The opportunities expected to arise from investing in silver now are even more pronounced than those of gold. [Let me explain why that is the case.] Words: 1367
So says an article at www.myglobalinvestments.com which Lorimer Wilson, editor of www.munKNEE.com (It’s all about Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. The article goes on to say:
Furthermore, banker manipulation of the silver market has caused this asset class’ price to be extremely suppressed, as the silver market suffers more from this market manipulation than any other traded commodity…In the long run, this market manipulation will only allow prices to reach greater heights, as investors are allowed to purchase larger amounts of silver at exceedingly low prices. This is causing the already small global silver inventory to be depleted at an alarmingly fast rate. Eric Sprott, Chief Investment Officer at Sprott Asset Management, alluded to this shortage of physical silver [in this (1) article and this (2) article] when speaking about his attempt to gather the 22,298,525 [troy (3)] ounces of silver bullion allotted for his physical exchange traded fund:
Frankly, we are concerned about the illiquidity in the physical silver market. We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver.
Wall Street banks such as JP Morgan are manipulating the silver price on behalf of the Federal Reserve to artificially prop up a continually depreciating dollar. Lower silver prices cause investors to collect greater amounts of physical metal, which is expected to inevitably cause a short squeeze (i.e. a physical metal default). This, in turn, would bring about an actual divide between paper and physical silver prices. These free market forces are expected by analysts to reach unimaginable prices once the banks are forced to go out into the market and buy the silver which they must deliver to those who request physical delivery. Once investors hear about this short squeeze, more and more of them will demand delivery of their physical metals which do not actually exist, which would send the price even higher.
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There are other reasons why the global silver rate is becoming depleted. Gold is normally hoarded, while silver is hoarded and consumed. Because no other metal surpasses silver in terms of electrical conductivity, there are literally tens of thousands of industrial applications presently being used for this metal. Silver also has other types of applications related to other industries due to its excellent reflective and anti-bacterial properties. However, the amounts of silver used per application are so minimal, that it becomes impossible to recycle silver from any particular unit. For example, when a computer, cell phone or CD is thrown out, the minute amount of silver that existed in each product cannot be recovered; it is lost forever. Consequently, in the last century, approximately 90% of global silver inventory has been consumed and depleted forever. This leaves a final 1 billion ounces of silver approximated to exist on the face of the earth, which industry and investors are currently competing to buy up. The global race has begun…
Furthermore, most of the silver which is easily accessible in the ground has been taken already. Industrial demand alone is increasing at about 18% per year, as new industrial applications keep emerging. Moreover, investor demand continues to increase at a staggering rate.
As a result of the industrial depletion which has taken place, only about 10% of global silver reserves remain. All governments and central banks in the world have dumped their silver on the market over the last 70 years, and the majority of this silver has been consumed and depleted. No known government stockpiles of silver exist anymore in the world, even though gold is still stockpiled by central banks around the world. Because the demand for silver is exceeding supply, the arbiter must be price, especially when considering that there is only approximately 1 billion ounces of global silver supply left…
