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So, I was on a call with a friend yesterday, and out of nowhere, he says, "Do you think Warren Buffett is buying silver again?" He always comes up with these theories, this guy. And I say, "No way, man. Don't be stupid. Come on." He says, "In 1997, he bought 20% of the world's annual production, and the only sign was that vaults were emptying, just like they are now." And I say, "But that doesn't prove anything.
Everyone is buying silver. That's why vaults are emptying." Then he goes, "He is selling stock like crazy. Maybe it's to buy silver. He's sitting on a record pile of cash for a reason, and conditions are worse today than they were in his 1997 buying spree. But that doesn't mean he's buying silver," I say.
"That's not proof." And I'm getting a bit annoyed at this point. Then he says, "What about the carry trade blowing up in Japan? What about the dollar dropping 9% last year? He has the cash, and he has the same reasons as he had in '97." "Look at this article," he tells me. So, I I look at the article, and "Maybe you're onto something," I say.
This is the crazy story of the last time Warren Buffett secretly cornered the silver market, and why conditions right now in 2023 are almost identical, if not significantly more explosive. Look, I'm not saying that he is buying. There's zero confirmation. But by the end of this video, you'll understand why my friend might not be so crazy.
I mean, he is crazy, but not about this, maybe. My name's Nick. I've been a professional investor and unprofessional trader for 24 years. Today, we need to talk about the secret history of Buffett's 1997 silver heist, the mathematical proof that supply is tighter now than it was back then, the February day that could blow this entire market wide open, and if Warren Buffett is buying silver for the third time in history.
Let's figure this out together. But before we do this, this is not financial advice. This is not an inducement to buy any asset. Investing is high risk, and most importantly, do not take financial advice from some random dude on YouTube. Look, historically, Warren Buffett is not a big fan of silver.
He calls it an unproductive asset along with gold. But every rule has an exception, which is why in 1997, Buffett bought up 20% of the world's mined supply of silver. And the only clue that it was happening was that both were running dry and people were thinking, "Why?" So, to understand if the Oracle is back The Oracle is Warren Buffett, by the way.
If he's back in the silver game, we have to understand what he actually did in 1997, because most people get this wrong. They think Warren Buffett just woke up one morning and was like, "I like shiny rocks." He didn't. So, let me tell you the true story of why in 1997 Buffett bought up more silver than any man in history.
So, back in '97, Berkshire Hathaway, that's Buffett's company, quietly and secretly accumulated 129.7 million oz of silver. That's a lot of silver. To put that into perspective, that was around 20% of the world's available inventories at the time. Uh so, basically a quarter of the actual global production, too.
[screaming] He did it through a single broker, a firm called Febro, and he took delivery in London. That's going to be important. He didn't buy the paper contracts. So, he didn't buy the ETFs. I don't think ETFs existed back then, but but anyway, you get my point. Now, so no leverage. Like I always say, leverage kills.
Buffett doesn't use leverage. Don't use leverage. He wanted the physical metal. Why? Because Buffett is a value investor. He looks for things that are mispriced. And in his own words, and I'm paraphrasing here, he said that silver had been in a structural deficit for years. The world was consuming about 800 million oz, but only producing around 500 million from mines and scraping together another 150 million or so from recycling.
That left over a gap of 150 million oz per year. And that gap was being filled by above-ground stock piles. Buffett looked at the map and said, "Well, eventually stock piles are going to run run out. And when they do, the price has to go up." So, he started buying on the 25th of July, 1997. He got in at around $4.50 an oz.
1997 was a good year, by the way. That's a year Hercules came out uh from Disney. I was 11, I think. I went to see it at the cinema. I miss the '90s, guys. I miss the '90s. Anyway, sorry. He started buying on the 25th of July 1997 for 50 an ounce, right? And then he disclosed his position around about February or March of 1998.
When he disclosed the position, the price shot up to over $7. And he held from for around about 10 years from there, if I recall. But here's the thing, a rare Buffett defeat. The Oracle got defeated. He later admitted that he sold too early. Had he held onto that hoard, at today's prices, it would have been worth around 13 billion.
