Courtesy of the Village Whisperer, we are happy to present BMO's latest comprehensive report on silver titled "A new paradigm for silver." While we suggest readers skip the part about price expectations for gold, silver and other metals, which at this point nobody save for the Chairsatan has any clue where these will go (and Bernanke's mind is made up for him by Jan Hatzius, so as always pay attention to Goldman buy/sell signals on PMs), the report does have a very extensive section on the key supply and demand drivers, which for anyone new to the metal, is a must read. Additionally, the report covers virtually all the key silver miners of note (incidentally for those wondering, the San Critsobal strike was lifted earlier today).
- BMO Research has reviewed a number of supply and demand scenarios for silver through 2015E. The analysis suggests that the projected rise in mine supply should largely be consumed by rising industrial demand through to the end of 2012E.
- The prospects of further quantitative easing combined with sovereign debt concerns, competitive ‘fiat’ currency devaluation in western economies, and the return of inflation could result in investment demand exceeding BMO Research’s projections and extending the supply deficit through 2014E.
- This shift in the supply/demand dynamic lies in contrast to the broader investment perception for silver, which is rooted in the 1990’s when the metal was in abundance, driven by the demise of the photographic industry and Chinese selling.
- The paradigm shift for silver suggests that the traditional benchmarks for silver, such as the long-term historical ratio with gold, are no longer valid. Accordingly, the markets are searching for a new set of criteria againstwhich to benchmark the price of silver, with a bias to the upside.