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Guest Post: More On The Case Of Silver
Submitted by David Galland of Casey Research
More On The Case Of Silver
Last month gold broke into new record territory – reaching an all-time high of $1,387 on October 14.
A new record in nominal terms, that is. To top the previous high in
inflation-adjusted dollars, gold will have to approximately double from
there.
Silver, however, has barely made it halfway back to its prior nominal
high of $49.45 an ounce, achieved on January 21, 1980. In order to
break into new territory in inflation-adjusted dollars (using the same
CPI calculation methodology used in 1980), silver would have to rise to
over $250 an ounce – more than ten times where it is today.
Here are some other useful facts about silver:
Due to the fact that silver’s industrial applications result in
destroying the stuff, there is currently a total of only 1,234,590,000
“investable” ounces of silver in aboveground supplies. At $21 per ounce,
the total value of aboveground silver comes to only about $26 billion.
By contrast, because pretty much every ounce of gold ever mined still
exists, there are a total of 4,585,620,000 “investable” ounces of gold
in aboveground stocks. At $1,330 per ounce, that comes to $6 trillion worth.
Thus, the silver/gold ratio is currently about 63:1, yet the total
value of all the investable gold on the planet is about 235 times that
of silver.
For the record, the ratio of silver to gold in the earth’s crust is
17:1. That’s in the ballpark of the 15:1 average silver/gold price
ratio that has held sway over the centuries.
Kicking off his presentation at our recent Gold & Resource Summit,
Bob Quartermain, the powerhouse behind Silver Standard (SSO), stated
that if the audience took nothing else away from his talk, it should be
that the demand for silver well exceeds new mine supply, and has for
some time.
For instance, in 2009 total silver demand topped 889 million ounces,
outstripping new mine supplies of 710 million ounces. The difference
was made up by scrap recycling.
Of course, the real pressure going forward is from investment demand,
which has been a fraction of that for gold. If history is any guide,
however, as gold becomes viewed as being too expensive for the "common
man," silver sales will soar.
The following chart from Quartermain’s presentation helps put things into perspective.
Furthermore, if you agree with our contention that the economic
crisis will continue, and that China’s propped-up manufacturing sector
will come under serious pressure, it’s also logical to assume that
demand for industrial metals such as lead, zinc, and copper will fall.
That’s important in the discussion of silver, because only 30% of
silver’s production comes from primary producers (i.e., silver mines),
with the balance produced only as a byproduct of other minerals.
Of the total new mine supply, fully 57% is associated with base metals production.
As it, too, has industrial applications, demand for silver from
manufacturers will also falter, but given the existing deficit in
supplies, the surge in investor demand, and silver’s growing use as a
“green” metal (50 to 60 million ounces used up in solar energy
applications in 2010 alone) and as an antibacterial agent, the overall
supply/demand picture remains favorable.
The truly miniscule amount of silver available above ground and its
relatively modest price gains over the course of the precious metals
bull market so far are what set the stage for it to play a quick game of
catch-up to gold in the months just ahead.
And when silver does a runner, the handful of pure play silver
companies – producers and juniors that have identified large deposits –
will do the equivalent of a moon shot.
Just a heads up on something to pay attention to, especially on days
when the precious metals take a breather from their steady ascent.
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Physical beeches
http://www.silver-coin-investor.com/images/iStock_000005558311Medium_4_1...
apropos of your "physical" comment and to offer perspective on the $6 trillion (current) value of the gold stock, the value (at issue) of the mortgage backed securities concocted 2004 to 2008 was at least $9 trillion, according to the earlier iridian post (p.s. iridian means pertaining to the iris or rainbow).
the big move upside is setting up.
Well, I was tryin' to wait on a correction before buying a few more rolls of silver eagles, but I guess I'm gonna have to go back to dollar cost averaging.
Naah, don't wait. When I have extra money, I go and buy and barely pay attention to the price.
Since I have no idea which (of silver or gold) will do better, I buy both. Diversification. I also snap up the hard to find US Platinum Eagles should I see one.
Case "for" silver.
Would you guys also buy silver tableware in addition to bullion right now?
It might be better to buy and put away something you can eat with that silverware right now rather than the silverware itself....
a dinner set wouldn't be a bad play. silver is an anti-bacterial and anti-microbial agent.
http://www.saltlakemetals.com/Silver_Antibacterial.htm
bingo
I really wanted to but I decided it wasn't worth paying that much more for something that would most likely end up stolen at dinner parties. I did go ahead and get a silver money clip though.