So he left billions on the table because he underestimated just how long that deficit would last or how bad it would get. So according to Katusa Research, and this is the article that my friend sent me that really got my attention, Buffett's original thesis has actually come true now. The deficit he saw in 1997 was a pothole.
The deficit he's seen today is is is a bloody chasm. But none of this actually proves anything. The man bought 30 years ago, it doesn't mean he's buying now, which is why I was skeptical when my friend first brought this up and why I still kind of am going to be honest, but let's continue going through this together.
Drop your thoughts in the comments, by the way. Is Warren Buffett buying silver? So let's look uh let's talk about the deficit because this is the engine of this whole story. In '97, Buffett saw a gap. Today that gap is a chasm, like I said. We're currently on our fifth successive year of structural deficit or is it our sixth?
It doesn't matter. Fifth or sixth, close enough. So what does that mean? According to the Silver Institute, cumulative shortfall, that's the amount of silver we use versus the amount we dig up since 2021, is nearly 820 million ounces. Think about that number. 820 million ounces, that's the silver that's gone, consumed, vanished into solar panels, into landfills, or into Warren Buffett's vault, maybe.
Anyway, when Buffett bought in '97, the cumulative deficit was around 700 million ounces. So the hole today is roughly the 20% larger than the hole that convinced him to buy in 1997. And you might say, "Well, Nick, if the price goes up, surely the miners are just going to dig up more silver, right?" Wrong.
70% of silver comes out of the ground by accident. It's a byproduct. It comes from from lead mines, zinc mines, copper mines. It's kind of like a bonus metal, right? Which is why mining production has essentially stagnated at around 800 million oz for a decade. It hasn't It hasn't moved. We We've We've thrown billions at mining, by the way, and we still can't get more silver out of the ground, which is crazy to think about.
But this still doesn't prove that Warren Buffett is buying. All we have is that in he bought in '97 partially because of a deficit, and the deficit is bigger this time around. So what about demand? Well, demand is doing something that didn't even exist in Buffett's wildest dreams in 1997. In '97, the biggest use for silver was photography.
Do you remember those Kodak cameras? Do you remember the film in the cameras? The film was made of silver, at least partially. I used to love those disposable cameras, by the way. Do you remember them? The little plastic ones? Man, I got to stop with the '90s nostalgia. It [snorts] But look, if you were around back then, you might remember that digital cameras were coming around, and everyone was like, "Oh, well, silver's dead because digital cameras are coming around." But Buffett bought anyway.
Then flash forward to today, we have an entirely new beast eating up silver supply. First is solar panels. We We talked about them, photovoltaic cells. You can't have a green energy transformation without silver. In 2023, solar demand ate up 197 million oz. That is nearly 20% of the entire global supply just for solar panels.
And that number is compounding. Sprott estimates that by 2030, solar alone could eat up 270 million oz. But to balance that out, solar manufacturers are looking at ways of thrifting silver. So keep that in mind. I think I read that they want to do minus 90% of the silver usage right now on on solar panels.
Anyway, but it's not only solar, you also have electric vehicles. An electric vehicle uses up to 50 g of silver. That's nearly twice as much as go as what goes into a gas car. Then you have AI. You you can't spell AI without silver. Not really. Uh anyway, you can't build AI data centers without silver.
So, in 1997, Buffett was betting on a deficit caused by photography and jewelry. Today, if he were buying, he would be betting on a deficit caused by the fundamental energy infrastructure of the entire planet. Which one sounds more critical to you? But, that doesn't prove anything. And I should point out that just because a billionaire might theoretically be buying, it doesn't make it right for you.
Billionaires can sit on positions for a decade and not care if it's up or down. And they certainly don't buy paper silver, by the way. So, no leverage, guys. All right, anyway. Moving on. Now, where This is where my friend really started to sound a bit conspiratorial. He mentioned the vaults. If we are using more than we are producing, the metal has to come from somewhere.
It comes from the above-ground stockpiles, the vaults. The vaults in London, the LBMA, this is where Buffett took delivery last time, and also the vaults in Shanghai. They're They're They're starting to run dry. Since the peak in 2021, the LBMA vaults have drained by over 400 million ounces. That is a crazy amount of silver gone from those vaults.