Indeed, so much silver has been used up by industry that there is now actually more gold in the world than silver. This is truly an astonishing matter when one realizes that there are approximately 12 ounces of silver in the earth to every ounce of gold. This is what is termed the ‘natural ratio’ between gold and silver. The ‘monetary ratio’ has historically been approximately 16 silver ounces to one ounce of gold. Yet at our present time, quite incredibly, there is actually more gold on the earth than silver. The economic laws related to supply and demand cannot allow this present situation to persist; there must be a market correction, and this is, in fact, starting to occur at this present time. In fact, the present silver to gold monetary ratio is close to 45 to 1; that is, 1 ounce of gold can be bought with approximately 45 ounces of silver, even though there is more gold than silver available to investors. Silver experts state that the ratio must come down to its historic monetary ratio, which is around 16 silver ounces to every 1 ounce of gold…
Presently, silver is boldly outperforming gold as free market forces are beginning to correct these aforementioned imbalances, as can be seen in the following annual percentage gains for 2009 and 2010:
Projected Profits from Investing in Silver:
The following is an estimate compiled by Lorimer Wilson (4) of what types of silver prices and gains we could possibly see in the coming years. This will be expressed in terms of the silver to gold ratio:
Silver’s Price Range with Gold at $3,000
a) Gold @ $3,000 using the silver:gold ratio of 47:1 puts silver at $63.83 b) Gold @ $3,000 using the silver:gold ratio of 22:1 puts silver at $136.36 c) Gold @ $3,000 using the silver:gold ratio of 14:1 puts silver at $ 214.29
Silver’s Price Range with Gold at $5,000
a) Gold @ $5,000 using the silver:gold ratio of 47.1 puts silver at $106.38 b) Gold @ $5,000 using the silver:gold ratio of 22:1 puts silver at $227.27 c) Gold @ $5,000 using the silver:gold ratio of 14:1 puts silver at $357.14
Silver’s Price Range with Gold at $10,000
a) Gold @ $10,000 using the silver:gold ratio of 47:1 puts silver at $212.77 b) Gold @ $10,000 using the silver:gold ratio of 22:1 puts silver at $454.55 c) Gold @ $10,000 using the silver:gold ratio of 14:1 puts silver at $714.29
To conclude, there is no accurate way of knowing exactly how high silver will rise in price in the coming months and years. As the current financial crisis continues to worsen, billions and even trillions of dollars can conceivably be trying to enter the silver market… For this reason, nobody can be certain what sorts of prices will be witnessed.
[Indeed,] in this type of scenario, it would not be impossible for prices to eventually reach the thousands of dollars per ounce, especially when considering the fundamentals for silver which have been outlined here.
Titles and Links to articles Referenced Above:
- Don’t Delay: Get Your Fair Share of Silver Today! Here’s Why http://www.munknee.com/2011/01/the-inside-story-on-why-silver-is-such-an-exceptional-investment-opportunity/
- Sprott: Shocking Shenanigans in Paper vs. Physical Silver Market http://www.munknee.com/2011/07/sprott-shocking-shenanigans-in-paper-vs-physical-silver-market/
- What’s the Difference Between 1 Gold Karat, 1 Diamond Carat and 1 Troy Ounce? http://www.munknee.com/2011/03/whats-the-difference-between-1-gold-karat-1-diamond-carat-and-1-troy-ounce/
- Why Silver at $398.52 is a Realistic Parabolic Peak Price http://www.munknee.com/2011/07/with-gold-at-10000-silver-could-reach-714/
Other Related Articles:
- Think You Know All About Silver? Take This Quiz and Find Out http://www.munknee.com/2011/06/think-you-know-all-about-silver-take-this-quiz-and-find-out/
- How to “Play” a Parabolic Move in Silver http://www.munknee.com/2011/04/how-to-play-a-parabolic-move-in-silver/
- Silver is Now Even More Precious Than Gold! Do You Own Any? http://www.munknee.com/2011/03/silver-is-now-rarer-than-gold-do-you-own-any/
- It Is Time To Embrace the New Refrain “Got Silver?” http://www.munknee.com/2011/02/the-coming-silver-supernova/
- Silver Is About As Close As You Can Get To A Sure Bet! Here’s Why http://www.munknee.com/2011/01/silver-is-about-as-close-as-you-can-get-to-a-sure-bet-heres-why/
- Panic Before the Herd and Win-Win with Silver! http://www.munknee.com/2011/01/panic-before-the-herd-and-win-win-with-silver/
- World’s Silver Production By Country – And Much More! http://www.munknee.com/2010/12/worlds-silver-production-by-country-and-much-more/
- Why You Should Own Some Silver – As Well As Gold http://www.munknee.com/2010/11/why-you-should-own-some-silver-as-well-as-gold/
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.