold miners in the S&P were were a sub index of the S&P to just see how they perform versus the rest of the S&P and and other sub indices they are the single best performing sector of the S&P 40% free cash flows I mean nothing comes anywhere close to that I think that's going to trigger m&a they're going to use the this cash and when the market comes in and starts to push their share prices up they're going to use their shares as a currency

to turn around and start buying up uh smaller players and uh replace their their reserves and that that means you know investors can start moving down the food chain in the uh in the precious metals uh mining area yeah yeah I think for sure you can see how that Cascade could could start to happen so we'll we'll keep waiting and watching and we'll we'll be checking in with you to see how this is going on the note of silver I I wanted to bring up uh we since we spoke we got the latest numbers

from the silver Institute so I wanted to at least cover that a little bit we've got our fifth consecutive deficit coming up but but quite a bit less actually than than 2024 so what what's your take on those numbers well you know I think that they're expecting industrial demand to come off a little bit they're expecting um sorry to go up but they're expecting um investment demand to come off uh a fair amount and that kind of uh makes up for it but what I found interesting is that if you look further

down in their forecast uh uh in in these tables that they produce they think that investment demand will actually be and it's not included in the sort of the main numbers but if you include the investment demand let's say uh which would go um especially the investment demand that goes into silver ETFs they've actually doubled their forecast from 50 million ounces of silver to 100 million ounces of silver so if you include that you're actually somewhere very close to the the record deficit

that we saw in the Last 5 Years so again it's it's how you look at the numbers you know some will argue that um they don't want to include uh investment demand in in uh in silver deficits because uh that technically that silver is always available a back to Market to to feed supply I I'm not so convinced of that I think that a lot of the silver buying ETFs is one thing but the physical silver buying I think much of that once it's purchased it comes off the market and it's going to stay off

the market for a long time I think you know you we hear about these silver stackers that buy and buy and buy and never want to sell ultimately eventually you know they will sell some will sell earlier than others but I think on average for the most part we're only going to see that silver come back to Market at considerably higher prices I think we need to be you know somewhere near 40 and well north of 40 before that starts to come back to Market it'll probably even only trickle in so I

wouldn't look to that to help meet um deficits anytime soon so for me that helps uh you know paint a very very bullish picture on the on the uh Supply demand uh aspect yeah I think that that gives a good idea of those numbers and how we can look at them in in some different ways so I won't I won't keep you too much longer I know we've got to send you back out onto the floor of pdac but but since we're here I I've been asking people who I talk to you know how much room in your portfolio do you have

right now to be like how much cash do you have to deploy it seems like a lot of people come here and it's a little unfortunate because they're they're so packed already that's true um you know that's a good point because if you're bullish and you've been bullish for some time odds are that you've allocated a fair bit of your capital I will say this that you know last last year Alone um or in the past year in Silver stock investor portfolio we had we've had uh

I'm going to say four or five uh companies that have done really quite well a couple of them have have more than doubled um some of them were owned prior a couple have only been owned for a matter of a few months which was just tremendous so I always say that you know you get a double take half off the table sit on that cash I think that within the next sort of month or couple of months some people are are worried I think that it's probably a you know a lack of experience to see silver and gold come

back and they're they're starting to panic and for me it's just hey you know you're getting a better opportunity to buy this and buy the stocks at a little bit better price because many of them had have had quite the Run for the past year so if you've been looking to deploy I think we're getting to the point now where where the timing looks really quite good again maybe it's a matter of a month or a couple of months I think we're going to see that bottom I I I'm

not concerned neither for the medals nor the miners or the explorers that that we're going to see any kind of of a of a dramatic selloff I I would look to be deploying actually quite soon okay good to get that perspective as well and I any final thoughts you would leave investors with you know um I was uh listening to Eric's BR this morning um there was a packed room there must have been I don't know maybe 800 a th000 people practically in that room just sort of eyeballing it and you know

something that he said probably three or four times was be patient and you know um in my presentation back in January when we last spoke my last slide was patience is the rarest commodity and I I believe that and I think that that's one of the biggest um enemies that investors have today they they want to make the the quick Buck but the big money is made over time and you know look for deep value and you know Eric if you have the chance to listen to his talk he gave all kinds of ways that and and

tricks and ideas and I mean you know he's one of the most successful and uh best known resource investors he's almost single handedly with a few colleagues supported the entire industry for practically a decade so this is the kind of guy you want to listen to and and and understand and and get you know some insights from and he said you know there's there's so much deep value there things that are being missed by others one example was you know you've you've got projects that are

valued at much much lower prices Metals prices than where we at right now um you know maybe $20 silver maybe 20 $2,000 gold when we are you know in silver we're 50% above that in Gold we're almost 50% above that if you take you know if you're bullish enough and and I'm very confident that we're going much higher in both Metals so if you're at least confident enough that these current prices are going to be sustained and you take those prices and then you do your own calculations on those

projects on either the deposits the value of the deposits or the potential cash flow I mean you know what the Public's missing and this is in the fine print in these presentations that you know that they've used these much lower numbers to Value these projects that the potential is a multiple of what sometimes looks already very bullish and so you have to you know do a little bit of that research yourself be selective look for risks and then deploy and then be patient and I think that ultimately I think we're

we're back near where we were back in say 2000 2001 when the tech bubble popped and we had a decade of just tremendous returns in this sector and I think it's we're at a very very similar time right now and uh you know if you want to look for value and and and and minimize your risk uh it's hard to find a a deeper value sector okay well I think that's that's a perfect place to leave the conversation for now thank you so much for coming on to go over what's happening in silver

this is really good thank you Charlotte it was a pleasure of course and and once again I'm Charlotte McLoud with investing news.com and this is Peter [Music] CR for