Now, we've seen months where 50, 60, 70 million ounces just just walk out the door. Where is it going? Is it going to India? Is it going to China? Is it going to industrial production? Is some of it going to Warren Buffett? Who knows? And speaking of China, look at the Shanghai Futures Exchange, by the way.
The SHFE vaults have collapsed. We're looking at an at inventory levels of like 450 or maybe in 350 tons. It sounds like a lot until you realize that that's around 13.5 million ounces. 13.5 million ounces for the entire industrial hub of China. Buffett bought 130 million ounces on his own. He could buy every ounce in Shanghai in Shanghai's vaults 10 times over and have enough cash left for Dairy Queen.
If you don't know what the Dairy Queen reference Warren Buffett likes Dairy Queen, he is a huge fan. Anyway, the physical market is tight right now. It's tighter than it's tight, right? Uh and I was about to say something rude there. And that brings me to the geopolitical card that Buffett didn't have to worry about in 1997.
This is a new variable that only existed as of January 1st, 2026. China has implemented export controls on silver. They've designated it as a strategic mineral. I mentioned this in my last video because they control 60 to 70% of the world's refined supply of silver. They refine it, they process it. And now they are saying, "We need this for our solar panels and our military.
You guys in the west, you you just figure it out for yourselves." This effectively locks a huge portion of the global silver supply within China's borders. In 1997, the market was free. Today, the market is being fenced off by China. If you're Warren Buffett and you see the supply chain fracturing, do you wait for price to go up or do you secure your 130 million ounces when while you still can?
But Nick, Buffett doesn't buy just because of supply and demand. He buys because of the macro environment. He buys because of value. He buys value. Right you are, my learned friend. So, let's look at the world in 1997 versus the world today in 2026. In the late '90s, we had the Asian financial crisis.
We had the Russian default looming. Now we have the Russian defeat That's such a stupid joke. Cut that, please. In 1997, we had Long-Term Capital Management, a giant hedge fund about to blow up. The monetary regime, it was wobbling in '97. It was it was a weird time. What do we have today? Today, we have the Japanese carry trade unwinding.
Bond yields in Japan are breaking out, threatening to suck liquidity out of the global system to the tune of trillions of dollars. We have central banks buying gold at a record pace. For the first time since '96, central banks hold more gold reserves than they do US Treasuries, '96, '97. They are voting with their wallets.
They they are saying we don't trust the debt of America anymore. We trust metal. We have the dollar the dollar dropped 9% in 2025. That's that's his worst year since 2017. We have a political environment where tariffs and a weaker dollar are openly discussed as policy goals. Trump wants a weak dollar.
Dis- Debasement is the goal. Buffett hates inflation. He hates currency debasement. In '97, he used silver as a hedge against the chaotic macro backdrop. I haven't even mentioned the first time he bought, by the way. He also bought silver in the '60s, which was a hedge against the dollar because he was worried about debasement back then.
Today, the backdrop isn't just chaotic. It it it's actually actively hostile against the dollar. So, you know, maybe echoes of 1962. But, that still doesn't prove that that Buffett's buying in 2026. And this brings up the final and perhaps the most compelling point, the capacity. My friend said, "What about the war chest, right?" That's what he mentioned.
Berkshire Hathaway is sitting on 381.7 billion in cash. It's an all-time record for them. They're cashed up to the gills. It's an obscene amount of money. It's like half an Elon Musk worth of money. I say that as if Elon Musk is a is a unit of measurement. What what am I on about? Anyway, he's sitting in Treasury bills earning 4 to 5%.
Buffett has been a net seller of stocks for 12 consecutive quarters. He sold Apple. He sold Bank of America. He sold Kraft, I think, a few weeks ago. He is cashing out. Why? Because he says he can't find anything to buy. He says valuations are too high. And he's not half wrong about that. I mean, the stock market's crazy right now.
