What impact would the nationalization of mining in Bolivia (the world's sixth largest producer of silver) have on short term and long term silver prices?
Naturally, it would be a long-term positive factor for the silver prices as the nationalization of mining would most likely lead to lower supply of the white metal. This could be caused by either governing authorities that would prefer to stockpile silver instead of selling it abroad or by the fact that a monopoly (nationalization – thus more or less one owner of the whole industry) generally produce less and at higher price than it is the case with a competitive market.
In the short term, it's impossible to tell, as markets are so emotional and volatile. Theoretically, nationalization should be a positive factor for the short run (the same logic as above), however it could be the case that this risk is already factored in the price. In other words, this could be the "buy the rumor, sell the fact" situation. If you recall, that was the case when the SLV ETF was introduced. Everyone and their brother explained how positive this will be as many more people will be able to invest in silver. Price soared which could have been partly attributed to these remarks.
However, we should not forget that when the SLV ETF was finally brought to life the price of silver plunged.
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