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Will Silver Be Worth More Than Gold? Perspectives On A Coming Silver Shortage

Tyler Durden's picture




 

While hardly news to regular readers, most of whom have ridden the 80%+ wave in silver in 2010, the following video from Future Money Trends explains some of the key basics about why silver, which is unique in the precious metals basket in that it is also an industrial metal (and has thus sparked much debate over whether or not it, like gold, is "money"), and provides some perspectives on why silver just may one day be more valuable than gold. Some facts: while there are 10 ounces of silver, for every ounce of gold mined, the most of it is not "free flowing" and is locked up in industrial uses; for every $1 in SLV investors still pile $7 in GLD; above ground silver has declined from 10 billion ounces in 1950 to 5-700 million ounces in 2010 (compared to an increase in above ground gold from 1 billion to 7 billion ounces); the gold to silver ratio is at 50x while the average long-term is 15x, industrial demand for silver is up 18% in 2010; and much more. Of course, there is no reason why one has to pick one or the other. Historically both have been tiered stores of value, with the Roman empire going so far as to succumb its silver currency when the going got tough. The simple fact is since global deleveraging will likely continue and since the US government will need to print trillions, most of it monetized by the Fed, the ongoing currency dilution will continue to result in increasing P prices: pretty simple. The only downside case to gold and silver holdings would involve massive asset liquidations a la September 2008, which also would mean that the Fed has lost control, that the US dollar is no longer the reserve currency, and that after the smoke settles, non-fiat currencies will rise again. And that includes both gold and silver.

 

h/t Daniel

 

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Fri, 12/31/2010 - 13:20 | 839745 A_MacLaren
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China doesn't give a rat's ass about pollution.

Fri, 12/31/2010 - 14:33 | 839943 Fred Hayek
Fred Hayek's picture

But (reverant gasp) Tom Friedman of the (reverant gasp) New York Times thinks they're wonderful and committed to environmentalism.  But then, (reverant gasp) Tom Friedman is a committed environmentalist, too.  So committed that he bought a house in suburban MD, razed it and built this

http://wonkette.com/413811/this-is-literally-thomas-friedmans-house

new 11,000 square foot mansion with nary a solar panel in sight.  Tom loves the chinese dictatorship.  It's not quite a Walter Duranty level embarassment for the times but it's getting up there.

Fri, 12/31/2010 - 14:35 | 839955 akak
akak's picture

It will be interesting to see how Peak Oil is going to impinge on Tom Friedman's "The world is flat" thesis.

Fri, 12/31/2010 - 14:27 | 839927 RafterManFMJ
RafterManFMJ's picture

Why would you assume all Chinese cars would use palladium? Oh, that's right, the Chinese are very worried about the environment. I forgot that.

Fri, 12/31/2010 - 12:27 | 839547 TruthInSunshine
TruthInSunshine's picture

2012 news report:

"...as fiat currencies all over the world implode, roving, sophisticated, highly trained and extremely well armed squads of men continue locating and heisting any significant stores of silver they learn of.

Some have speculated that these paramilitary-like squads have had to have received intensive training in weapons & tactics from a large sovereign state possessing an extremely large military.

And in other news, foreclosures are on track to reach 8 million this year, although the president of the National Association of Realtors has stated that now is a good time to buy a house...."

Fri, 12/31/2010 - 12:22 | 839562 Ecoman11
Fri, 12/31/2010 - 12:37 | 839603 snowball777
snowball777's picture

http://exm.nr/gC0i37

+96%, bitchez...and you can take a contract for delivery without a hernia.

Fri, 12/31/2010 - 12:39 | 839606 MsCreant
MsCreant's picture

Hi Hoes,

Silver, away!

Fri, 12/31/2010 - 13:19 | 839728 Cognitive Dissonance
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Sat, 01/01/2011 - 01:53 | 841195 Dr. Sandi
Dr. Sandi's picture

Two fine rides!

Fri, 12/31/2010 - 12:41 | 839608 Godisanhftbot
Godisanhftbot's picture

 Of the 90% of the readers here that rode that 80% bull silver move, did that cover their losses shorting the market?

Fri, 12/31/2010 - 12:45 | 839626 MsCreant
MsCreant's picture

Didn't short Silly, got out entirely. Don't play a rigged game. Don't give your oppressors the means to oppress you. Don't participate in Ponzi.

ZH has said to get out of markets a number of times. 

Fri, 12/31/2010 - 13:21 | 839744 mark mchugh
mark mchugh's picture

Why do so many seem to think PM bulls and stock shorts are the same people?  When you water down the currency, stocks go up...but PMs go up more.  Stocks are irrelevant to us.

