*Editor note: With sentiment near all-time lows for the entire bull market, we thought it apropos to bring back SRSrocco’s viral, comprehensive FUNDAMENTAL ANALYSIS on the forces that will push silver over $100/oz. 

There are tremendous forces at work that will push silver over $100 an ounce.

According to the  2012 World Silver Survey, total global silver investment demand has risen from only 31.6 million oz in 2002 to a staggering 282.2 million oz in 2011.  As world economic fiat based monetary system continues to deteriorate, investors are taking delivery of physical silver rather than holding on paper contracts that may not be backed by any metal whatsoever.

This has created a run on the LBMA… the largest metal exchange in the worldOnce the world ‘s liquid energy supply starts its inevitable decline from its current plateau, annual silver metal production will decline as well.  There will be no silver glut and there will be no silver available when the world’s fiat monetary system finally dries up and blows away.
Get ready.  The forces for pushing silver over $100 have just begun.

2014 Silver Maples With Security Mint Mark 
As Low As $1.99 Over Spot at SDBullion!


By SRSrocco, SRSrocco Report:

There are tremendous forces at work that will push silver over $100 an ounce.  Very few precious metal analysts understand all the forces that are at work.  Some analysts focus on specific areas such as the gold-silver ratio and technical analysis, while others write about future investment and industrial demand.  And then of course, we have the more unorthodox analysts who delve into the ongoing manipulation of gold and silver — a realization shared by the author of this article.

However, one of the most important aspects of silver that most analysts are completely unaware is the availability (or lack of thereof) of future silver mine supply.  I am simply amazed how some analysts can forecast lower silver prices due to a so-called future supply glut that is supposedly coming in the next few years.

As I have mentioned before in a previous article, analysts today are so specialized they have no idea what is going on in another industry.  It is highly doubtful that the metal analysts who make these long term silver supply forecasts really comprehend the details of the energy market and industry.  The failure of these metal analysts to understand the complexity of the global liquid supply system will render their future forecasts completely inaccurate.  This will be discussed at the latter part of the article as it is one of the longer term forces to impact silver.


Silver Surplus-Deficit Explained Again

There still seems to be a misunderstanding about the so-called surplus-deficit of silver.  Some analysts are pointing to the fact that increasing annual silver surpluses, without continued strong investment demand, can make the price of silver fall quite rapidly.  I would like to repost this graph to show the surplus-deficit forces.


According to GFMS (now Thomas Reuters), there was a silver deficit until 2003.  During this time of supposed deficits, the price of silver remained in the $4-$5 range.  However, when the deficits disappeared and the surpluses began, the price of silver magically began to rise.  The first year silver was no longer in a deficit (2004) it hit an average price of $6.67 an ounce.  Then in 2005 it reached an average of $7.32, $11.54 in 2007, $13.38 in 2008, $14.98 in 2009 and so on and so forth.

The white line on the graph represents the average annual price of silver.  As you can see the price is heading higher in parallel with the so-called rise of silver surpluses.  These silver surpluses have been absorbed by institutional and retail investors.  The notion that a structural deficit in the annual silver supply would push the market price of silver higher, failed to materialize prior to 2003 when actual deficits took place.

So, here we can see that the rise in the price of silver since 2004 has less to do with industrial demand and more a factor of increased silver investment.

  1 oz RCM Call of the Wild Gold Howling Wolf 
As Low As $49.99 Over Spot at SDBullion!

Silver Investment Demand:  Just Getting Started

Precious metal enthusiasts who are concerned about whether or not silver investment demand will remain strong in the future… shouldn’t be.  From the data I am gathering, we are just beginning to see how large of a force silver investment demand will be in the upcoming years.

One of the more notable gauges of increased silver investment over the past decade, has been the growing demand of official government coins.  In 2002, total supply of official government coins and medals were 31.6 million ounces.  However, by 2011 this grew to a staggering 118.2 million ounces or a gain of 274% in just nine years.


The four largest selling official government coins are the U.S. Silver Eagle, the Canadian Silver Maple, the Austrian Silver Philharmonic and Australian Silver Koala & Kookaburra.  These four government mints produced 101 million silver ounces of coins & medals (majority were coins) or 85% of the world’s total in 2011.

