Is A Physical Silver Shortage Spike Imminent?

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Sun, 12/11/2011 - 16:08 | 1968089 MolotovCockhead
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All I know is that they built those huge FEMA camps....waiting...waiting.....waiting for the chicken to come back to roost. Could be any day now.

Sun, 12/11/2011 - 23:08 | 1968948 UP Forester
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FEMA camps?  You mean the one's that now have contracts for 72-hour full-staffing?

Sun, 12/11/2011 - 17:02 | 1968204 Nobody special
Nobody special's picture

Rehypothecation was a way to draw tangible assets back into the market. Without it, the market would have collapsed long ago. Harvey Organ was on this one. He noted there was more physical being withdrawn than existed. This was the method.

Consider gold. If there was a shortage, the paper market would fail. But if owned gold could be reappropriated without detection, it could be used to prop the market up longer. We have that in silver. We have that in gold. And once delivery is demanded in physical, we have that no more. Few chairs remain and the music has stopped.

Sun, 12/11/2011 - 18:13 | 1968347 FMR Bankster
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Things change and silver, like all commodities is impacted. There used to be large commercial consumption in photography, now there's very little. On the other hand new needs have emerged. And of course there has been shortages, silver was around $2 an oz in 1971 and it's $32 today. Not bad. I suspect it will get much better in the future. Much of the spike in price possibility here is that silver is mined as a by product, very rarely as the primary metal. So silver going from $32 to $100 won't drag much supply from the ground but it will come from safe deposit boxes and jewelry boxes.

Mon, 12/12/2011 - 06:01 | 1969380 vamoose1
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Immiment?   Were you trolling during spelling class?

Sun, 12/11/2011 - 14:39 | 1967821 Barbarous Relic
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Silver, the other white meat.  

Sun, 12/11/2011 - 15:30 | 1967985's picture

Gold -- it's what's for dinner.

Sun, 12/11/2011 - 17:50 | 1968301 akak
akak's picture

Precious metals: they're not just for breakfast anymore.

Sun, 12/11/2011 - 17:52 | 1968304 akak
akak's picture

CME & LBMA: Where's the beef?

Sun, 12/11/2011 - 17:54 | 1968311 akak
akak's picture

"Hello, Kitco/CapitalOne, my name Jon Nadler."

Sun, 12/11/2011 - 18:06 | 1968331 High Plains Drifter
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as a silver bug, i am afraid to talk about silver around here with that evil trav7777 lurking ............:)

Sun, 12/11/2011 - 18:22 | 1968343 akak
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Not to worry --- Sundays are his work days, when he is busy bombing black churches. 

Sun, 12/11/2011 - 19:16 | 1968453 Calmyourself
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Sun, 12/11/2011 - 18:08 | 1968338 High Plains Drifter
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but but but, its just a industrial metal............

Sun, 12/11/2011 - 14:41 | 1967829 G. Marx
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Very slick.

Sun, 12/11/2011 - 14:42 | 1967833 Obadiah
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Silver BitcheZ

Did I say it right?

Sun, 12/11/2011 - 14:52 | 1967838 apberusdisvet
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Watch for both GLD and SLV to implode within the month; nobody with half a brain would invest in these manipulation scams.  And the CRIMEX will default within the next 3 months; count on it.  The reality is that Sprott, even with his excellent relationships with miners (given his various portfolios of mining stocks, will not be able to find the millions of ounces he needs for his new vehicle.  There are no, I repeat no, large physical stocks of silver available.

Sun, 12/11/2011 - 16:35 | 1968156 Al Gorerhythm
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Well, not at these prices, at least.

Sun, 12/11/2011 - 17:08 | 1968217 Nobody special
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Ha. Not at this price. At what price then? The published price is for paper, not physical. And if the paper price plummets, there goes your pricing mechanism. The divergence will make it impossible for us to know the true value of silver, at least until smoke clears.

Serious question people... how WILL we price our silver in this event? What would be a reasonable buy price, sell price? Not numbers, methods of measuring value that we can apply when this happens.

Sun, 12/11/2011 - 19:07 | 1968258 Al Gorerhythm
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Well, let me put it this way. When I see that silver is recognised as money again, that'll be the time when mine gets re-circulated. Price? Well, I'll rely on historic values rather than the hypotecated short sold exchange rate of today. One caveat to that is that the historic value may well be due for a reset, taking into account modern consumptive uses.

Sun, 12/11/2011 - 19:23 | 1968473 Mr Lennon Hendrix
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oil, land

Sun, 12/11/2011 - 19:39 | 1968508 stacking12321
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i use this as a guideline:

1oz gold = 16 oz silver = 16 barrels of oil

right now silver is way underpriced.

when silver:gold ratio reaches 12:1, time to sell silver

Sun, 12/11/2011 - 18:23 | 1968367 stacking12321
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i suspect his new vehicle and also his letter to miners to hold silver instead of cash, are an effort to put pressure where he sees weakness, i.e., availability of silver supply.

Sun, 12/11/2011 - 14:47 | 1967840 jomama
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btw, i would love if someone could calculate or provide direction to numbers that i could crunch that determine how much leveraging power in FRN's is removed from the system by buying 1oz. of Ag! 

Sun, 12/11/2011 - 14:54 | 1967871 Piranhanoia
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can't compare. one is real.

Sun, 12/11/2011 - 15:01 | 1967889 Ahmeexnal
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First buy that oz (or more), then do the math, as you feel that coin in your hand.