 

Fri, 12/31/2010 - 14:09 | 839885 akak
akak's picture

Agreed.

At this point, whether played long or short, stocks are simply for the herd.  And the herd is going over a cliff.  Forgive me if I demure from joining in that stampede to doom.

Sat, 01/01/2011 - 01:55 | 841196 Dr. Sandi
Dr. Sandi's picture

I made and lost a couple million during the high tech boom. Now, the only stock I'll go near has either chicken or beef as its base.

Fri, 12/31/2010 - 19:42 | 840712 perchprism
perchprism's picture

 

Absolutely.  Cashed out a CD and bought a painting I've wanted for over 6 years now, originally $9,800 and got it for 4K.  Bought silver and gold, too.  My 401K is junk, so I don't even look at it anymore.  Everything's in "SAFE", haha.  Makes nothing, loses nothing.  Maybe I'll buy some farm acreage.  Why bother with the stock market?   

Fri, 12/31/2010 - 13:06 | 839701 tmosley
tmosley's picture

Stopped shorting back in April of 09 when the Fed started gunning the markets.  I got out entirely that summer, as that was a sure sign of terrible things to come.  I went all in silver (tiny bit of gold too), and have been quite happy since.

Fri, 12/31/2010 - 13:15 | 839727 Saxxon
Saxxon's picture

LOL!  In my case, yes; short positions were my only losers.  I am still stupid and try to call tops.  I think I gained some discipline this year though and kept my losses small.  At least, every time I covered I was proved to have been correct for doing so.  Never again will I allow my deep contempt for bureaucrats undermine my trading.

Fri, 12/31/2010 - 14:03 | 839863 gdogus erectus
gdogus erectus's picture

No but I'm hopeful.

Fri, 12/31/2010 - 12:41 | 839610 BigMike
BigMike's picture

Isn't this movie made by that George 4title NIA guy?  His videos are all kinda cheesy, but thats the point.  He's trying to scare people a little and wake them up.  Sure it's a little sensationalist, but if that gets people to research precious metals, why is that a problem?  

 

The fact that he mis-pronounced catalytic doesn't invalidate the claims in the video.

Fri, 12/31/2010 - 13:22 | 839741 fiftybagger
fiftybagger's picture

Actually it's visionvictory and he is admittedly no silver expert.  George4title got booted from Inflation.us for being shady.  SGTBull, Davinci, Stellaconcpts, and Silverfuturist are more the silver specialists.

http://www.youtube.com/user/BrotherJohnF?feature=mhum

Fri, 12/31/2010 - 12:42 | 839613 gwar5
gwar5's picture

Nominal $30 1980 Silver should be about $100 today ($130 1980 record nominal price)  without the manipulation and currency pressure. 

Gold hasn't been jerked around as much, so Silver has a long way to go. But Gold is the sentimental favorite. 

 

 

Fri, 12/31/2010 - 12:44 | 839623 Themarkmonster
Themarkmonster's picture

That video is way too over the top.  It actually makes me want to sell my silver.  The fact that silver is going higher is common sense and this video forces the issue.  No need to.

Fri, 12/31/2010 - 13:26 | 839769 fiftybagger
fiftybagger's picture

Cut the guy some slack.  He's reaching a lot of people who don't know the silver story.

http://www.youtube.com/user/BrotherJohnF?feature=mhum

Fri, 12/31/2010 - 12:51 | 839631 Pegasus Muse
Pegasus Muse's picture

Even for a hard core Silver Bug that clip was a bit over the top. 

There's another good James Turk interview out on KWN today.  Turk says, “We’ve got a financial Katrina coming”, perhaps as soon as next year.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/12/30_James_Turk.html

 

Fri, 12/31/2010 - 14:38 | 839961 Fred Hayek
Fred Hayek's picture

"You're doing a heckuva job, Bennie!"

Fri, 12/31/2010 - 12:51 | 839636 KickIce
KickIce's picture

A little off the beaten path.

Isn't it ironic that one of the main selling points to going to fiat currency is the convenience.  Flash forward to today and you could either carry around one ounce of gold or 14 ones.

OK, so making change might be a problem...

Fri, 12/31/2010 - 12:51 | 839642 trav7777
trav7777's picture

let's see here...Gold is around 80Moz per year production, silver 750 or so.  Gold peaked in '01, silver hasn't yet.

Anyone expecting price parity against this backdrop is a fool.

However, Pd and Pt?  Both in the low 6Moz production levels, and Pd's price has been "suppressed" by Russia's sales from strategic stockpiles.

