What will happen to Silver Prices by the end of 2018? (Part 1)


Welcome to illuminati silver, we tell you
the truth about silver. Today is Saturday 4th August 2018 and this
is the first part of 2 videos where we highlight what we believe will be the influences on
the Silver price for the remainder of 2018 and where we predict prices will end up at
the end of the year. At the time of publishing, silver prices currently
stand at $15.42 some 8% or $1.34 down on exactly a year ago and down some 9.5% or $1.64 since
the start of 2018. So without doubt 2018 has so far proven to be a lacklustre year.
In 2018, prices have oscillated between about $15.20 and $17.55 per ounce. Experts are not
necessarily surprised, but of course many are hoping for a better performance before
the year ends. There are a number of factors which could
affect the price from hereon and we have consolidated them into 5 major influences. They are as
follows: 1. Geopolitical issues
Like gold, silver prices often increase when geopolitical issues are at play. When Donald
Trump won the US Presidential election in late 2016, many believed safe-haven demand
for precious metals would spur higher silver and gold prices, especially as Trump was seen
as a most controversial and unpredictable figure. However, that instability hasn’t
yet translated into higher silver prices. However, Trump continues to cause concern,
having formerly been described as “flirting” with war with North Korea and Iran, and now
clashing with China and Russia (the latter by his administration if not directly by the
President himself). The President is locked in a trade war with the Asian nations, with
both the US and China imposing tariffs on each other. He has also threatened tariffs
with our European Partners, though recently this may have been resolved and we must not
forget the ongoing battle with Canada. So far however what we have witnessed has
run contrary to conventional wisdom that political unrest favours safe-haven assets. Investors
will have to see if this trend changes as these and other geopolitical issues continue
to develop. 2. Interest rates
In general, higher interest rates tend to put pressure on non-interest-bearing assets
like gold and silver; conversely, when interest rates are lower, precious metals tend to perform
better. However, last year there were three rate hikes, and gold prices rose instead of
falling, while silver was relatively flat. The US Federal Reserve has raised rates on
the back of an economy that has been growing at a steady pace but it could slow the pace
of rate increases if there is a change. Currently there is no consensus on how many hikes there
will be in 2018, although the Central Bank is expected to keep raising rates. The rate
hike in June was the 7th in the past 3 years despite the comments of Investor Guru Peter
Schiff stating at the time and we quote “There is no way the FED can raise rates”.
We believe that at least another rate rise is on the cards and possibly 2 before 2018
is out. Despite this, it’s worth noting that precious
metal prices could rise even if rates continue to increase. According to Investopedia, despite
the widely held belief that there is a negative correlation between rates and precious metals
prices, “a long-term review of the respective paths and trends of interest rates and gold
prices reveals that no such relationship actually exists.” However please notice that it mentions
‘long term review’. 3. Price manipulation
Some silver market watchers and a number of our subscribers believe that the reason prices
have seen little momentum in recent years is that a small group of institutions have
been shorting silver. Ed Steer of Gold and Silver Digest and the Gold Anti-Trust Action
Committee has explained the idea in the past, noting that JPMorgan and a handful of others
are involved. In early November 2010, US law firm Kaplan
Fox & Kilsheimer filed a class action complaint on behalf of an individual investor, Eric
Nalven. The suit named JP Morgan and HSBC in connection
with an alleged conspiracy and manipulation of the market for silver futures and options
contracts traded on the Comex exchange in New York.
The complaint alleges that around June 2008, when JP Morgan acquired Bear Stearns and its
short positions in silver futures, JP Morgan and HSBC started a conspiracy to manipulate
the market for silver futures and options contracts for their own benefit.
Despite this, charges against the firm were dismissed in 2014 and again in 2016, although
the 2016 charges have since been appealed. Our own view is that there is price manipulation.
Not particularly by the FED or the US Government as some believe, but by greedy institutions
attempting to make a ‘quick buck’. Now we know some disagree with this, but to be
frank, our next point will highlight why we believe this. After all such manipulations
can only be achieved short term and it is extremely difficult to believe that they can
achieve price suppression for the past 7 years. After all, it took no time at all to identify
those institutions including Deutsche Bank who were guilty of manipulating LIBOR Rates
– did it? 4. Traditional Supply and Demand.
Perhaps the most reliable document we can go to, though it is historic in nature is
the Silver Institute’s World Silver Survey which is produced for the Silver Institute
by the GFMS team at Thomson Reuters. Now before anyone dismisses this Survey, the
major sponsors include and we wish you take note of these:
• Coeur Mining Inc (a precious metals producer with 5 mines in North America employing 2,000
people) • Fresnillo Plc (the world’s largest silver
producer and Mexico’s second largest gold producer
• Industrias Penoles S.A.B de C.V which is the world’s top producer of refined silver
and the leading Latin American producer of refined gold and lead.
• Pan American Silver, the world’s second largest primary silver producer;
• Wheaton Precious Metals the world’s largest pure silver and gold streaming company
• and a host of other numerous gold and silver and precious metal mining companies.
