There are fundamentals. And then there is legalized betting, ultimately backed by you, the tax payer. Otherwise known as speculative trades. 

Modern day commodity prices are determined by the latter, rather than by the result of trading based on the former. 

As silver prices bounce along the bottom of a four-year dismal performance range, suddenly it becomes nationalize news. Everyone likes to see the aftermath of a train wreck.

From the bearish nonsense emanating from the mainstream press, to the evergreen bullishness of the alternative - ‘pro-gold and silver’ publishers, too few acknowledge the true depths of these broken markets.

Both are careful to present the array of so-called fundamentals to justify their assumptions.

And yet evidence for why prices are the way they are - and why they will eventually return from whence they came is ignored almost as a matter of routine.

Bill Bonner and friends recently provided some commentary from inside bullish side.

While much of what is presented is not far from the (fundamental) mark, these factors do little to indicate manifestation in current price.

The Next Silver Bull Market May Have Already Started

Silver is down 7.1% this year.

Will this weakness persist? To find out, let’s look at the key factors in the silver market this year.

• Like gold, silver fell as the U.S. dollar rose on the back of expectations that the Fed will hike rates.
• World demand for physical silver fell 4% in 2014, largely due to a record 19.5% drop in investment demand.
• Silver exchange-traded funds (ETFs) did not see big liquidations in 2014. ETF holdings grew by 1.4 million ounces and recorded their highest year-end level at 636 million ounces.

The first two factors helped push silver 19.9% lower last year. That’s more than gold or any other precious metal fell. Despite this, silver production rose 5% in 2014. That added to the pressure on prices.

Why did miners produce more silver when prices were falling? Because of:

• By-product metal. Around 75% of the silver mined is a by-product at gold or base metal mines. These producers will keep mining silver, almost regardless of price.
• Reduced cash costs. The primary silver producers have cut costs since they peaked in 2012. The main way miners do that is by boosting production to achieve economies of scale.
• Bull market hangover. Precious metals were in a major bull market from 2001 to 2011. Producers built a lot of mines in response. Nobody wants to pull the plug on a new mine that’s losing money if they think prices will go higher.

That’s the backdrop. Now let’s look at this year’s fundamentals.