Even though the sales of these official coins dropped off during the first part of year, strong demand has returned in the second half.  For instance, there was a 32% decline in Silver Eagle sales in the first six months of 2012 when 17.4 million were sold compared to 22.3 million during the same period in 2011.  However, if we look at the chart below we can see that 2012 Silver Eagle sales are now only down 18% compared to the same time last year.



There was also a similar decline of Silver Maples in the first half of 2012.  From January to June, sales of Silver Maples fell 32% compared to last year.  Nevertheless, when the Royal Canadian Mint releases its third quarter report, we will more than likely see an increase of its Silver Maple sales in percentage terms compared the first half of 2012.

Another interesting trend taking place and shown in the chart above is the amount of Silver Eagles sold compared to Gold Eagles.  Compared to last year, Gold Eagle sales (-36%) are down twice as much in percentage terms than sales of Silver Eagles (-18%).  Furthermore, the U.S. Mint has sold 53 times more Silver Eagles than Gold Eagles in 2012 (the ratio in 2011 was 40-1).  Thus, retail investors have been purchasing 33% more Silver Eagles than Gold Eagles compared to the same period last year.

Even though the four countries listed above produce the lion’s share of official government coin sales, there is another country that has big plans to change their ranking in the future.


China:  Big Plans For Future Silver Investment

China has been patient by only producing 600,000 (annually) of its one ounce Silver Pandas for nearly a decade.  However, last year China decided to increase its mintage of its 2011 Silver Panda from 600,000 to 6 million… and in 2012, they plan on increasing it to 8 million.  Why the sudden 10 fold increase of their Chinese Silver Panda sales in one year?

Well, according to Jim Orcholski who runs J & T Coins LLC Blog.com:

The main reason the mintage of these coins was increased so much starting last year is that it became legal in 2011 for Chinese citizens to own silver coins.


100 oz Silver NTR Bars As Low As 59 Cents Over Spot at SDBullion!

While this huge increase in silver Panda production figures over the past two years seems impressive, it may only be a drop in the bucket for what is being planned in the future by the Chinese government.  Again, according to Orcholski quoted in the article “China Strives to Make Silver Panda as Popular as American Silver Eagle”:

The Chinese government is also eager to make Silver Pandas as popular as American Silver Eagles.  Pandas are obviously very popular within China, and it’s not known how many of the Silver Pandas are exported and how many are sold within the country.

For the Chinese government to make good on its promise to popularize its Silver Panda to equal that of the American Silver Eagle, they will have to increase their annual mintage substantially.  In 2011, the U.S. mint sold nearly 40 million Silver Eagles.  If the Chinese plan on surpassing this record, I would imagine they may set their goal on producing 50 million annually.  This may not be that tough of a challenge due to the fact that the China has three times the population of the United States, and their citizens are becoming keen buyers of the precious metals.

Here we can see evidence, that the demand for official government silver coins has gone exponential over the past decade.  However, this is only one part of the overall silver investment picture.


Silver Investment Demand vs. Industrial Applications

One of the more tiresome, boring and overused analysis in determining the future price of silver, is the forecasted consumption of silver in industrial applications.  There is this notion that if the world’s economies slide into a severe depression, that the demand for silver will fall as industrial activity declines.  Thus, we would have much lower silver prices… that is, according to these analysts.

Hogwash.  We now know by the data provided in both the surplus-deficit and official government coin charts above, it has been investment demand that has been the overriding force in determining the market price of silver, not industrial.  Again, if industrial demand didn’t move the price when we had real annual silver deficits in the past, why on earth would we expect it to affect the price in the future.

To get a true picture of the massive increase of silver investment during the past decade, take a look at the chart below:


The grey bars in the chart above show how much silver was consumed on an annual basis by industrial applications while the blue represent coin & medal demand and the orange denotes implied net investment.  These figures do not include silver consumption in either photography, jewelry or silverware.  Below is the data for the following years:


By adding the silver demand from official coin-medal and implied net investment together, we get the total amount for the year which was 31.6 million oz in 2002.  Thus, total world silver investment in 2002 was just a mere 9% of the silver consumed by industrial applications.  However, by 2011 global silver investment jumped to 282.2 million oz accounting for 58% of silver used by industrial applications.