If you want precious metals that are actually SCARCE *and* have major industrial usages, the PGMs are where you need to be, not this fuckin silver

Fri, 12/31/2010 - 13:40 | 839801 tmosley
tmosley's picture

You must only have half a brain, because you never seem to be able to understand more than half of a given problem.  Gold is not consumed in industry.  Silver is.  You just discard consumption like it doesn't matter.  By your logic, land should be infinitely expensive, because they don't make any anymore.  Well guess what?  All the land ever made is still there.  Same with gold.  The silver, however, is ALL GONE.  This is what happens when you use more of something than you produce.

Fri, 12/31/2010 - 20:09 | 840756 trav7777
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IDIOT.

Gold is demanded for STORAGE.

Silver, LIKE OIL, is demanded for CONSUMPTION.

Silver is produced in TEN TIMES THE AMOUNT as gold, there is NO SUPPLY PROBLEM.  Who fucking CARES how much is stored?  It's like OIL, we're consuming 85mbpd of the shit, it isn't POSSIBLE to judge the oil scarcity issue by how much we have in tanks, dipshit.

Fri, 12/31/2010 - 15:01 | 840024 JLee2027
JLee2027's picture

Silver is money trav, and Pd / Pt aren't. Price is controlled by demand...not supply....

The demand for sound money (silver) will be unbelievable once the paper currency collapse begins in earnest.

Fri, 12/31/2010 - 20:11 | 840763 trav7777
trav7777's picture

No, it fucking isn't.

There is no edict from god or law of physics that states that silver IS money.  Silver has been USED as money, so have a lot of other things.

copper has a longer track record as money than silver, but none of you cretins seem to run around spouting about how COPPER IS MONEY.

Fri, 12/31/2010 - 21:29 | 840869 akak
akak's picture

i frequently agree with you, Trav, but you have, how shall I say it, easily the least diplomatic attitude and manner of anyone whom I have ever encountered in this forum ---- and I have been known to use more than my share of profanity and curses here.  While slamming others is sometimes called for, it does not help you argue your case, or gain you credibility, to do so incessantly.  Just trying to offer some hopefully helpful advice.

(That said, please don't just tell me "Go to Hell!")

Sat, 01/01/2011 - 03:26 | 841258 trav7777
trav7777's picture

I AM #1

lol.

what difference does it make?  Have you noted anyone here to be amenable to being convinced that their opinions are stupid?  I mean, I won't sugarcoat it; a lot of people have really stupid opinions but they cling to them like the last drumstick in a bucket of KFC at Oprah's.  I've seen people try to use the high road and state their cases "with respect," but it goes nowhere.  So, what's the point in it?  I may as well take the low road.

Sat, 01/01/2011 - 02:47 | 841237 JLee2027
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I not going to argue with you trav, you're a bright guy. Let's just agree to disagree. 

Sat, 01/01/2011 - 03:32 | 841261 trav7777
trav7777's picture

naw, let's not.  Silver is not money in the absolute; that's a simple statement of fact. 

Sun, 01/02/2011 - 05:42 | 841468 Green Leader
Green Leader's picture

Copper is money and small copper coins will be the way to trade independent of the Beast/Antichrist system. 

I was in chaplain school a few years ago (before anyone asks, I dropped out!). On one class the teacher said God had revealled her that Christians should store copper coins for the coming hard times.

Copper is money and small copper coins will be the way to trade independent of the Beast/Antichrist system. 

 I just don't go around spouting...

 

Fri, 12/31/2010 - 12:51 | 839643 Fake Jim Quinn
Fake Jim Quinn's picture

This has the same feel of the real estate videos circa 2007. I'm long silver but these videos mean the get rich quick dope pushers are scouring the land for the next fleecing opportunity. Makes me jittery

Fri, 12/31/2010 - 12:55 | 839657 Godisanhftbot
Godisanhftbot's picture

 I said that about Gold 300 ago. The hustlers are just noise, mean little.

 What we need is a method to be able to eat gold and silver, cause in the coming apacalypse , you'll need a hearty breakfast.

 

Fri, 12/31/2010 - 13:20 | 839740 Saxxon
Saxxon's picture

Yes Fake Jim but unlike 2007 a prospective Ag buyer can't go get a no-doc loan to buy it.  Much, much smaller pool of buyers.

People reading this board are in the 1% minority of the U.S.A.  The great majority can't name a single miner, still less its trading symbol.  This bull has room.

Fri, 12/31/2010 - 18:36 | 840584 greenbear
greenbear's picture

Jittery because of one video made by someone who wants to gain subscribers for a newsletter or whatever?  What about the ridiculously bullish fundamentals that are hopefully the reasons you bought silver in the first place?  Have those changed?  No.  The fact remains that in 1979 20% of the US population owned PM (gold and gold stocks) vs. 0.8 % today.  

