Guest Post: The Silver Sleuth

Tyler Durden's picture

Submitted by Jeff Clark of The Casey Report

The Silver Sleuth

We once had an ongoing series in BIG GOLD called, "1001 Reasons to
Own Gold." The idea was that there were so many valid reasons to own
the metal that I wanted to track and report on them. If you've been
invested in the precious metals arena, you know there have been a myriad
of bullish indicators for silver this year as well.

Here's a couple new reasons to own silver that a lot of mainstream investors probably aren't aware of…

Due to increased demand from industry and investors, silver exports
from China are expected to drop about 40% this year. And that's
actually an improvement; customs data show exports plunged almost 60%
through the first eight months. China exported about 3,500 metric tons
of silver in 2009, but has exported only 970 tons through August of
this year.

What a lot of Westerners don't know is that China ended export
"rebates" two years ago to stem the shipment of natural resources
leaving the country. As a result of the regulation, silver exports
decreased in 2009 but are nothing like what they're experiencing this
year. In other words, the large drop in exports is a direct result of a
huge increase in demand within China itself. According to one Chinese
banker, the spike in demand is coming from all areas – jewelry,
investment, and industrial. In his words, it's led to a "physical
market shortage in the Far East."

How important is this? China is the world's third largest producer of
silver (after Peru and Mexico), so the amount of silver coming to the
global marketplace this year will drop by more than 74 million ounces.
This represents roughly 8.3% of total annual global supply from 2009.
If worldwide demand continues at its current pace, where is the extra
metal going to come from? This alone tells us the price of silver will
move higher.

The next item I sleuthed out was that the U.S. Mint is expected to
release a new five-ounce silver bullion coin this year, the first ever.
The coin will be three inches in diameter and have a composition of
.999 fine silver.

I've read the five-ounce bullion coins will be near-exact replicas of the America the Beautiful
quarters. There will reportedly be five different designs, and the
mint plans to produce 100,000 of each. I can't wait to see them.

The coins will be classified as bullion, meaning they should be
available to the same dealers already authorized by the mint. This will
likely create excitement in the silver market, especially when you
consider its affordability. At $23 silver, the five-ounce bullion coin
will cost $115, plus premium. One ounce of gold runs $1,340 as I write,
while five ounces will cost you $6,700 plus commission.

Perhaps most bullish is the fact that silver is vastly underpriced
when compared to gold. Look at it this way: gold is currently priced
57% above its 1980 nominal high of $850; silver would have to more than double
to reach its 1980 nominal high of $48.70. And that's excluding any
inflation-adjusted calculation. Yes, silver's spike was partly a direct
result of hoarding by the Hunt Brothers, but my question to the
skeptics is this: what's keeping us from seeing similar stockpiling
today? What if there are several Hunt Brothers out there?

It's true that central banks don't buy and store physical silver, so
one source of demand that's common for gold isn't present for silver.
But let's keep things in perspective: demand for all forms of silver is
rising, and we see no reason the trend won't continue. And with
indicators like decreasing supply from China and increased attention
from a new bullion coin, I say the big picture on the silver price is
extremely bullish.

This silver sleuth says, buy some silver on the next dip. There's lots of reasons you won't regret it.

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bobert's picture

My bond portfolio, that I have reduced a great deal, is getting eatin alive these days.

Their is a "silver" ling out there for me somewhere!

MiguelitoRaton's picture

We're the Hunt brothers nailed by the governent for trying to corner the silver market? So what's to prevent other Hunt brothers?...Uh prosecution? But yes, I'm a big fan of silver bullion as an economic insurance policy.

tmosley's picture

The Hunt Brothers used margin, and the government changed the rules in the middle of the game on them, causing a margin call which shut them down and lost them a fortune.

Had they refrained from using leverage, and simply taken physical delivery, we would probably have a different monetary system now, and the Hunt's would be richer than Bill Gates, Sam Walton, the Rockefellers, and the Rothchilds put together.

So now it falls to us.  Take delivery of silver, and become rich.  It's that simple.

rocker's picture

The Hunt brothers used margin about the same way JPM got in trouble shorting silver.

When you short more than exist and use collusion of others to achieve your goals.

You belong in Jail. Just like Goldman Sachs does for their efforts in the CDO's and SIVs.

TheGoodDoctor's picture

And that is the god damned irony of the whole JPM silver debacle right there.

The Hunt's were criminals but JPM is a respected bank? Right!

Bay of Pigs's picture

Anyone see that ad tonight during the World Series by JPM? I've never seen a bigger piece of propaganda in my life. Something like,

"This way forward, into the future, working together", type of busllshit.

I say let's burn these fuckers to the ground on the illegal and immoral gold/silver manipulation is the way "forward".



Chappaquiddick's picture

Rocker - I'm trying to get to the bottom of some of the current investment themes surrounding silver.  Could you please tell me where you have derived the information that the silver market is shorted more than exists?