The World Silver Survey calculates Implied Net Investment by subtracting total fabrication from the total global silver supply.  In 2011, global silver supply (mine & scrap) was 1.04 billion oz and total fabrication (industrial applications, photograph, jewelry, silverware and coin & medal) consisted of 876 million oz leaving a difference of 164 million oz as implied net investment.

According to the 2012 World Silver Survey, physical bar investment accounted for 98 million oz of the 164 million oz implied net investment total in 2011.  Here again, we can see from the two charts above, institutional and retail investors have been the predominant force in pushing silver from an average of $4.60 an ounce in 2002 to averaging over $35 an ounce last year.

Even though silver has risen nearly 75% per year for the past nine years… this is just the beginning of the price moves to come.  Why?  It looks like something quite fishy is taking place in the precious metal exchanges.

U.S. Silver Exports:  Putting Out The LMBA Fire?

In the past, investors were happy to fork over hard earned money for paper promises of gold and silver.  However, that trend seems to be reversing quite rapidly.  After the collapse and bankruptcy of several large commodity brokerage houses along with the supposed ongoing threat that allocated and unallocated gold and silver accounts have been rehypothocated (stolen), investors are now demanding delivery of physical metal instead of paper I.O.U.’s.

Furthermore, a week doesn’t go by without an article written about government gold repatriation or whether or not a central bank actually holds the very gold (or rights to the gold) that is shown on its balance sheet.  When we add up all these factors, who can blame the investor for wanting to acquire the real physical asset?

One country that is scarfing up as much of the precious metals as it can, is China.  According to the research done by Jim Willie, massive amounts of gold (official & unofficial) have been shipped from West to East (mainly China) in the past several years.  One place for an investor or a sovereign country to take delivery of large quantities of gold and silver is from the LBMA  located in London — the largest metal exchange in the world.

Rumors are floating around the precious metal blogosphere that wholesale physical supplies of gold and silver are extremely tight, even though so-called “official statistics” may state otherwise.  Nevertheless, there is one “official source” that may help confirm these rumors.

In 2011, the USGS published that the U.S. exported 19 metric tonnes of silver bullion to the United Kingdom during the entire year — a very miniscule amount indeed.  However, something very interesting occurred starting in May of this year.  In May, the U.S. exported 19.4 metric tonnes of silver which was more silver than was exported during the twelve months in 2011… and this is just the tip of the iceberg.

If we look at the chart below, we can see just how much silver is leaving the shores of the U.S. and being shipped to the United Kingdom in 2012:


In the upper right hand portion of the chart you will see the quantity of silver exported each month to the United Kingdom.  The United States exported 37.3 metric tonnes of silver in June, 169 metric tonnes in July and 65.3 metric tonnes in August.  In just four months, the U.S. has exported 291 metric tonnes of silver to London (LBMA).

There are two significant trends taking place that are represented in the chart above.  First, the United States has exported more silver bullion in the first seven months of the year than it did in all of 2011.  Secondly, silver bullion shipped to the United Kingdom rose from 3% of total U.S. silver exports in 2011, to a staggering 42% of the 700 million oz exported so far this year. 

Why has there been such a large increase of silver bullion exports to the United Kingdom over the past few months?  Could it be that the English have suddenly ramped up solar power manufacturing… or may it be due to an abrupt increase in foreign demand for their formal silverware?  I highly doubt it.

More likely than not, the large silver bullion exports to the U.K. have been utilized to help meet the insatiable physical silver bullion demand taking place on the LBMA.  As the old saying goes… where there is smoke, there’s probably a great deal of silver paper on fire.

If we consider the strong investment demand forces described in the examples above (present & future), I hate to say, investors should probably brace themselves for much higher silver prices in the next several years.  Yet, investment demand is only one part of the powerful forces that will push the price of silver over $100 an ounce.

 The 2014 RCM Peregrine Falcon Available Now at SDBullion
As Low As $2.99 Over Spot!

Will Higher Silver Prices Bring On More Future Mine Supply?

There is this economic principle that states increased demand and higher prices of a commodity or product will eventually bring more supply to the market.  While this has normally been the case during the history of mankind, the world will soon be hit by a rude awakening.