 

We are just at the beginning stages of the silver bull market and  I believe the time is fast approaching that the almost decade-long rise to $30 will look like a horizontal line on the silver chart in comparison to where it will be.

Fri, 12/31/2010 - 12:52 | 839645 cramers_tears
cramers_tears's picture

My father owned a vending machine business and in '65 he started culling out pre-'65 silver coins from his receipts.  My mother always thought he was insane.  Especially when he forced all of us to do it.  We'd be around the kitchen table sorting through mounds of coins.  I'd rather have been hanging out w/ my friends.  Anyway, he left us all a buttload of old silver halfs-quarters-dimes-nickels.

So my question is this - when do you get out? and more importantly - what do you do w/ the proceeds?

Fri, 12/31/2010 - 13:05 | 839699 Cognitive Dissonance
Cognitive Dissonance's picture

So my question is this - when do you get out? and more importantly - what do you do w/ the proceeds?

The answer to that question depends entirely upon what you would be getting into. Since we will not know what the public will accept as a replacement for the soon to be devalued fiat paper currency, the answer to your question can't be answered at this time. Nor should you worry about not being able to answer at this time.

The powers that be have a long way to go before they destroy all trust in ourselves and our currency. More fun to come.

Fri, 12/31/2010 - 19:50 | 840717 RoRoTrader
RoRoTrader's picture

My gut is to disagree with your answer about 'what to do', CD.

If you are envisioning the kind of radical social change I think you and are others are implying from the 'collapse' of fiat and the 'in god we trust' mantra or whatever variation of it has occured throughout history then the answer is won't matter. And, it won't matter because another order will emerge from the last and the public will 'seek out its leadership' and will accept as a replacement what the public has always accepted as a replcement albeit with a different name, face and/or number; some other authority to replace the previous, and whether that authority denominates its currency in gold silver paper, intimidation, terror or whatever that authority will derive its authority form the public by giving the public the same thing the public has always asked for and has always received, and that is for its nominated 'authority' to think for it.

Shangri la, baby.

 

Fri, 12/31/2010 - 19:51 | 840725 akak
akak's picture

I hated your post on first reading it, but there is more truth to it than I would care to admit.

Fri, 12/31/2010 - 20:01 | 840745 RoRoTrader
RoRoTrader's picture

Best wishes for 2011 and more, akak.........if I remember it right I think you were the first one to comment on the something I wrote just after I started in this tough neighborhood.

I sincerely appreciate your comment.

RoRo

 

 

Sat, 01/01/2011 - 09:30 | 841384 TheDriver
TheDriver's picture

Your answer is spot on CD. When I'm asked this same question by friends, my answer has always been, "I don't know. That will be for my children to decide as I suspect I won't see the end of this mess in my lifetime."

Fri, 12/31/2010 - 13:06 | 839703 -Michelle-
-Michelle-'s picture

When you're converting from PMs to tangibles.  That's the only way we'd sell.  It's like asking when do you get out of your savings account.

Fri, 12/31/2010 - 14:13 | 839890 akak
akak's picture

It's like asking when do you get out of your savings account.

Excellent point, Michelle!  Well said!

Fri, 12/31/2010 - 13:09 | 839709 Fake Jim Quinn
Fake Jim Quinn's picture

Your dad understood Gresham's law!

 

I'm not the Grand Vizier, but you have to figure if/when you sell, think about where the growth is. The West has everything it needs and that's why it entertains itself with IPads, American Idol and other useless crap. But the East still craps in the middle of roads. So think about minerals (precious, energy <Ux e.g.>, and basic), construction, and other basic necessities needed in India and China. Further remember that as they get richer, they'll move up the protein food ladder. So anything that enhances meat production (e.g. Potash).

 

That's my humble opinion. And remember this is worth what you paid for it

 

Good luck investing

Fri, 12/31/2010 - 13:11 | 839715 Brutlstrudl
Brutlstrudl's picture

When the tough times start getting to you, cash in enough silver to  take the family out to good Italian restaurant.

Fri, 12/31/2010 - 13:25 | 839764 billsykes
billsykes's picture

buy lead.

Fri, 12/31/2010 - 13:28 | 839777 Fake Jim Quinn
Fake Jim Quinn's picture

Billy -- I presume you want lead when wrpped in a full metal jacket

Fri, 12/31/2010 - 14:59 | 840016 impending doom
Fri, 12/31/2010 - 15:02 | 840032 JLee2027
JLee2027's picture

So my question is this - when do you get out? and more importantly - what do you do w/ the proceeds?