I've written to GATA on claims they've made regards silver abundance ratios, recycling and silver going extinct and got pointed towards Ted Butler.  I'm looking to find the data that backs up these statements. Can you help?

BearOfNH's picture

Ted Butler uses the CFTC Commitment of Traders report which lists the long and short positions broken down by trader type. Large speculators are net short a lot of silver, small speculators are net long. Convert from contracts to ounces, compare with mine production figures and you get these kinds of results.


Chappaquiddick's picture

Thanks Guys!


I wonder where exactly this thing will correct up to??

It must be the end of JPM - and exactly how is Greenspan et al going to explain why there's no gold in Fort Knox??


slvrizgold's picture

Its a lot more than just an insurance policy.  It's 100% pure unadulterated MONEY.   Undervalued "currency" if you will.

One point the author missed...   He wrote about central bank not being buyers of silver.  I think the more RELEVANT point is that central banksters hold no silver therefore they can never be a SELLER of silver!    Think about that for a minute.

pmn's picture

Hey Miguel, It may come as a shock to you but not everybody on the planet lives in the USA

Spalding_Smailes's picture

Wells Fargo & Co., conceding that some foreclosure affidavits “did not strictly adhere to the required procedures,” said it will file supplemental statements to courts in about 55,000 proceedings.

The bank, which has proceeded with home seizures while rivals including Bank of America Corp. and JPMorgan Chase & Co. delayed theirs, said today in a statement that it found some lapses during a review of its processes. The bank will begin filings in 23 states immediately and aims to complete them by mid-November, subject to local laws, according to the statement.

Real Estate Geek's picture

I'm not going to hold my breath waiting for 55,000 indictments for perjury.

Chartist's picture

Ah, the old silver to gold ratio argument for higher silver prices.....You know, the ole Nat gas to oil ratio argument hasn't worked out too good for Nat gas investors for quite awhile...

A friend of mine is one of the largest traveling buyers of old silver and gold jewelry in the country.  He tells me he'd feel a lot better about gold prices if they'd stop mining so much of it.


unum mountaineer's picture

hmmm...idk, i haven't been seeing that. a bit of the opposite. haven't been reacting the same for a month or so. check out harvey organ blogspot. come back then let me know what you think. i'll look out for you in other posts too. not repitition..but rhyming..

DosZap's picture


Newsflash, there is a shortage of both Gold and Silver right now, matter of fact, wonder where SPROTT is going to get 20 Milllion+ ounces he needs NOW for his ETF?..............

Pegasus Muse's picture

A friend of mine is one of the largest traveling buyers of old silver and gold jewelry in the country.  He tells me he'd feel a lot better about gold prices if they'd stop mining so much of it.

I'd feel a lot better about fiat paper if Ben would quit printing so much of it.  Fed money printing overwhelms gold production by orders of magnitude. 

apberusdisvet's picture

Nice try troll; gold production has declined considerably over the past decade.

RobotTrader's picture

So far, not much excitement yet.

You would have thought this would have taken off on the news.

Now only if silver could be used in catalytic converters.

Then it would take off like Palladium has....participating in the worldwide orgy of new car buying...


tmosley's picture

Wrong Chart, Robo.

Though it is true that there is a surprising lack of activity.  Though when you think about it, it makes sense.  I would imagine that those who are paying close attention know that paper PM vehicles are probably worthless, and so they are buying physical at the retail level.  When the retailers run out of stock, and start making demands for delivery from the exchanges is when things will get interesting.  I'd say November 3rd is probably the key date.

Bartanist's picture

"when" ... "if" ... yup .... as I have said below, there is no apparent shortage for industrial applications. So, when and if may very well become "never".

tmosley's picture

I didn't use the word "if", you'll notice.

There is no "if" involved here.  And never say "never".

rocker's picture

I own Palladium as well.  I really like Platinum and nickel too.  I do think silver is the best opportunity.

I will soon reveal my best pick.  Hint ?  O.K.  It works well with platinum.

hamurobby's picture

Nickel is a "cheap" play. Go to your bank, withdraw your savings in .05 nickels, you get an instant 20% gain in value with the metal vs frns.

How long at the interest rate you are recieving from your savings acount to make 20%?  Its a win win either way, hyperinflation or deflationary collapse, you have cash and nickel, and no separating pennies.

DollarMenu's picture

I keep seeing this thought posted but I can't really see how it pays off.

If you disregard the laws against melting coinage, you probably won't escape

the 'coin fees' exacted by your bank for coins in any sizable amount.

Tell me please,

how does this 'buy nickels' thing result in a 20% profit for you?

Are you able to work a $50K nut to make a $10K income?

Do you do it weekly?

Every other day?

How does this actually work?


hamurobby's picture

It pays off in the future, this isnt a source of income, but a storage of wealth. Have you ever heard the term, "A part of all I make, is mine to keep"?

