An Insightful Discussion on Silver and the Economy with Peter Krauth

April 19th, 2024 Comments

In a recent interview on Money Metals with Mike Maharrey, Peter Krauth, author of the book The Great Silver Bull: Crush Inflation and Profit as the Dollar Dies, discussed the intricacies of silver as both a commodity and an investment. Maharrey commended Krauth on the well-organized structure of his book, which allows readers to delve into topics selectively, appreciating its concise and impactful writing style.

(Interview Begins Around the 4:30 mark)

Peter Krauth, with a background of over 20 years in resource investment and analysis, shared his motivations for writing the book, driven by a desire to consolidate his extensive research on silver. The book, emerging amid the COVID-19 pandemic, reflects a comprehensive guide, particularly beneficial for those in the industry, including fund managers specializing in silver.

The conversation with Mike Maharrey and Peter Krauth also touched on the economic implications of the depreciating dollar, a central theme in Krauth's book. He provided a stark portrayal of the U.S. as a debtor nation, with its ballooning debt and the implications of inflation on everyday purchases, which have dramatically surged in recent years. Krauth argues that the dollar's slow depreciation is a significant financial phenomenon, impacting savings and broader economic stability.

Krauth’s insights extend to the historical and practical applications of silver, explaining its usage over gold due to its lower value by weight and greater suitability for smaller transactions. He also highlighted the critical role of silver in modern industries, especially in green technologies like solar panels, which are becoming increasingly reliant on silver, intensifying its demand.

He underscored the inelastic nature of silver supply, pointing out that most silver is derived as a byproduct of mining for other metals, which means that its supply does not necessarily increase with rising silver prices. This, Krauth suggests, is a fundamental reason why silver is currently undervalued and why its price does not fully reflect its market dynamics and utility.

Towards the end of the interview, Krauth shared where readers can find his book and follow his ongoing analysis on silver through his newsletter, "Silver Stock Investor." He remains active on social media platforms like Twitter and LinkedIn, continuing to engage with a broader audience interested in precious metals and their economic implications.

Key Questions and Answers from the Interview with Peter Krauth

What motivated you to write "The Great Silver Bull"?

Krauth explained that his motivation stemmed from years of accumulated research and encouragement from a colleague. The decision to write crystallized during the early days of COVID-19, driven by a desire to organize his findings and insights into silver's market dynamics into a comprehensive guide.

Krauth shared, "I had been writing a weekly report on gold and silver for my former employer, probably for three or four years, had accumulated a lot of data on the silver market, and I said, 'That's a great start for me. I can use a lot of that research.'" 

He added, "Deep into COVID, middle of the winter, looking around and thinking, I'm not going anywhere. I'm barely seeing anyone. This is likely to be like this for a while. Why don't I just go ahead and do it?"

Can you make your case that the dollar is dying?

Krauth highlighted the alarming growth of U.S. national debt and inflation rates, pointing out that everything from rent to consumer goods has doubled in price in recent years. He described the erosion of the dollar's purchasing power as a slow but inevitable process, exacerbated by financial policies that favor debt management over economic stability.

"The U.S. is a huge debtor, $34 trillion. That debt is growing at a rate of a trillion dollars every 100 days," Krauth explained. He continued, "You just have to look at inflation, and what people are paying for things... nearly everything has doubled in price."

Why do you prefer silver over gold as a form of money?

Krauth argued that historically, silver was used as money before gold due to its lower value by weight, making it more practical for daily transactions. He noted that silver has facilitated more business historically than gold, which is typically reserved for storing wealth and larger transactions.

Krauth reasoned, "Silver relative to gold has a lower value by weight, it is easier to use in daily transactions." 

He elaborated, "Because of the volume of use of silver, it's proven itself historically as, perhaps... until otherwise, until something else comes along, it has proven itself as the best-found form of money."

What are your thoughts on the current price and underlying fundamentals for silver?

Krauth pointed out that silver is undervalued, especially when compared to its historical price peak in 1980 and its significant industrial use. He discussed how silver's supply is largely inelastic due to its production as a byproduct of other metals, which does not necessarily increase even when silver prices rise.

Addressing silver's valuation, Krauth noted, "If you compared all of the base metals, and the precious metals, and the platinum group metals with their price in 1980, they were all dozens of percent if not hundreds of percent, and in some cases thousands of percent above their 1980 level. Silver was the only one of all of those that was still below its 1980 high."

What is happening with silver demand in the context of green energy?

Krauth emphasized the growing demand for silver in the solar industry, where it is an essential component of solar panels. He noted that even if production of solar panels were to stabilize, the demand for silver would continue to increase due to advancements in technology that require more silver per panel.

Highlighting the impact of green technology on silver demand, Krauth stated, "I consider the solar consumption of silver, because it's integral, it's indispensable to solar panels, to be the 800-pound gorilla in the solar market... It grew last year by 64% over the prior year."

These questions and answers covered the crux of the interview, highlighting Krauth's expertise in the silver market and his perspective on broader economic issues, particularly the challenges facing the U.S. dollar.

Peter Krauth Interview Summary

The overall lesson from the interview with Peter Krauth revolves around the significant economic and investment potential of silver, especially in the context of current financial challenges such as inflation and the depreciation of the U.S. dollar. 

Krauth emphasizes that silver is not only historically valuable as a form of money due to its practicality in daily transactions but also increasingly crucial in modern industries, particularly in green technologies like solar panels which demand large quantities of silver.

Furthermore, Krauth's discussion highlights the inelastic nature of silver supply, which does not necessarily respond to increased demand, thereby contributing to its undervaluation. This scenario presents a compelling investment opportunity, as he suggests that silver is still priced below its historical peak and the fundamentals suggest it should be higher.

In broader economic terms, the interview sheds light on the impact of fiscal policies that contribute to the erosion of currency value, making a case for precious metals like silver as a hedge against such decline. 

Krauth’s insights suggest that understanding the dynamics of commodities like silver can provide valuable strategies for preserving wealth and capitalizing on market inefficiencies. This underscores the importance of considering historical context, industrial demand, and economic indicators in investment decision-making.

In conclusion, the discussion with Peter Krauth not only highlighted his deep knowledge and passion for silver but also addressed broader economic concerns, making a compelling case for the strategic role of silver in hedging against inflation and currency devaluation.

To pick up a copy of Peter Krauth’s book, The Great Silver Bull: Crush Inflation and Profit as the Dollar Dies, you can get it here

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