It's money, and you use it when silver returns as money. Won't be long.

Fri, 12/31/2010 - 13:01 | 839685 fiftybagger
fiftybagger's picture

Silver is not even close to being in a bubble.

The Silver Bubble Debunked http://www.youtube.com/watch?v=3lVCtIiMveE


Fri, 12/31/2010 - 13:18 | 839729 Threeggg
Threeggg's picture

Could the agenda of Fauxbiz be any more obvious.

They are sitting around asking.

get this:

"Should people wake up and invest in equities" ?

and just now the chick said that "Gold is in trouble" ? (as it is about to hit a new non-inflation adjusted high). you cant make this shit up.

I am telling you  !! -- "Get your shit together folks"--. !!!!

We are in "BIG" trouble

Good luck next year !!

Fri, 12/31/2010 - 13:21 | 839750 TruthInSunshine
TruthInSunshine's picture

Yeah, I'm sure that braniac FoxBusiness anchor wouldn't want investors to miss any rally in equities.

I mean, some of the shittiest stocks conceivable, having negative book values, have risen 700%.

Get those quality equities while they're so low?

Fri, 12/31/2010 - 15:03 | 840041 JLee2027
JLee2027's picture

700%? Name these mystery stocks.

Fri, 12/31/2010 - 13:23 | 839756 billsykes
billsykes's picture

I like silver, it is a better conductor of electricity than copper, that being said I have studied the stats on industrial silver and it is declining, but the recyclable silver is becoming less and less as photography and x rays are obsolete. The stuff that you can recycle, PC's, electrical switches, solder, are so insignificant that you would have to recycle all (1 year of) of California's E-waste just to get 250k oz of silver. That's 7.5m dollars a year gross, not a big enough market, and realistically you are not going to get 100% of the market.

Research any of the companies that make silver solder or wire, they suck and they are falling all over themselves to make pennies off an oz, the recyclers of silver are failing, (gemark) and the numbers that the US geological service are giving are just ball park guesses. Call em' they are pretty straight shooters and they will tell you they are totally guessing.

What are PC's doing? Getting smaller. Read all of the academic journals and research coming out of universities, all the ones that deal with Precious metals is how to replace them or use less.
Bottom line, silver in industrial use is declining because of photography. It will not be replaced. But I do think it is a worthwhile physical investment.

Fri, 12/31/2010 - 14:46 | 839977 Fred Hayek
Fred Hayek's picture

I thought there was a significant, and growing, market in solar panels and associated technology for the use of silver because of its excellent conductive properties.  Is this overrated?

Sat, 01/01/2011 - 06:02 | 841316 zero-g
zero-g's picture

Fred,

As a consequence of Europe's lead free Rohs standard, it forced solder and other components that used to use lead to switch to silver to prevent a serious problem called tin-wiskering. Until there is another metal identified to replace silver in this role, it will be used in pretty much all electronics, but in such small quantities per item that recovery will probably never be feasable in a large scale. I believe this has been a just one major reason for silver's industrial rise in the last 10 years. 

Fri, 12/31/2010 - 15:51 | 840191 redrob25
redrob25's picture

Until they replace silver in electronics, and as anti-bacterial agent in medical implements, the demand will not wane. Wait until India and China's economies go hockey stick shape.

Fri, 12/31/2010 - 13:28 | 839775 mark mchugh
mark mchugh's picture

One issue with this (well actually, I've got a couple, but anyway), I wonder where the 7 Billion ounces for above ground gold came from because all the estimates I've ever seen say we haven't cracked 6 Billion ounces yet.

The themes expressed are fine, but I'd question some of the numbers tossed around.

Fri, 12/31/2010 - 13:30 | 839778 37FullHedge
37FullHedge's picture

I sold my house over a year ago and put about the lot on Silver, My forecast then was a price target of $200 to $400 an ounce within 10 to 20 years, I am suprised of the speed over the past few months but its not close to the price target,

My reasearch at the time my findings was in 2009 an estimated 20 Billion ounces of above ground silver and about 9 billion ounces of gold a 2.2 ratio and about 10 times more silver mined than gold,

Using this very basic supply math a ratio of 10 to 1 within 10 to 20 years looks credible as is a gold price of $2,000 to $4,000 I had to put my funds somewhere so this imbalance looked good and more importantly it still does,

I also believe Silver will be more expensive than Gold oneday but not in our lifetimes since gold never gets used and silver does and when mining outputs start falling in both metals a longtime from now silver will keep being used up and when the above supplys of Silver is less than gold with little mining output Then prices should reflect this fact maybe 50 to 100 years away.

