Mario Innecco of Maneco64 told Commodity Culture host Jesse Day that current silver prices represent a gift for stackers despite recent weakness, because the metal remains heavily undervalued relative to gold and the long term drivers of currency debasement remain intact.
Innecco noted that silver sits only about 8 percent above its 1980 high nearly 47 years later while gold has multiplied several times over the same period. “Silver is heavily undervalued and I’m holding on to it and trying to add on to it as well,” he said.
He acknowledged that a retest of the $50 level is possible but argued it would be “a steal for those people who stack silver as an insurance against long term currency debasement.” Whether the system defaults on its debt or continues to inflate it away, he argued, “you want something that’s nobody else’s liability, which is gold and silver.”
The interview spent considerable time on the paper market and the large short positions held by commercial traders. Innecco pointed to the outsized shorts relative to other commodities as a clue and described silver as “the Achilles heel of the bankers” because it functions as everyday money. He referenced the Hunt brothers’ accumulation in the 1970s, the 1980 crash after regulators intervened, and the 2011 episode widely linked to JPMorgan selling. “If they didn’t control the prices they do, and I think they do, this system that we’re under would have been gone a long time ago,” he said. “So at least it gives us some time to accumulate physical gold and silver on the cheap.”
Innecco framed the leverage in silver as especially extreme. “The physical market will assert itself and it has been asserting itself,” he said, noting the Silver Institute’s report of multi year deficits. “Where is the supply?” He compared the current setup to the fractional reserve nature of foreign exchange trading and argued that problems only surface when longs demand actual delivery. The recent spike toward triple digits earlier in the year, in his view, reflected exactly that pressure forcing naked shorts to cover.
On mining equities he was constructive. Innecco, who sits on the board of a royalty company, said the sector is “minting money” with strong free cash flow and remains heavily undervalued. He noted that the miners have outperformed the metal itself since the July low and that some generalist managers appear to be allocating for diversification even if they are not outright bulls on the metals. “I think we’re still in the early stages of a massive secular bull market,” he said.
Drawing a parallel to the 1970s, Innecco recalled the roughly 50 percent mid cycle correction in gold before the final leg higher. He suggested the bears have already had their chance to push prices lower and that the current pullback does not constitute a total collapse.
Mainstream value investors who dismiss gold as having “zero intrinsic value,” he argued, simply do not understand monetary history or the fact that central banks still hold tens of thousands of tons of the metal. Evaluation is possible by comparing gold to money supply and debt owed to foreigners.
Innecco also discussed the theoretical possibility of a gold revaluation to address the U.S. debt. Using the Treasury’s reported 261.5 million troy ounces, he calculated that a price above $137,000 would theoretically cover the publicly held debt, though he called such a move “crazy” because it would destroy the dollar and force a return to a gold standard.
A more modest revaluation near current market levels, he suggested, could raise cash without increasing debt while putting a floor under the price, similar to steps taken in the early 1970s that preceded the decade’s inflation.
The overarching message was patience and continued accumulation of physical metal. Short term volatility and even sharp drops have occurred before, Innecco said, yet the structural problems of debt and the tendency of authorities to inflate remain unchanged.
For those focused on removing wealth from counterparty risk rather than trading paper, the current prices are an opportunity rather than a reason for caution.