There are no "coin fees" if you buy them in reasonable amounts you can carry out of the bank. I buy twenty or thirty rolls at a time, and they dont mind trading out penny rolls either, to search through for pre 82 pennies. I still the same exact amount of currency. It is a slow process but they are worth more than the denomination printed on it. I dont care one bit about trying to melt it or make money in that sense, but if their is inflation or a hyper deflationary collapse, that little bit of currency will hold its value. Its not for everyone but I enjoy it.

bobert's picture

20% seems like a nice gain to me.

Whenever I receive those small random checks in the mail (rebates, premium refunds etc.)

I take it to my bank and request nickels.

The old female teller was a bit put out with me at first but has been accomodating.

I've been doing this for a few months now and have a pretty nice inventory of the stuff.

Building copper, silver, and other metals in a variety of ways also.

It's fun!

Stormdancer's picture

Golly!  Wonder of wonders.....a lawsuit gets filed accusing paper silver of being a scam, and you're surprised when the world doesn't scramble to bid up paper?  LOL....typical.


Turd Ferguson's picture

The next dip (by overnight Sunday into Monday at the latest) will take us sub 23, maybe to 22.50

Buy this dip with both hands. Silver will soon move through 25 and on toward 27. On the chart, there is no resistance until 35 or so. A very, very attractive investment.

Vernon Wormer's picture

You've been right so far. I'm in.

iota's picture

Really? I thought it looked like it made the dip on the 22nd? Been undulating upwards since then.

fredquimby's picture

All in already! Mostly with Call warrants with strike 24.50 and an insurance of a (very cheap) put warrant strike 21...


nmewn's picture

"What if there are several Hunt Brothers out there?"

What if there are millions ;-)'s picture

One can only imagine the stretch marks on Mamma Hunt.

bobert's picture


Your brevity is impressive.  You are in my opinion most often right on target.

Good post here also!

I agree! What if???

nmewn's picture

Why thanks Bob.

Just running through the news before I head off to's a good topic though;

"A judge had put the execution on hold because she said she was "left to speculate" whether this drug was safe for its intended use.",0,6859358.story

ROTFLMAO...sometimes life is stranger than fiction.


benb's picture

“….Yes, silver's spike was partly a direct result of hoarding by the Hunt Brothers, but my question to the skeptics is this: what's keeping us from seeing similar stockpiling today? What if there are several Hunt Brothers out there?”

We don’t need no stinking Hunt Brothers hoarding the silver. All we need is for the paper schmucks to wake up to realize the virtual silver is just that... nature will see to the rest.

rocker's picture

Do you mean like the hoarding of Copper by the CB's.  Are you suggesting it's only the CB's who control all.

Bartanist's picture

Just curious where this "silver shortage" is. The company I work for takes weekly high volume deliveries of silver from multiple sources for industrial applications and not one of the sources has once mentioned the possibility of being short of silver.

Seems like another bunch of logic-gap assumptions that are not in fact true. They are just made to seem true by using incorrect logic and incorrect assumptions.

We buy silver inside China as well and there is no apparent shortage there either.

tmosley's picture

Industrial users have always gotten first priority.  Those who are investing in paper silver vehicles probably have no silver.  The market participants think they have the silver, so they are perfectly willing to sell their real silver for low prices.  Once the warehouse situation is made clear, the real shortage will materialize.  I'd suggest you and your company take possession of as much as you can while it is still easily available.

benb's picture

“Just curious where this "silver shortage" is…”

At this point there is no shortage only because of the amount of none-existent (un-backed) paper silver being accepted by investors. If all paper silver were required to be backed with physical, the market would be turned on its ear overnight. When confidence in paper drops you’ll see the shortages. (IMO)


Bartanist's picture

I look at the silver paper as a simple gambling chip, just like a stock certificate ... and both are more than likely only electronic.

Virtually none of the people making this gambling bets wants to take possession of the silver under ANY circumstances. They are just gambling.... and sure if these gamblers started taking possession there would be a shortage. It has not happened yet. Why would they take possession in the future? Is the world ending and they did not get the memo?

MeTarzanUjane's picture

"Is the world ending and they did not get the memo?"

Far too few have your realistic vantage point and the bugs want to see some fireworks.

Blindweb's picture

Peak oil, impossibility of Western society paying off their debts, the crumbling of the U.S. empire...

Generally I don't even waste my time responding when people are this far behind the curve. 


tmosley's picture

Exactly.  This is why there has never been a bank run in the history of the Earth.  People just want the paper, they don't care if there is anything to back it up.

Incidently, I just wrote myself a check for $1,000,000,000,000,000,000.  Now I'm the world's first QUINTILLIONAIRE!  Suck on that Bill Gates!

Hook Line and Sphincter's picture

Si Senor Mosley, these are the same people who settle for porn, and never end up getting the real cuchi.

benb's picture

“I look at the silver paper as a simple gambling chip…”

Yes sir. The knowledgeable guys trading paper metal are in “Jack be nimble” mode. Great if they make some dough on the deal. I just wouldn’t want to be around when the music stops or when we hear that hellacious screeching scratch in the record.