Many things can happen hence I am divested in other assets and due to the rise of Silver I am a little overweight in this asset class which is concerning but I am struggling with a better bet so I will ride on and accept 20% swings as the norm.

Fri, 12/31/2010 - 15:06 | 840057 JLee2027
JLee2027's picture

20 years? Why? It could take a week when the short squeeze combined with supply issues begins.

My reasearch at the time my findings was in 2009 an estimated 20 Billion ounces of above ground silver 

20 billion? 1-2 billion is more accurate. At 20 billion the price would be...under a dollar per ounce probably.

Sat, 01/01/2011 - 12:00 | 841484 37FullHedge
37FullHedge's picture

www.silverinscripture.com on this website look at the archives and look at the one The Real Silver deficit This was written in May 2006 but worth a read and its written to break down the real silver mining and above ground supplys regarding Silver,

Today 20 billion ounces is probably lowballing the amount the info on this site says it much better than I could,

Looking at the above gold supplys my number of 9 billion ounces was wrong its more like 5.5 billion today and this website blog comes up with a 5 to 1 gold ratio in all above ground supplys and is probably fair,

Why 10 to 20 years for a 10 to 1 gold silver ratio forecast? No real reason other than for the past 30 to 40 years the market has been around the 50 to 1 range and although for me it should be 10 to 1 or less the market has not agreed for a longtime so I just give it a longtime to move thats the only reason, Regarding the short issues yes I agree this will move things quick but timing such things is anyones guess but for me for something to reach a value it should be worth it other than shorterm market developments.

Looking at this subject a little closer a real 5 to 1 ratio sounds fair and a 10 to 1 target sounds fair and if the market delivers next year I wont be complaining

Sun, 01/02/2011 - 02:50 | 842338 JLee2027
JLee2027's picture

Well that seems to be some kind of rant against Ted Butler claims on remaining above-ground silver. However, the author didn't do his homework...it's not Ted's work. It's based on analysis by Israel Friedman. Ted just confirmed the work of Friedman independently.   Ted's been doing this for decades, so I cannot imagine it's off by a factor of 20. Sorry.

Fri, 12/31/2010 - 13:48 | 839825 Hulk
Hulk's picture

Nice tit at 3:47...

Fri, 12/31/2010 - 15:21 | 840100 JLee2027
JLee2027's picture

Perv! Made me look.

Fri, 12/31/2010 - 18:37 | 840587 Hulk
Hulk's picture

Not bad, eh?

Sat, 01/01/2011 - 02:48 | 841239 JLee2027
JLee2027's picture

Certainly a one bagger.

Fri, 12/31/2010 - 13:57 | 839840 TruthInSunshine
TruthInSunshine's picture

Hunt Brothers FTMFW!!!

Fri, 12/31/2010 - 14:07 | 839860 Duffminster
Duffminster's picture

"There is Drastically Less Silver Available than There was when it was Trading at $50 an ounce. 1/10th as much as in 1940."

Amazingly the Financial World routinely ignores these facts. Is this because of the undue influence that certain of the Too Big to Fail Bullion banks in the U.S. and Britain in both giant naked short positions in the primary silver exchanges and the establishment media or is  it just simply mass ignorance? I'll start with a few articles in this large forum post. I'll post other articles in response later. But this article is a good starting point. Just so you know, I'm all in on silver and I think it should be trading at somewhere above $300 per ounce based on the basics of supply and demand and the massive spring back potential energy created by long term massive price supression and the unwinding of that as the multiple law suites, including class action suites against JP Morgan and HSBC continue along with public statements by the CTFC in regard to their findings of manipulation of the silver markets by certain very large financial organizations.

This article is a great update to the silver supply discussion in my opinion.
click here
"...
In 1940, there were approximately 10 billion ounces of silver above ground in the world, with half owned by the US Government. At that time, there was about a billion ounces of gold. Ten times more silver existed in the world than gold. After more than 60 years of over-consumption of silver, of drawing down and depleting the inventories built up over hundreds and even thousands of years, the relationship of how much silver exists above ground compared to gold has flipped. Now there is much more gold left in the world than silver. Currently there are up to 5 times more gold in the world than silver, depending on how you define inventory. Silver inventories have declined from 10 billion ounces in 1940 to 1 billion today. The U.S. government, the largest owner of silver in 1940, with over 5 billion ounces, now owns zero ounces. Gold world inventories, including jewelry, have increased from 1 billion ounces in 1940 to 5 billion today, according to all reputable sources like the World Gold Council.