I thought of that about two years ago and investigated the Silver Vaults of Chancery Lane, London. The price of the silver cuttlery (spoons and forks) bore no relation to the price of silver. They were very nice but if you were to melt them down, you would do badly. I came to the conclusion it was not the same investment as pure silver.
No. Bad idea. You'll pay extra for the fabrication cost. Stick to bullion and Eagles.
"To the moon Alice!"
Check out the New 500 oz bar ... Nice
http://www.kitco.com/silver/
Coins are highly recommended at this point. As silver begins its eventual run to 1000, those bars will be under heavy suspicion. There are some beautiful 1/2 ounces out there:
http://www.apmex.com/Product/54878/2010_1_2_oz_Silver_Australian_Koala.aspx
http://www.apmex.com/Product/54873/2010_Year_of_the_Tiger___1_2_oz_Silve...
mmmm..."teh sliver pr0n"
gold production peaked, silver hasn't yet.
As long as they can pull 750M oz out of the earth and the amount YoY is growing, the historical imbalance will remain.
Want to re-phrase that? I'm not sure if you realize that Bill Gates alone could buy all the silver that exists...
"Silver, however, has barely made it halfway back to its prior nominal high of $49.45 an ounce"
No mention of the Hunt Bros. influence in that price level? And no mention of new Silver ETF's requirements to hold physical and the effect on price.
Just to be fair... or not.
I offered my girlfriend a silver vibrator and she dumped me. You ungrateful bitch!
Don't feel bad. There is no way a man could compete with a silver vibrator. That friggin' thing could drill through a brick wall. Ungrateful bitchez!
Thanks man. I feel better now. Can I have milk, cookies and a teddy bear now please?
Sure! But now that your girlfriend is gone, yer gonna have to suck your own thumb.
...it could scare the shit out of vampires.... keep it handy :)
Hmm....would that be as anti-microbial as vinegar? Two birds, one stone? You could be onto something here.
Jim Sinclair / Turd
- Gold Bottomed, Dollar Index Headed to 56 ....
Why was QE reported at $600 billion when it is really $900 billion?
“Because that’s management of perspective economics.”
Is it ok to let gold run in a day or two?
“I don’t think you can really control it. I think that gold will run but as of today, whenever the boss speaks, we’ll call him the financial boss, there is always intervention to make the boss look good. It’s never failed, it will always be so, and it is so today.”
When asked about the US dollar Sinclair responded, “72 right now is the price objective, then I think some modest strength, and then into the sixties.”
Jim Sinclair also mentioned the dollar index, “could eventually fall to 56.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/3_Ji...
Duh: I guess some of you silver bears don't read the news on the silver manipulation done over the past 30-40 years. Ask yourself why they would do this, and what would happen if they are not allowed to continue this scam.
unleash a cyber attack on the US treasury
stuxnet===> UST NEXT
SCADA connected printing presses? Why not. To what end though?
In 2002, I had $15k saved up for a new car. I figured I would wait until the ICE was obsolete and buy whatever the new technology would be --- NG, electric, maybe diesel if all else failed. I also figured it would be about 10 years before the transformation to a new engine was complete, so I looked around for a good investment vehicle that would keep up with inflation over that time period.
The stock market by then obviously didn't look like such a sure bet anymore. And interest rates were falling below my perception of inflation. So I bought 15K of silver bullion and bags @ 4.15 to 4.50/oz. My wife and everybody I talked to thought I was crazy. That's when I figured I was right.
Today, my stash can buy me a much better car than I have ever driven. So, do I sell now and drive around very happy? Or do I go for the Tesla Mach II in 2015?
Silver will still move 50 fold from here, so yes, you are a touch early I'd say...
50 fold? Maybe 500 fold when the real crisis hits.
Do you want an appreciating asset (silver in a secular bull market) or a depreciating asset (car losing value daily unless a rare collectible)?
+1
Buy an old GTO, or Trans Am.
Tesla's are garbage, and won't age well
After reading this I am a bold dug now.
http://fofoa.blogspot.com/2010/10/flow-addendum.html
Thoughts of "Another" can't go wrong with that
FOFOA's blog has taught me so much about gold, I cannot recommend it high enough.
I have had Grandma's sterling (92% silver, 8% alloy metals) silver coffee and tea service on my buffet for many years. Every time I walk by I have such great memories of her. I really love it for those memories. Do I really need to lock it away now?