Gold and silver mining is extremely energy intensive.  Back in the good ‘ole days (late 1800’s & early 1900’s), the majority of energy used in mining was human and animal labor.  This somewhat primitive method of extracting the precious metals from the ground worked fine as the ore grades were extremely rich and confined to narrow veins.  But, as the best quality mines were played out and the average ore grades started to decline across the world, more energy was needed to mine and process the ore.

The mining industry solved this problem by building bigger machines that could move larger amounts of ore to compensate for the declining ore grades.  Eventually, animal and human labor was replaced by earth moving machines.  For a while, bigger worked fine until the mining industry demanded… GARGANTUAN.

Caterpillar meet this challenge by designing and building the Model 797F Haul Truck — one of the largest mining haul trucks on the planet:


The 797F is the epitome of massive on all scales.  It is nearly 50 feet long and can haul 400 tons of ore (800,000 lbs).  The tires specifically designed for the 797F, are 13 feet tall and cost $42,500 a piece.  The 797F is so large, it takes 12 semi tractor trailers to ship the truck to the mining site for final assembly.  Included in the list of parts is its tiny 1,000 gallon fuel tank (sarc.).

Here’s the good part.  The Caterpillar 797F is so large, it averages 0.3 mpg and consumes roughly 65 gallons of diesel per hour.  Because of its huge cost, the 797F is normally run 24 hours a day, 365 days a year, stopping only for scheduled maintenance.  If we calculate its annual fuel consumption based on conservative figures, the 797F can burn nearly a half a million gallons of diesel a year.

Again, the reason why the mining industry transitioned its machines from bigger to gargantuan was to offset the decline of ore grades that went from very rich to extremely poor.  Before I tie together the future energy picture and its impact on silver mine supply, let’s look at some actual data on declining  ore grades in the top silver miners.



Putting Actual Data Behind The Decline Of Ore Grades At The Top Silver Miners

In all my research on the Internet, I have yet to come across an individual or publication that has provided the public with actual data on the overall decline of the average ore grade in the silver industry… well that is, up until now.

When I gathered the data to produce the chart below, I had no idea of what the final outcome would be.  However, as I tallied the final figures, I was completely surprised by the results:


For the sake of clarity, an ore grade is the amount of silver contained in the ore before mining.  The average yield is the actual amount of silver the company produces when it processes a tonne of ore.

Here we can see that in just six years, the top silver miners average yield has declined 34% or 5.6% per annum.  In 2005, the top 6 silver miners produced on average 13 ounces of silver per tonne of processed ore, but by 2011 their average yield dropped to only 8.6 oz per tonne.

Moreover, in 2005, the top 6 silver miners produced 123 million oz of silver by processing 9.4 million tonnes of ore, but just six years later they had to process 15 million tonnes of ore to generate 129 million oz of silver.  Subsequently, the net result was a mere 5% addition of silver production by a 60% increase of processed ore.

RULE OF THUMB:  As ore grades or silver yields decline, it takes more energy to produce the same or less metal.

The mining companies included in the calculation above were Fresnillo, BHP Billiton’s Cannington mine, Pan American Silver, Hochschild, Polymetal and Hecla.  Some of these silver miners were chosen over other companies who had higher annual silver production due to the availability of data as well as consistency of its reported annual silver yields.

I omitted Coeur d’Alene because its annual silver yields were all over the place due to new mines be added and old mines dropping off throughout the years in which I collected the data stream.  Truth be told, Couer’s average silver yield in 2011 was only 4.2 oz per tonne of processed ore.  In that regard, the addition of Coeur’s silver yield data into the mix would have made the overall declines even worse.

Furthermore, the companies and the one individual mine (Cannington) were chosen as they belong into the category of primary silver mines.  The authors of the annual World Silver Survey did not include Hochschild or Polymetal in their example of primary silver miners, although  I allowed them due to several reasons.

Fresnillo is titled as one of the largest primary silver miners on the planet.  However, in its first half 2012 report,  Frenillo’s revenue break down was 51% from gold and 45% from silver.  Fresnillo is now actually making more revenue mining gold rather than silver.

On the other hand, in Hochschild’s first half 2012 report, the company received 70% of its total revenue from silver and only 30% from gold.  In my book, Hochschild is more a primary silver miner than is Fresnillo.