I ask you to think about that for a moment, there being more gold than silver aboveground, as this is one of the most important factors in silver today. It is also one of the least known facts, even though it is easily verifiable and has evolved over such a long time. When people first hear or read it, they instinctively disbelieve it. 99.9% of the people on the planet, to this day, would tell you that it can’t possibly be true that there is more gold than silver in the world. Or even that there is an equal amount of gold and silver. None of this 99.9% has ever taken even a minute to think about it or read or try to verify how much of each remains above ground. They don’t have to. Their verification comes everyday, as it has everyday for decades, from one simple source - the daily price of each. The price of silver and gold is broadcast constantly, to every nook and cranny around the world, that there are 60 to 70 to 80 times more silver in the world than there is gold. That’s what 99.9% of the people in the world think. And I’m not just talking about uneducated people in third world countries. I would include the most sophisticated, wealthy and educated people, who have come to believe that the price doesn’t lie.

I do hope 99% of the people here don’t think that.
It is this simple fact, that the relative price of silver compared to gold is so distorted, relative the their respective quantities in existence, that is all anyone needs to know to buy silver. This is not a knock on gold. I will stipulate to and accept as true every bullish argument that anyone could make on gold. You could spend hours or days lecturing me on all the good things that gold has going for it, and I will accept them without dissent. When you are done giving all the bullish gold arguments, I would just add two things. One, all those arguments apply to silver as well, and two, there is less silver than gold.

I’m compressing hundreds and even thousands of years of silver history into a few minutes of time. For many centuries, the world dug up and used silver for money and beauty and wealth. In the last century or so, we discovered incredible new uses for this age-old material and continued to dig it out of the ground, in ever increasing quantities, basically consuming all the newly mined silver plus almost all of the old stuff as well. And even though this is a fairly easy set of facts to verify, only an infinitesimal amount of people are aware of how little silver remains. And in spite of the growing rarity of this age-old cherished and desired material, its price, on any objective measure, is dirt cheap. There is less silver in the world on a per capita basis, than in history, yet the price still reflects super abundance. At the risk of over using a statement I’ve made in the past, I couldn’t make this up if I tried...." I added the bold for emphasis in my recent post at The Duffminster Times.

Fri, 12/31/2010 - 14:10 | 839886 Dodge135
Dodge135's picture

Gold doesn't tarnish (unless you have some mercury nearby)

Fri, 12/31/2010 - 14:26 | 839912 akak
akak's picture

Now there is much more gold left in the world than silver. Currently there are up to 5 times more gold in the world than silver, depending on how you define inventory. Silver inventories have declined from 10 billion ounces in 1940 to 1 billion today.  

That is all true, yet all this talk of dwindling aboveground stockpiles of silver still ignores the fact that roughly nine times as much silver as gold is produced by mining each year.  All this focus on stockpiled silver, or the lack thereof, seems designed to imply that the total aboveground stockpile is the ONLY source of silver for industrial and other uses, when in fact the drawdown from aboveground stocks was never more than a relatively minor component of total annual supply in ANY given year one wishes to examine. 

The drawdown in total stockpiled silver over the last century is certainly a factor in its price appreciation over the last decade, but definitely not the only factor, nor, I suspect, even a major one.

Fri, 12/31/2010 - 14:20 | 839909 Cyrano de Bivouac
Cyrano de Bivouac's picture

Well there was a tofu restaurant in Arcadia, Ca called "Young Dong"(now closed) also a Vietnamese restaurant nearby(El Monte) called "Pho King".

Fri, 12/31/2010 - 14:26 | 839931 rumblefish
rumblefish's picture

just curious,

what percentage of your wealth do you ZH'ers hold in PM's?

Fri, 12/31/2010 - 14:33 | 839952 Dr. Gonzo
Dr. Gonzo's picture

Hard to say on any given day since home prices and the dollar keep falling and our riches keep going up. The percentage increases every day without us doing anything.

Fri, 12/31/2010 - 14:40 | 839963 Dr. Gonzo
Dr. Gonzo's picture

Any good money manager will tell you 10% needs to be in PM's. I'd say less then 1% of the American population knows or follows this golden rule with their savings. Most Americans are ignorant and that's the way they want us to be. (hence the public school system.)

Fri, 12/31/2010 - 21:15 | 840854 spinone
spinone's picture

100%

Sat, 01/01/2011 - 02:16 | 841206 Dr. Sandi
Dr. Sandi's picture

Other than my wealth of wit and good looks, 100% of my wealth is in silver and gold. 150:1 silver:gold ratio by weight. The silver side of the scale keeps increasing vs. gold for now.

Also, wit increasing at the cost of good looks.

