Is Silver Russia’s Secret Economic Weapon?
Russia stockpiling silver: https://www.jpost.com/business-and-innovation/precious-metals/article-823167
Silver is generally considered an industrial metal, not a reserve asset. Though, to be fair, Russia is largely cut off from the international financial system so their increased reliance on precious metals is hardly surprising. But in an environment where fiat currencies are declining in value, silver and even platinum could become de facto reserve assets at some point in the future.
If Russia is gong to lose this war there will come a point when they know they are going to lose. An inevitable result of a Russian loss would be a Ruble crash that would take a long time to recover. It would not surprise me to see Russia using precious metals as a hedge against the decline of their own currency. If an ounce of silver costs 3000 Rubles today but will cost 4000 rubles six months from now, I would be buying today.
This might make sense if you're a Russian to whom rubles are very important, but does it necessarily hold true for anyone else?
I'm currently in Laos, the local currency is the kip. The value of an ounce of silver in Lao kip is about 6x higher than it was when I was here a few years ago. It has tripled since I was here just before the covid scare. Was that particularly relevant to you as an Australian? Or to a typical Russian? Absolutely, if you were Lao and put all your wealth into silver a few years ago you'd have done extremely well for yourself, but how relevant is that to anyone who isn't Lao?
I'd certainly rather have my money in silver than rubles, but is any non Russian thinking about taking a long term position in rubles? Sure, Russia has a larger economy than Laos', but is it that big?
well Russia ( and Iran ) knows what assets are worth kept in foreign banks ( SFA on a bad day ) so anything useful will be better as a store of assetsOne of the reasons I think the silver market is finally heating up is because of its use as a hedge against all fiat currencies. It took high inflation for the penny to drop with a lot of people.
I take the view that the genie is already out of the bottle with COVID making governments realise that they can spend their way out of a crisis by increasing the money supply and borrowing. Now every government is going to do it more often because it's politically expedient to do so. Let the next government worry about it. It's a game of musical currency chairs. One government at some point in the future isn't going to be able to find a chair when the market decides it has lost confidence in the currency.
Russia will know what it can and can't achieve in Ukraine. If it dawns on them they have lost, stockpiling as many liquid hard assets they can makes sense. A loss in Ukraine would send the Ruble spiraling down and spending Rubles on gold and silver before that happens is a pretty good bet.
One of the reasons I think the silver market is finally heating up is because of its use as a hedge against all fiat currencies. It took high inflation for the penny to drop with a lot of people.
I take the view that the genie is already out of the bottle with COVID making governments realise that they can spend their way out of a crisis by increasing the money supply and borrowing. Now every government is going to do it more often because it's politically expedient to do so. Let the next government worry about it. It's a game of musical currency chairs. One government at some point in the future isn't going to be able to find a chair when the market decides it has lost confidence in the currency.
Russia will know what it can and can't achieve in Ukraine. If it dawns on them they have lost, stockpiling as many liquid hard assets they can makes sense. A loss in Ukraine would send the Ruble spiraling down and spending Rubles on gold and silver before that happens is a pretty good bet.
what if Russia just stops selling to 'unfriendly nations; , China , India , and Iran could soak up almost everything Russia exports if they had a mind to ( back to the 'Iron Curtain' days )I totally agree that the insane covid policies have contributed to inflation in many countries, and governments are largely not being held accountable. Most Australians I know, even some of the apparently intelligent ones with university educations etc, don't join the dots and can't understand when I do it for them. The amount of money they have hasn't gone down, the government gave them free money, so the fact that their money isn't worth as much just seems like an unfortunate thing no particular entity is responsible for. If the buying power of the dollar had remained the same but people lost half their money because the government taxed or otherwise appropriated it, everyone would be screaming blue murder, there would be unprecedented outcry and unrest, but the exact same thing is not causing anyone to kick up a fuss, because people are typically that financially illiterate.
I'm not sure how relevant Russia specifically is, but definitely, I'm bullish on silver, and widespread inflation is part of it.
You say Russia losing the war will cause an increase in silver prices. If I play devil's advocate and assume you're right, what would you say a Russian victory would do to silver prices?
I must admit I don't feel compelled to talk about your kitchen sink.I think silver is a good example of the adage, 'the market can be irrational longer than most investors can stay solvent'.
I feel that geopolitics like Russia-Ukraine is the ephemeral stuff. The case for silver remains its relationship to gold, its history as money, the reputed physical 'structural' deficit, the perversion of the market with the dominance of paper futures contracts, all the industrial uses and all the other old hashed over arguments. They haven't meant a damned thing investment wise for over 20 f'g years. Good luck following this bs week by week. I retain a diminished but still significant investment in silver and if it were in front of me here I'd look at it with as much interest as my kitchen sink.
P.S you have my permission to talk about it if you must
USD Silver, ETPMAG, SLV and Wykoff's Dec Silver all pausing around this resistance zone waiting for a break up on the daily. The weekly USD Silver chart looks to have broken up, but it keeps failing on the daily - 13 x last 5 months now. Momentum still clearly up, short and medium term. Healthy consolidation so far. Fundamentals all seem to be pointing higher and silver is still lagging gold.
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Haha. I was about to post asking what members feel are the predominant factors affecting Silver and also what is "the vibe" in holding silver. I've been following your and @Sean K 's and @greggles posting on Silver and your post gave me some answers.I think silver is a good example of the adage, 'the market can be irrational longer than most investors can stay solvent'.
I feel that geopolitics like Russia-Ukraine is the ephemeral stuff. The case for silver remains its relationship to gold, its history as money, the reputed physical 'structural' deficit, the perversion of the market with the dominance of paper futures contracts, all the industrial uses and all the other old hashed over arguments. They haven't meant a damned thing investment wise for over 20 f'g years. Good luck following this bs week by week. I retain a diminished but still significant investment in silver and if it were in front of me here I'd look at it with as much interest as my kitchen sink.
P.S you have my permission to talk about it if you must
Printing money is the easy part, what happens later as a consequence is another story. I imagine that in the future many countries will struggle with unwanted inflation. Loading up with gold, silver and even bronze will be a reaction to the unforeseen future, maybe a recession but who really knows?Most likely an increase in demand due to today's news that China will stimulate their flagging economy. Silver has gone up more than gold. Copper and oil prices have risen also. It remains to be seen if there's any follow through and that China will do something instead of talking about it. China seems to be firing a few shots across Trump's bow.
Reports of China buying gold again. Commodity bulls are pawing the ground once more.
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