Polymetal was also selected due to the fact that its two primary silver mines, Dukat and Lunnoye produced 17 million oz of silver at an average yield of 9.8 oz per tonne in 2011.  Furthermore, Polymetal’s first half revenue were split equally at 48% each from gold and silver.  So, in reality, Hochschild and Polymetal are just as much a primary silver producer as is Fresnillo.

I only included data from primary silver mines in the companies listed above.  Even if a company received additional silver production from one of its primary gold mines, I elected not to include these figures as it would have skewed the results in determining the true decline rate of yields in the primary silver mining industry.

Lastly, there is this practice in the mining industry to process lower grade ores as the price of the metal increases.  Some mines actually put a mark locating the lower grade ore within the project for the miners to remove during the year.  Furthermore, mines will process lower grade ores and tailings that they chose not to do in the past when prices were lower.  However, this does not really alter the overall average annual decline of yields in the silver mining industry shown in the chart above.

For example, both the Fresnillo and Cannington mines have seen substantial declines in their average silver yield in the past six years.  This was not due to mining and processing lower grade ore to take advantage of higher metals prices, rather it was due to the mine being played out and finally reaching the reserve base ore grade stated in their production reports.

  Year of the Horse Bars & Rounds As Low As 89 Cents Over Spot at SDBullion!

Silver = Stored Energy

One factor that most precious metal investors fail to comprehend is the energy nature of silver as a store of value.  Of course they understand that silver and gold are real money and in that vein… they hold a certain amount of perceived or intrinsic value.  Unfortunately, they fail to realize that the most important value attached to an ounce of silver, is the stored energy contained in each coin.

A monetary value was attributed to an ounce of silver or gold based upon the amount of energy and capital it took to mine the metals as well as its degree of rarity.  During the Roman times when silver was mined by human and animal labor, the monetary value was given based upon the amount of labor (energy) it took to produce a one ounce coin.  Basically, the free market determined the prices of goods and services in silver coin to their relative energy value.

For example, if it took on average four hours of labor to produce an ounce of silver during the Roman Empire, that coin was exchanged for a good or service of equal energy value.  In this example, a  city laborer working a twelve hour work day might receive 3 silver coins as pay.  I realize I am making a basic assumption here, but this is how a monetary value was given to gold and silver.  Of course, the market would figure out on its own the value of an egg, chicken, horse or a cow for example.  But, in the end, the more energy that went into producing a good or service, the more silver or gold coins it took to equal the energy transaction.

Once an investor realizes this energy value as it pertains to silver (or gold), you will then understand how important energy plays as a role in the production of the metal as well as its role in the overall economy.  Thus, as the energy supply of a society increases, so will its production of gold and silver as money (if the society uses precious metals as money).  On the other hand, as the society experiences a decline in its energy supply, so will the mine supply of its gold and silver.

The mining industry has been banking on the continued growth of the global liquid energy supply to be able to increase the production of gold and silver.  With the knowledge that the peak of conventional oil production is now upon us, new hope has been placed on the supposed SHALE ENERGY PARADIGM to be its energy savior.


How The Shale Energy Boom Will Turn Into A Huge Bust

As I mentioned before in my article WHY IS THE FUTURE SUPPLY OF SILVER MORE AT RISK THAN GOLD, the world has been watching closely the new shale energy boom taking place in the United States.  Why?  If the United States shale energy model proves successful, then the rest of the world believes they will be able to recreate the same results in their respective countries.

It is due to this very reason why the Shale Oil & Gas Industry have spent a great deal of time and money pumping out a positive PR campaign to convince the U.S. public and the world that shale energy is indeed our next energy savior.  They state that shale oil and gas can supply the United States (and the world) with cheap energy for the next several decades.

While it is true that production volumes in both shale gas & oil have risen quite substantially in the U.S. over the past few years, there seems to be a dark side of the equation that the industry would like to keep a secret.  However, to keep the length of this article from getting out of hand, I will only focus on the shale oil aspect of the industry.