Fri, 12/31/2010 - 14:27 | 839932 Dr. Gonzo
Dr. Gonzo's picture

I've been buying PM's for 10 years and still have no problem buying at these prices. Last week some tubes of 2011 maple leafs came. I made sure to order an odd number to get some loose coins for gifts. APMEX seals them in a thin plastic now. Totaly Beautiful coins 9999 pure. I look at them and know they are worth much more than the $31. If JPM told me silver was worth $150 I would not argue. For all the sceptics out there order just one 9999 maple and hold it in sunlight, fluoresent light or any kind of light and you will understand on a viceral level the value of what you are holding. Silver forever Bitches! I don't care about paper money or bank accounts anymore. I'm free!

Fri, 12/31/2010 - 14:32 | 839945 akak
akak's picture

Argentum is a seductive mistress, is she not?

Fri, 12/31/2010 - 22:38 | 840942 perchprism
perchprism's picture

 

There is an atavistic reptilian brain-stem response to pure silver and gold.  To run it through your fingers and watch, hear, and even smell it as it tinkles on the table is to know what money truly is and was meant to be.

 

I'll spin a Silver Eagle on the table and invite visitors to witness the event as it winds down and finally rattles to a stop.  There's nothing like it in the world.

 

 

Fri, 12/31/2010 - 15:15 | 840085 blindman
blindman's picture

the potential value of silver so campaigned about that no

other element seems to posses is it's unique capacity to

destroy jp morque and other like shorted derivatives. 

there is value and then there is value.  so silver has become the

precious metal with a political characteristic par excellence. ?

chemists and physicists have yet to evaluate these sorts of properties.

Fri, 12/31/2010 - 15:15 | 840086 ApeMilesHigh
ApeMilesHigh's picture

Some have suggested that the move to corner copper is a countermove to the Chinese current corner in Rare earths. Does anyone have any thoughts toward this?

Fri, 12/31/2010 - 15:40 | 840159 oddjob
oddjob's picture

Are they are planning to implode the Copper price at a future date to try and get a companion move out of Silver?

Fri, 12/31/2010 - 15:15 | 840089 Silverhog
Silverhog's picture

I buy both Silver & Gold, but I must say I really like the look of Silver better. As I drive a silver Jeep and would never buy a gold one.

I have been in the antique business for over 30 years. In my travels I still see large amounts of sterling silver in display cases at most good shops. Not once do I see anything of size in Gold. So I'm assuming that the bulk of this Gold is held privately by various countries, Central Banks and very wealthy. The rest is scattered across the world in coins, jewelry or smaller bullion bars. So Silver must be far more dispersed across the globe as few large reserves are listed. These smaller concentrations in shops should evaporate in time. Most shop will tell you that everyday buyers come in with calculators looking at weights and prices. A fine vase will get whisked off to the smelter faster than you can blink if a seller is not keeping his items up on the spot prices. This said, I still believe the ratio maybe somewhere in the range of 12:1 now. I still think there is more Silver than Gold on the surface, but I may be proved wrong, but that would be OK with me.  

Fri, 12/31/2010 - 16:40 | 840304 pcrs
pcrs's picture

I never understand the claim that 

supply=X

demand=Y

therefor there is a supply shortage.

Imho there is never a supply shortage. The demand is only Y at a certain price and the supply only X at a certain price. You have to deliberately compare supply at 1 price with demand at another price (if you include supply from stock piles).

Sat, 01/01/2011 - 15:47 | 841701 Clint Liquor
Clint Liquor's picture

When demand exceeds supply, the price will increase.

Price increase will either kill demand or encourage supply. 

The price of Silver has risen dramatically in the last decade and the net result has not been a loss of demand nor an increase in supply.

This fact clearly shows the price of Silver is not high enough.

Fri, 12/31/2010 - 17:20 | 840394 joemayo
joemayo's picture

....

Fri, 12/31/2010 - 23:57 | 841064 Nutsac
Nutsac's picture

Silver price in parity with Gold is truly unthinkable idea. Imagine how much price of electronics will be if this is happen?

Sat, 01/01/2011 - 00:53 | 841135 hero HNL
hero HNL's picture

The guy in the video has connections with penny stock scammer Jon Lebed.He also makes a lot of videos for inflation.us which is a proven rip-off site.

 

Be careful with free info on the net as there are scam artists that try to profit from surging prices of PM's. Check with google or youtube concerning the guy.

 

hero

Sat, 01/01/2011 - 08:15 | 841348 pcrs
pcrs's picture

Are you aware of any of the facts in this video being wrong? Because if the facts are correct, it does not really matter if the guy presenting them is a scam artist.

Do NOT follow this link or you will be banned from the site!