Now we mention these because it is in these companies best interests to obtain and promote
as bullish a report as is possible and yet despite this, the Annual report portrays sobering
reading. The 2018 report published just over three
months ago and which we produced a video on 5th May (https://www.youtube.com/watch?v=Xv5nWrnq6q0&t=6s)
highlighted the following points: • 2017 saw the 5th recorded silver market
deficit in a row. A deficit of some 26 million ounces was recorded with mine supply falling
by 4%. To put this mine supply fall in context though, it follows 13 consecutive years of
annual increases – up to 2016. • Physical demand contracted by 2% in 2017
due to a fall of some 27% in coin and bar demand – a fall of some 27% in coin and
bar demand – falling from 207.8 million ounces to 151.1 million ounces. This is now the second
consecutive annual decline in coin and bar demand falling from 292.1 million ounces in
2015 to 151.1 million ounces in 2017. • On a positive note, jewellery demand rose
by 2%, silverware by 12% and industrial fabrication by 4%. In fact, the interesting factor here
is the ever-increasing use of silver for industrial purposes. In 2017 demand for Industrial fabrication
represented some 70% of mine supply and 60% of total silver supply. This compares with
2016 of 65% and 56% respectively. So 70% in 2017 vs 655 in 2016 of mine supply and 60%
in 2017 compared with 56% in 2016 of total supply. One of the main reasons for this is
that photovoltaic demand rose by 19% driven particularly by solar panel usage, mainly
by Chinese households. • So Mine supply is down 4%, with total
supply down 3.7%, coin and bar demand is down 27% with total physical demand down by 2.3%
resulting in a physical deficit of 26 million ounces, and once factoring in ETP and Exchange
Inventory build, a total deficit of 35.2 million ounces. There are a lot of figures there but
basically what it is highlighting is that demand is down although supply is also down.
• The average price of silver fell from $17.14 in 2016 to $17.05 in 2017.
So we should not be surprised to have seen little change in the average silver price.
Now for years people have been screaming manipulation, and whilst we have some sympathy here, as
mentioned earlier, basic economics tells us that if supply=demand then price is likely
to remains constant. A deficit of 35.2 million ounces is tiny, if one considers that even
the most conservative assessor values above ground stocks of silver with almost immediate
access at around 1 billion ounces, with a fair number quoting closer to 2 billion ounces.
So, a continuous 35 million oz deficit can be arguably catered for over the next 30 years
before supply becomes imperilled. Now we are not advocating that because of course any
continuous deficit will of course cause prices to gradually increase but with Industrial
usage now accounting for 60% of total supply and frankly little on the immediate horizon
for this to increase significantly further (unless of course you believe that the world
economies are going to grow well above its current 2% -3%) then the only factor likely
to affect supply in any great numbers is a rise in demand for investment purposes, and
we have seen these figures actually falling recently.
It’s worth bearing in mind that any major impact on Industrial demand is more likely
to be negative especially if the tariff situation gets out of hand – as global demand will
inevitably fall. Equally if world economies pick up, then although this may be advantageous
for silver producers it is likely to mean that demand for silver as a monetary metal
will fall further, thereby cancelling one another out, as funds will be even more avidly
directed towards the stockmarkets. 5. Internal US Politics.
On Tuesday, November 6th, 2018, midterm elections will take place. All 435 seats in the United
States House of Representatives and 35 of the 100 seats in the United States Senate
will be contested. Currently The House of Representatives stands
as follows: • 236 Republicans
• 193 Democrats • 6 vacancies due to resignations, planned
resignations and death. In the Senate there are:
• 51 Republicans • 47 Democrats
• 2 Independents. The Democrats have to defend 10 seats in States
that Donald Trump won — and on top of that, if they want to reclaim control of the Senate,
they have precious few opportunities to take seats from Republicans. But there is a path
for Democrats to win the Senate. It starts with winning eight or nine or all 10 of those
seats they’re defending — and then winning two or three or four of the Republican-held
seats in the following States: • Nevada
• Arizona • Tennessee
• Mississippi • Texas
• Nebraska So although at the moment, the Democrats feel
moderately confident that they may indeed win the House of Representatives, they are
far less certain about the Senate. We are of the opinion that if the Democrats win both
Houses and the Mueller report is negative towards the President, then impeachment proceedings
will most certainly begin. But even before the election takes place,
if the polls show that a ‘Blue Wave’ is likely to sweep over the elections, then we
can certainly predict that markets will become more turbulent (providing they haven’t moved
dramatically before then) and until the election is over we would expect to see monies leaving
the stock market and moving into gold and silver. However, the more dramatic moves,
we believe will occur post the election and perhaps early into the New Year.
On Monday, we shall highlight the highs and lows we expect the silver markets to reach
before 2018 is out and our reasons for it. So please look out for our next video.
We hope you have found this video interesting and informative and if so, please give it
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Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of
its owners.

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