UGGs bitchez!!
now that was effing hilarious.
Your moniker does you a total dis-service. That's some funny shyt. ROTFLMAO
I am starting a new web site called Goldlike Productions, its an amalgamation of conspiracy types and Gold bugs.
don't bother with the uggs site above me, I thought it said juggs but it's not, just some dumb boots.
http://www.youtube.com/watch?v=z5ViK-7z8Ws
So, now is a good time to sell gold?
Lost in all the shuffle of this ongoing QE wealth confiscation is the very real physical delivery problem that is unfolding on the Comex.
The problems began in earnest about 8 weeks ago, coincident to the breakout in the silver chart. Once silver closed above 23, there was really no resistance until 35 or so. And 35 is where its headed. How soon it gets there is anyone's guess but I'm prepared to give it a try:
Let's look for 27 by the end of this month.
Maybe put in a short-term peak near 28.50 sometime in December.
Let's then say that silver will, at some point in Q1, will trade at +20% for the year already.
That gives us a print at 34, sometime before 3/31/2011. OK, I can live with that.
Now, the wildcard is Comex delivery failure and, don't laugh, that's a real possibility. There is a serious, global movement afoot to take delivery of PMs and the Comex could very well experience a "run", if not in December then in early 2011. IF this happens, and since it hasn't happened yet that's a very big IF, clearly all bets are off. $50 silver becomes not just a pipedream of Adrian Dougals and Harvey Organ, it becomes reality.
The Turd from Kansas is an astute observer of precious metals, much more so than the Bearing that just rolls when told.
I do not know much / anything about Comex problems, but I am a take the money and run kind of guy. That means I buy physical gold, silver and platinum when I get some extra dough (that of course would be AFTER buying bearings from Korea and Japan, business bitchez).
Silver at under $30 is a bargain, as is gold at under $1500. So, when to sell? With luck, never!
There are heavy players moving into the Silver market,bit like wolves moving round a campsite in the night.Silver is the achilles heal of the Banking system.The market is small in real terms but non-delivery appears to be growing day by day to be a distinct possibility.Take out the paper crap and there will not be a lot left.Feel sure few people realise the importance of this story that paper certificates are just a paper ponzi fraud with the same ounce sold maybe 100 times.The wheels will come off this scam very SOON.
I agree silver will continue to climb. However realistically unless someone corners teh market and then demands delivery (Hunt Style) we are unlikely to see huge surges. Although as a holder of physical it would be a dream come true. As the paper certificates are really only the custodians of fiat most people woill sell out for fiat and when teh return gets to hot to turn away people will fiat in. The price will fall. I see that happening upto a peak of say $35 with gold at $1400. 40:1.Still not a bad return.
I know everyone keeps using the histrical figures but that was before widespread banking and silver was used instead of fiat.
So waht we need is a cornered market or a banking crisis for things to go really mad. MUHAHAHAHHAHA !!! what if we got both:-)
both are brewing
From Kingworldnews.com
With gold and silver near the highs, King World News interviewed James Turk out of the United States. When asked about a short squeeze in gold and silver Turk responded, “The Asian buying that you mentioned in your recent blog is more fuel to the fireworks Eric. The last big squeeze that we had in silver was in March and April of 1987. Over that six week period in 1987 the price of silver literally doubled. The 1987 experience illustrates the kind of pain that shorts can suffer, and that just goes to show that you never want to mess with the bull.”
From The fed
"We are trying to corner the market in fiat with the intent driving down the price to make people spend more. Of course we know there will be casualties along the way. Banks may go bust but we'll bail em out. Asset prices may well double, but what the hell, oh and the people yes anybody who has a 401 on paper will feel well off... for a while. The unemployed well they are a lost cause , these people have to be patriotic and understand sacrafices will need to be made, we advocate eugenics . As for the rest of the of the world? mmm, we did give that some thought to that.....for a nano second but after consulting our remit it clearly states athat our responsibility lies within the US. We are lucky that everyone agreed in Brettenwoods, Good luck"
Silver up to $25.07 and climbing.
Yep...leading gold now in terms of breaking out.
Yes. It has led for two months now and it will continue to lead.
Silver is the mother of all anti-bubbles.
