Silver took another hard hit this week, and whenever that happens, I start seeing the same question: where’s the floor? Is it $60? Could we go back to $50? What about $40? And every time, somebody in the comments swears we’re headed back to $20.
I’m not going to pretend I know exactly where the bottom is. I’ve watched silver long enough to know it can fall a lot further than people think it should. But there’s a difference between saying silver can crash and saying we’re going back to the days when $20 silver was normal. I don’t think we are. I don’t think $20 silver is realistic anymore, and I definitely don’t think we’d see it stick around for any real length of time.
Silver Can Still Crash
Remember March 2020? Silver briefly fell below $12 an ounce. People were panicking and selling whatever they could, and silver went down with everything else. Anyone telling you silver has a guaranteed floor needs to remember that.
But if you were actually trying to buy physical silver during that drop, you know the number on the screen wasn’t the whole story. You weren’t walking into a coin shop and loading up on rounds and Eagles for $12 an ounce. Premiums jumped, products sold out, and buyers often waited weeks to get the silver they paid for.
That’s an important distinction for those of us who stack physical. A price on a chart and the price of silver you can actually take home are two different things. Spot matters, but so do availability, dealer inventory and the premium you’re paying over it.
Could we get another crash? Sure. I have no idea how low spot could go during another situation like that. But silver falling below $20 and staying there for years, with physical silver readily available at low premiums? I just don’t see it.
Twenty Dollars Isn’t What It Used to Be
You don’t need an inflation report to know your money doesn’t go as far as it did a few years ago. You see it at the grocery store, when you get something repaired, when you buy equipment and pretty much everywhere else you spend money.
The same inflation that changed what $20 buys also changed the cost structure around producing silver. Workers, equipment, parts, energy and construction all cost more than they used to. Then the silver still has to be refined, fabricated, transported and sold before it ever gets into your hands.
Mining costs don’t create a hard floor, and a lot of silver comes from mines that primarily produce other metals, so those mines don’t necessarily shut down just because silver gets cheap. But the cost of getting an ounce out of the ground and into your hands still matters. Anyone comparing today’s price to 2019 without thinking about that is leaving out a big part of the picture.
What My 2018 Silver Order Looked Like
Back in October 2018, I placed an order for 500 Silver Eagles and 60 Buffalo rounds. Spot was $14.77. I paid $16.92 each for the Eagles, about $2.15 over spot, and $15.36 each for the rounds, which was less than 60 cents over. Shipping was free. The whole order, 560 ounces, came to $9,381.60.
Looking at that now hurts a little. At today’s spot, those same 560 ounces are worth around $36,000 in melt alone, and actually buying them again at today’s premiums would cost me quite a bit more than that.
When I ran the numbers, one thing stood out. That $14.77 spot price works out to roughly $19 to $20 in today’s dollars once you account for inflation. So when people say they’re waiting for $20 silver, what they’re really asking for is 2018 silver. Back then silver had been ignored for years, industrial demand was lower, and hardly anyone was talking about supply deficits. Getting back there would mean undoing most of what’s changed since.
And even if spot somehow did get there, look at those premiums. $2.15 over spot on Eagles. Today you’re looking at +$5 to +$7 over spot on the same coin. That premium is something that, if we somehow DID end up at $20, I don’t think for a second that you’d see the premiums there to match… not even close.
There’s Still Plenty of Demand
Silver gets used in electronics, vehicles, solar panels, electrical infrastructure and plenty of other industrial applications. That doesn’t guarantee higher prices, but it matters when we’re talking about what silver might be worth over the long run.
I’m not going to ignore the other side of that, either. Manufacturers are finding ways to use less silver, especially in solar panels. When a material gets more expensive, companies naturally look for ways to cut back. That’s something stackers should pay attention to, even if it isn’t what we want to hear.
We’ve also had several years where silver demand exceeded new supply, with existing inventories making up the difference. Now that doesn’t mean we’re about to run out of silver, and I think people sometimes take that argument too far. As I’ve said plenty of times on my YouTube channel, there is PLENTY of silver above ground and available. It simply means there’s more going on in this market than whether investors happen to be buying or selling this week.
Getting Back to $20 Would Be a Huge Move
With silver in the mid-$60s when I originally wrote this, a return to $20 would be a whole lot more than a bad week or a normal correction. Here’s what those lower prices would actually mean:
How far would silver have to fall?
Using $64.50 an ounce as our starting point:
| If silver falls to… | That’s a drop of about… |
|---|---|
| $50 an ounce | 22% |
| $40 an ounce | 38% |
| $30 an ounce | 53% |
| $20 an ounce | 69% |
These aren’t predictions. They just show how big a move we’re talking about.
I’m not going to call any of those prices impossible, because nothing in this market is. But a 70% drop from here isn’t a correction. That’s something seriously breaking. And even then, I’d bet on it being a temporary panic, not a price we’d be living with for years.
March 2020 is a good example of why that matters. Spot went extremely low, but it didn’t stay there, and physical buyers weren’t getting the bargain the chart made it look like they were getting. If something similar happened again, I wouldn’t expect a $20 spot price to mean dealers had stacks of $20 rounds waiting for me. They didn’t in 2020, and I don’t think they would next time either.
Here’s Where I Stand
I’m not saying silver can’t fall. It can, and it’ll probably give us plenty of uncomfortable days along the way. I’m also not telling you to buy at any price. A high premium still comes out of your pocket, and you shouldn’t assume you’ll get all of it back when you sell.
But I’ll say it plainly: I don’t believe we’re going back to $20 silver in any way that matters to a stacker. Maybe we get a scary dip on a chart during some kind of panic. Sitting at $15, $17 or $20 for long stretches, with product on the shelves at normal premiums? No. Too much has changed, including what a dollar buys, what it costs to produce and move metal, and how much silver industry keeps using.
I’ve got a receipt from 2018 that shows exactly what cheap silver looked like, and I’m glad I bought when I did. But I’m not holding my breath waiting for another one like it.
Could I be wrong? Sure, I’ve been wrong before. But if you’re sitting on the sidelines waiting for $20 to come back before you buy, I think you could be waiting a very long time. Be ready for pullbacks and buy the dips when they come. Just don’t build your whole stacking plan around a price I don’t think is coming back.