Sun, 12/11/2011 - 15:53 | 1968049 defender
defender's picture

The reality is that no leveraging power is removed from the system, because the FRN is still in circulation.  You might make a very short term dent if the silver was held on margin and you paid in cash.  The opposite would happen if you had been saving cash at home and then the business puts the money in a bank where it can experience fractional reserve lending.  The system is designed for monetary inflation by any means possible, so it is very difficult to even slow the beast down.

Sun, 12/11/2011 - 19:25 | 1968478 Mr Lennon Hendrix
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shorts must be located

Sun, 12/11/2011 - 19:30 | 1968486 stacking12321
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walking around with no pants on again?


Sun, 12/11/2011 - 19:33 | 1968499 akak
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Mon, 12/12/2011 - 00:23 | 1969087 Mr Lennon Hendrix
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that was funny but i dont understand why you are trolling me

Sun, 12/11/2011 - 16:13 | 1968101 seek
seek's picture

None, since when you pay in FRN, the FRN gets recycled. That's one of the keys to the big game, and why they hate PM based money -- because you can in fact pull PM money out of the system. With a PM-based fractional reserve banking, you guarantee a bank collapse because they're lending physical that doesn't actually exist through leverage.

The closest you can come to removing FRN leverage is cash under a mattress. Unfortunately that just means you're limiting their theft to the inflation rate.

If we were on on the PM system like the one prior to the 30s, the converting to physical and stuff that in your matress would basically result in ($ per oz)/reserve ratio dollars being removed from fractional reserve availability.

Current reserve is 10% (10:1 ratio) but there are a LOT of games, since CDs, time deposits, etc aren't counted against reserves. Let's assume it's 15:1, and silver is $30/oz, 1 oz would pull $450 out of the system, but only if we were on a PM-based standard. We're not, so it's a moot point.


Sun, 12/11/2011 - 19:26 | 1968480 Mr Lennon Hendrix
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printing fiat dilutes itself


Sun, 12/11/2011 - 14:46 | 1967844 RoadKill
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What is industrial demand for silver relative to total production?

Ohhhh. I see, you want to count ETF buying as demand. And an earlier column called for silver miners to stop selling their silver and calling their stick piles cash. Why bother spending $ digging it up then? Just leave it I'n the ground and borrow against reserves to pay a dividend.

But yeah - JPM is the one manipulating the market.

If I created an oil ETF to buy physical barrells and stick them back underground, I'd be thrown in jail.

Sun, 12/11/2011 - 14:46 | 1967846 JPM Hater001
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We love VisionVictory.  Subscribe to this guy and Victory independence.  Sometimes he is just rehashing what ZH has already told us but he has been a long time advocate of the common man (women for you femenists out there...plz dont -1 for the PC) and deserves respect for the mountaintop he screams from.

Sun, 12/11/2011 - 14:55 | 1967872 GeneMarchbanks
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Not for being un-PC, but for excluding male feminists and poor spelling. Aside from that we're agreed.

Sun, 12/11/2011 - 15:04 | 1967898 Socratic Dog
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Male feminist?  Wanker.  Shirt off.  I'll fight you for that.

Sun, 12/11/2011 - 15:20 | 1967948 GeneMarchbanks
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Let me break this down for you as you seem confused:

'Male feminist?  Wanker.'

Nope. The exact opposite. Being a male feminist keeps me from being a wanker. No need for wanking, ladies love male feminists... what else you got?

'Shirt off.  I'll fight you for that.'

Shirtless fighting? I'll pass. Thanks for the opportunity to display repressed homo-eroticism though.

Sun, 12/11/2011 - 16:02 | 1968069 GenXer
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I thought Fight Club was required reading for this site...

Sun, 12/11/2011 - 16:13 | 1968100 GeneMarchbanks
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It is. More importantly though, is distinguishing between things that are actual, and things that are understood symbolically. Kinda like... um... paper/physical. Stick around, your generation is about to learn a real(unintended) lesson.

Sun, 12/11/2011 - 16:57 | 1968200 kinganuthin
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Yeah.. ladies love male feminists, they are called "fag hags".  I'm a wanker and for it i get wanked often.

Sun, 12/11/2011 - 16:33 | 1968151 vato poco
vato poco's picture

Marchbanks: "[I'm a] male feminist."

Wait. So you're *admitting* you're a pussy? Interesting strategy there. I bet the ladies just eat it up!

Sun, 12/11/2011 - 16:48 | 1968184 GeneMarchbanks
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A pussy that gets pussy? Are you calling me a lesbian?


Sun, 12/11/2011 - 19:19 | 1968462 Calmyourself
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I'm a lesbian..  Trapped in an ugly man's body does that count??

Sun, 12/11/2011 - 19:50 | 1968537 akak
akak's picture

Based on my experience, every lesbian is trapped in an ugly man's body.

Sun, 12/11/2011 - 18:42 | 1968394 Jendrzejczyk
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You'd be surprised.

Sun, 12/11/2011 - 14:47 | 1967851 AC_Doctor
AC_Doctor's picture

Robojackoff says otherwise.  Buy LULU, Netflix and PriceLine and wait for the huge melt-up coming from hypothecation of stock certs...


Sun, 12/11/2011 - 14:51 | 1967857 Glasgow Gary
Glasgow Gary's picture

Something you'll never hear on the silver bull sites: the production of silver has not peaked. Has not peaked at all. In fact, global production of silver is growing very strongly. Unlike, oil, and unlike gold.


Sun, 12/11/2011 - 14:52 | 1967863 jomama
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Do NOT follow this link or you will be banned from the site!