Maybe I should start hoarding colloidal silver
There's about 738 ounces of Copper mined for every 1 ounce of Silver, assuming TROY ounces. There are estimated to be 1,350 ounces of Copper reserves for every 1 ounce of Silver reserves.
http://www.ccbullioncoins.com/Silver_Facts.html
When I was a kid, I worked for Eastman Kodak in the silver nitrate division. When the silver came in from Canada, I would weight it on the dock and then ride it up in the freight elevator. 90 pound ingots, 20 to 25 on a pallet. I always sat on it like a throne. Fun times! But then we would disolve it with nitric acid to make film base, oh well.
Greetings from Brighton/Henrietta, Argos!
Had a coin dealer try to factor in sales tax on trade this past Saturday!!! (I wanted to exchange some of my scrap sterling for silver in coin form). I was told the dealer's tax accountants had advised them recently that the government (local?) was cracking down on dealers not collecting sales tax. I have always bought, sold, and traded bullion on an anonymous cash basis with no paperwork and definitely no tax, so I walked away from the deal. Has anyone else noticed anything of this sort in their local bullion circles?
A lot of states have no sales tax for transactions over $1,000.
You should have asked for proof of regulation. Maybe he was keeping the extra %
Class action RICO case filed against JPM and HSBC for silver manipulation. ++ silver
cheap ugly spam belongs elsewhere
This is what I like about Zerohedge.
from a nugget a rich vein of information is contributed
Silver or Gold buy now !
Due to the fact that silver’s industrial applications result in destroying the stuff, there is currently a total of only 1,234,590,000 “investable” ounces of silver in aboveground supplies. At $21 per ounce, the total value of aboveground silver comes to only about $26 billion.
Sorry. I am still stuck on the above assumption. How and where is silver destroyed? Silver containing film is reclaimed for the metal. Silver containing solder from lead-free circuit boards is reclaimed. Silverware is held above ground as a source of value. Most mirrors are now aluminum coated, not silver.
Help me out here ... not seeing it.
"How and where is silver destroyed?"
there is probably more silver being recycled today than there was in years past - environmental concerns are driving higher recycle rates for electronics and the rising price of silver is making recycling more economic
the 'destroyed' silver happens when a cell phone, for example, ends up in the dump instead of being recycled - this 2009 article (http://www.eoearth.org/article/Cell_phone_recycling) is saying that there are 0.35 grams of silver in a cell phone and less than 1% of cell phones get recycled - the rest end up in the dump
silver-oxide batteries are another source of 'destroyed' silver - silver-oxide batteries have a long life and high energy/weight ratio so they are used in the small button sized applications - people are getting better about recycling batteries but there are still a lot of them that end up in dumps
so there's the answer to your question - silver is 'destroyed' a tiny bit at a time when electronic devices are thrown away instead of being recycled
Well, just look at copper. Copper can't be destroyed either. The copper people dug out 5000 years ago is still on the surface of the earth. Used wires are also recycled. But why did copper soar from $2000 a tonne in 2003 to over $8000 in 2006. That's because human beings need more copper for their modern life. You can't imagine that people would cut all the electric wires for copper as an investment while they had to live in darkness at night because all the copper is gone as an investment.
The same logic applies to silver. Only those "used" circuit boards, mirrors and so on are recycled. Guess you wouldn't recycle your computer for silver while making yourself have no access to the internet.
Dealing with the physical side of the metals markets (and also the LME) on a daily basis I subscribe to no conclusion that, at least in my lifetime, metals prices rise because of fundamental supply shortages. It is an assumption that simply does not bear out in fact. The LME's "reference" prices are simply chosen to achieve specific goals of those with the power to set price.
By the way for the other poster, the figure on the cell phone is incorrect. In Motorola and Nokia cell phones the alloys contain 3.8% silver in the solder and in most other cell phones and PDAs there is 3% silver in the solder. Cell phones contain about 1 gram of solder... so the figure reported is off by a factor of 10 (too high).
Yes, metal that goes into a dump is still above ground but not readily usable.
Well, you seem to believe that speculation determines the price not the fundamentals. That's correct in the short term but not the long term. I used to subscribe to the speculation hypothesis but not any more.;)
Not speculation ... outright price manipulation and currency debasement.
Look at the year 1980.
Well, price manipulation of course is everywhere. But fundamentals do play an important role. Just look at cotton and sugar
Not sure if this is an appropriate question, but can anyone recommend a Central Texas PM dealer?
GOOGLE u lazy fuck
Wow. Never thought of that.
To clarify, I was looking for a personal testimonial from someone here who has successfully dealt with a PM dealer in the Central Texas area.
Otherwise, thanks for your insights.
FR.WT.B
Bitchez.
Only cause Im already loaded....
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