You can find any silver hypothesis you like around the traps.

Regulators have bought some of them, investigating JP Morgan and other traders on accusations of playing with the futures prices in recent years.

What is concrete this year is speculators have rushed to short silver following its gains in April and now commentators aplenty are saying the short squeeze will help already-improving prices shoot up this year.

Not so concrete is the off-market hoard theory about the US bank, which says JP Morgan is holding 550 million ounces of physical silver.

There is no readily available evidence for this (those convinced use the bank's trading behaviour to demonstrate it) and JP Morgan did not respond to a question from Mining Journal about its physical holdings.

Looking at recent research and speaking to those who sell silver and study its movements alongside gold and macroeconomic indicators, no singular picture emerged of where silver is going. Many in the market say it's going up, but a lot of Comex traders will be hoping it doesn't climb back beyond US$17 per ounce.

How we get it

Silver is largely mined as a by-product of zinc, lead, copper, and gold.

Primary silver mines provide less than a third of the world's supply, estimated at 1,030Moz in 2017 by ThomsonReuters GFMS.

That supply goes into jewellery (25% of demand, according to RBC), electronics (22%) and coins and metals trading (20%).

Industry body the Silver Institute organises research and is backed by miners Fresnillo, Pan American Silver and Coeur Mining among others. Executive director Michael DiRienzo said industrial demand for silver would stay strong through evolving uses.

"[Demand] was just lower last year [on 2015], and in two key areas we saw very healthy rises," he said.

"One is silver use in solar panels - in 2016 we had a 34% increase, and that was based on global solar panel installations, which had a 49% increase.

"And to a lesser degree ethylene oxide, which was up slightly on 2015," he said.

Silver is used as a catalyst to produce ethylene oxide, itself used to produce industrial chemicals.

The ‘electrical and electronics' category of usage fell 4.8% year-on-year in 2016 to 234Moz.

Jewellery also fell year-on-year due to spending drops in China and India, but DiRienzo said forecasts backed that area to pick up soon.

In 2016, the silver supply deficit was 27Moz and demand is steady enough to see this widen in the coming years (even photography demand has stabilised).

But silver's existence between the two worlds of industrial and precious metals means other forces kept prices from rising and staying higher as copper has, for example.

RBC Capital Markets analyst Mark Mihaljevic wrote this month the silver price would be supported by supply lags for some time.

"We expect silver to remain in a physical deficit over the next couple of years with limited new mine supply (especially at current price levels), strong ongoing growth in photovoltaic demand, and a forecast rebound in electrical consumption, offsetting moderation in coin and bar demand," he said, also highlighting the suspension of Tahoe Resources' Escobal mine (2% of world supply) as a supporting factor in higher prices.

So if silver demand is strong, why did its price drop off mid-year after a high in April of over $18/oz?

What other criteria do we need to build an investment hypothesis for silver?

Precious metals specialists can help out here. Incrementum's research chief, Ronald-Peter Stöferle, told Mining Journal he looks at silver the same way he researches gold.

"For forecasting or analysing gold, we really focus on the big picture, the macro picture," he said.

"So inflation dynamics, real interest rates, opportunity costs (equity markets), the commodity markets in general, and currencies, most importantly the US dollar," he said.

"We basically regard silver as some sort of derivative of the gold price."

He said the mid-year gold and silver lull has confirmed it would head up again by the end of the year.

"I think that the deciding factor will be investor demand," he said. "At the moment, investor demand for gold is sort of sluggish.

"[Our last] report was published on June 1, saying the technicals (market indicators) are not overwhelming and we expect some short-term weakness, and that totally materialised in the last few weeks."

The golden silver ratio

So it's not just demand for silver that makes the price tick but also … a different kind of demand. Investor demand.

Stöferle advises clients and wants them to buy (sensibly) and the Silver Institute's whole raison d'etre is to spruik the industry, so let's hear from the front lines where those keen on buying the physical metal end up.

Sharps Pixley sells bullion from its London shop floor, and you can either walk out with your silver (and be hit by a 20% VAT charge) or ask them to hold onto it in a nice vault (no VAT).

CEO Ross Norman said silver followed gold and depended on zinc et al for consistent production numbers.

"Some people call [silver] a poor man's gold, and I just think it's boring," he said.

"It doesn't have its own fundamentals. It's driven by other assets, such as zinc and copper.

"It's got weird fundamentals attached to it as well: it tends to follow gold around like a faithful Labrador. It rarely shows character."
This loyal attachment means one tipping point commentators look at is the gold to silver price ratio.

While this is a price representation instead of a factor in bull or bear markets, it doesn't hurt to know the history of gold and silver's merry dance.

Right now one ounce of gold is worth around 75 ounces of silver, with 80:1 seen as a threshold for a turnaround.

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"It's got weird fundamentals attached to it as well: it tends to follow gold around like a faithful Labrador"

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In the past 40 years, the lowest ratio - 17:1- has come when silver managed to outpace gold in its record 1980 price growth (and fall, thanks to the Hunt brothers), which wasn't to be equalled until the mid-2000s.