But, he has to to that money somewhere. In '97, his silver purchase cost him around 600 to 700 million. It was big for the silver market, but Berkshire, for them, it was like 2% of their portfolio at the time. Today, with 380 billion, he could buy the entire annual production of silver, every single ounce dug out of the ground globally, and it would cost him around 25 billion.
It would be like less than 10% of his stockpile, right? Of his cash pile, rather. He could replicate his 1997 trade by 130 million ounces, and it would cost him like 10-ish, 12-ish billion. It'd be a rounding error on his balance sheet. That's like a an Elon Musk pinky toe worth of money. The dry powder is is there like it never has been before.
He has the motive, inflation, deficit, etc. He has the opportunity, the cash, and he has the history of taking this action. But that still doesn't prove anything. So, is he doing it? Look, guys, I'm a cynic. I spent too long in the investment world to believe in coincidence. Correlation does not equal causation, and usually when the internet gets excited about silver squeezes, it ends in tears.
But I have to admit, the setup is somewhat interesting. The Kitco Research article points out that the buy signals are are flashing exactly the same way they did 27 years ago. The Nasdaq article, which is another article my friend sent me, it's a Motley Fool article, but it's published in Nasdaq. They they say that we're approaching a critical disclosure window, February 14th, Valentine's Day.
That is when the 13F filings are due for the fourth quarter of 2025. This will show us what Buffett did definitively. And remember, he stepped down as CEO on January 1st, so this would have been his final actions that he did in the last quarter of last year. So, did he buy? Look, I'm not saying he did, I'm not saying he didn't, but if we see a line item for silver or a massive position in something silver related, like mining stocks, that would be history rhyming as it often does.
My favorite part would probably be that that he would hurt JP Morgan on the way out, which which would be fun because I don't like JP Morgan, but Buffett does like JP Morgan. He's good friends with him actually. Look, I'm not saying he's buying. There's zero confirmation. He might just be buying treasury bills, right?
He might be buying Japanese insurance companies again, but if you look at the deficit, the solar demand, the empty vaults, and the macro chaos, maybe. What do you think about all this by the way? Drop it in the comments. Do you think he's buying? Let me know. I I I try to reply to every comment. Speaking of comments, thanks so much for all the lovely comments, guys.
You guys are always saying nice things. Like, "Nick, you're so smart and well-informed. How do you keep up with everything that's going on around the world?" Well, I use Ground News because it ties into exactly what we've been talking about today. As an investor, you cannot afford to to see only one side of the story.
That is how you lose money. Ground News shows you how the same story is being covered across thousands of different news sources. You can see the bias. You can see who is reporting it and who is ignoring it. So, when I see a headline saying that silver is dead or headline that's saying silver is going to $200, I can pull up pull it up on Ground News and see who is actually saying this and what their angle is.
Look, we all know the media has an agenda, that banks have an agenda, everyone has an agenda. And if you're making financial decisions based on one source or one side of the story, you're going to get burned. Ground News helps me cut through the news. Check them out. It's only a few dollars per month.
That's That's like one Elon Musk atom worth of money. You I bet you didn't see that sponsor placement coming. Anyway, I think these theories are coming up because the world is in a messed up place right now. People They They like to look at these mythical figures like Buffett as some sort of buy signal.
And I get it. I mean, I love Warren Buffett. I I've always tried to invest like him, but there's there's a certain danger in following billionaires, especially some of them like Michael Saylor. He was saying 3 weeks ago to buy Bitcoin. He was like saying, "I might go to 10 million tomorrow. That's why you should buy it." Yeah, 10 million Argentinian pesos or whatever.
I Look, I shouldn't compare Buffett to Saylor because one is sane and one is a sailor, but the point I'm trying to make is don't bet your life savings on what billionaires are doing because they have different goals to you. Here's the thing though, you don't need Warren Buffett to tell you that supply and demand matter.
You don't need a billionaire to tell you that printing trillions of dollars eventually has consequences. The world seems up right now and I understand why people are turning to the security of precious metals. I always said that I hold silver because I consider it if things go to money. That's why I have some.
I don't put all my wealth into it and I'm not trying to flip it for money. So if Warren Buffett agrees with me or not, it doesn't much matter to me.
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