The highest ratio came in 1991 at over 100:1, when gold was flat again at $400/oz and silver was around $4/oz.

So there's not a lot in recent history indicating that when the ratio hits a certain point, the metal will rally.

A recent Macquarie research report said silver's good start to 2017 (reaching $18.56/oz in mid-April) and subsequent fall saw the ratio head over 70:1.

Stöferle said he uses the ratio to check on gold trends.

"We focus on the gold/silver ratio quite a lot, to confirm our view on gold," he said.

"If you really want to be in a gold bull market, silver should be rising stronger, or faster, so the gold/silver ratio should be declining.

"As you're seeing a falling gold/silver ratio, you're normally seeing rising inflation rates. Silver is very sensitive when it comes to inflation dynamics."

Stöferle picked a ratio of 30 or 40 in a gold bull market, the same as was seen in 2011.

Macquarie's July commodities report put the splitting of the gold and silver price dynamic (despite both having recent falls) down to major investors in futures moving from long to short positions.

"One exacerbating factor [in the fall] was oversized speculative positions - by March the New York futures silver net long was the largest ever, and, even as a percentage of open interest, the highest since 2007," the report said.

"From late April, it reversed significantly."

Long goes short

So beyond supply and demand trends, macro indicators and investor demand shown in physical and ETF trading, could futures trading be decisive when all other signs are vague on silver?

Sharps Pixley's Ross Norman thinks so.

"What I look at as a key driver in silver is speculative positions," he said.

"We are also predisposed negatively towards those guys as well - these are the traders who trade on the Comex futures markets, and currently they have an all-time large short position on silver.

"They've eroded their long position and they have an all-time record short position. These are people who don't really care about the fundamentals of the asset class they're trading, typically, they're just momentum followers."

This is not a new critique, although major banks have, in the past, been accused of being more than followers.

The US Commodity Future Trading Commission spent five years investigating manipulation of silver futures until 2013. It did not press any charges in the end, but said initially it had taken an interest because of the difference between silver futures prices and those of other silver products.

"The complainants [who sparked the case] generally asserted that because the prices for retail silver products, such as coins and bullion, had increased, the price of silver futures contracts should have also experienced an increase," the CFTC said.

"By reference to publicly available information concerning large traders with short open positions in the silver futures contracts, the complaints also alleged that the large shorts in the silver market were responsible for lower futures prices."

While that investigation ended without any charges, JP Morgan has been tested in court by non-government players as well.

In play currently is a case brought by three traders who say the major US bank controlled futures prices on the Comex floor in 2010 and 2011 by placing artificial bids, haranguing workers and making "misrepresentations to a committee that set settlement prices", according to Reuters.

Without commenting on the validity of the case, in February the US Circuit Court of Appeals struck down an earlier dismissal.

The most recent CFTC Commitment of Traders report had large speculators net long by 9,376 contracts on 5,000oz (troy) silver futures, compared with a net long position of over 100,000 in early April. The gross short as of July 18 was 81,400, up from 25,142 on April 4.

The current shorting has its upside, according to both Norman and Stöferle.

"The so-called smart money is massively bearish on silver, and as such, at some point the market is prone to a short-covering rally," Norman said.

"Anything, such as geopolitical tension in the world, prospective flare-up in Syria or Ukraine, wherever, could spark a fantastically strong short-covering.

"In other words, the worst is [priced in] in silver on the futures markets."

Stöferle agreed, and has predicted the catalyst: a US recession, saying its economy is doing much worse than widely thought.

"[I think we'll see] $1,450/oz for gold, and for silver I could imagine it going to $20/oz or $21/oz by the end of the year," he said.

Stöferle dismissed the short squeeze as an upcoming price driver, however. "For all the talk about the short squeeze and the Comex and all that, of course it can happen, but I would not bet on that," he said.

Norman picked an end-of-year silver price in the high teens and above $20/oz if anything catastrophic happens globally.

Ag-nostic

It's worth stepping back and looking at how the various silver options have stacked up financially recently. Physical silver is up less than 1% year-to-date, BlackRock's silver ETF is up 0.59% year-to-date to $10.98 per share, and major silver miners have had similar returns in that period: Pan American Silver with 0.59%, Hecla Mining with 0.95%, although Fresnillo breaks the pattern by gaining 26% this year and Tahoe Resources' woes have it down 46.09%.

And the alleged JP Morgan hoard?

Incrementum's Stöferle said investors may as well stick to what can be proven: "For me, it's impossible to make forecasts on something like that, therefore we focus on what we know and can be forecast, like inflation and mix of opportunity cost".

Finally, let's turn to our friends at Happy Preppers for some advice. As survivalists and fans of holding the precious metal, they are getting ready for the end of civilisation and know silver will be in demand on our ruined streets: "Someone may be willing to part with a can of SPAM for your silver coin."