In his article IS SHALE OIL PRODUCTION FROM THE BAKKEN HEADED FOR A RUN WITH THE RED QUEEN?, Rune Likvern presented this chart on the monthly net additions of producing oil wells in the Bakken:


The month over month change of reported wells are shown by the blue bars.  Here we can see that from early 2006 to the end of 2008, additions of a modest number of shale wells allowed the overall production per well to increase significantly (shown by the black line).  Nevertheless, since 2008, the rapid increase of monthly net additions of new shale wells has masked the high depletion rates while allowing only a modest increase of overall production from the Bakken.

According to Rune Likvern:

  • The wells normally have a high production at start up that rapidly enters into steep declines.
  • To facilitate growth in total production an accelerating number of wells needs to be brought into production.
  • To sustain a plateau requires a continual addition of a high number of producing wells.

Basically, the shale oil players have to run faster and faster just to stay in the same place.  This practice has allowed the increase of oil production from the Bakken Field in North Dakota, but it has done so at a huge cost.

In another chart developed by Likvern, we can see the estimated cumulative net cash flows for shale oil in the Bakken:


The chart reveals the ugly truth that the shale oil operations have accumulated an estimated $14 billion in negative cash flow since January of 2009.  Here we can see that shale oil players in the Bakken have seen an accelerated need for additional sources of capital not provided by their operations alone.  How long can they continue this losing battle?

The big energy companies such as Exxon-Mobil, Conoco-Phillips and Chevron-Texaco are cash cows.  They are so cash rich, they have been taking a portion of their positive cash flow and buying back their stock.  So, why are these shale energy companies either suffering from negative cash flows or are being loaded down with huge amounts of debt?  Could it be that the shale energy industry is really not a model that can be commercially viable long term?

To offer a fair and balanced analysis of shale energy, I have to provide a few bullet points on wonders of shale gas.  If you think the information coming from the North Dakota Bakken Field is disappointing, the data being released about the shale gas industry is even worse.


Buyback brown

Some Pearls Coming From the Shale Gas Industry

1) The USGS recently announced massive downgrades of U.S. shale gas reserves

2) Break-even price for typical shale gas player (over the life of the well) is at least $6-7 mmbtu.  With the current price of natural gas at $3.50 mmbtu… we can only imagine the hemorrhaging taking place on their balance sheets.

3) Geologists at Labyrinth Consulting have examined 9,100 of the 15,000 wells in the Barnett shale play using production data filed by the operators with the Texas Railroad Commission and found that less than 6% actually met minimum economic thresholds.

4) Forecasted revenues to land owners were a mere fraction of what was promised:

            a) The wells at DFW airport have come in with dismal returns. (8) They never performed           up to original projections. Chesapeake Energy needed 2.0/Bcf to break even. The wells   have produced .9/Bcf .

            b) The University of Texas at Arlington saw revenues peak at approximately $7M with a mere 6 wells on campus to plummet drastically in a matter of months. Revenues in 2010   were down to $800K even though there were now 22 wells on campus.

5) To acquire additional capital to continue the Shale Gas Treadmill, companies drilled a few wells to prove up new large reserves.  They took these supposed reserves and pawned them off on larger companies such as BHP Billiton, Encana and BG Group.

6)  In 2012, the shale gas party ended when in the first half of the year, over $8 billion dollars of impairment charges of shale gas investments were written of the balance sheets of major oil and gas companies.  BHP Billiton won the grand prize by suffering a $2.5 billion impairment write down from its initial $4.75 billion shale gas investment it purchased from Chesapeake the prior year. 

7) Wall Street firms have made a killing putting together these sort of lousy energy deals.  Without Wall Street, the Shale Gas Treadmill would not have the means to continue.

            (information from [2] Art Berman, [3-4] Deborah Rogers at the EnergyPolicyFourm.com)

If we have an open mind and are able to process the basic information on shale oil & gas provided above, we should come to the conclusion that shale energy will not be the savior of our future energy needs.  It may provide additional energy production for a brief period of time, but it is not a viable energy source for the long term.


Quick Wrap Up & Connecting The Dots…

Investment demand has been and will continue to be the driving force behind the rising price of silver.  Analysts who point to the growing so-called annual surplus of silver as a negative factor, have been brain-dead since 2004… the year both the surpluses began as well as the time when the price finally broke above its decade level in the $4-5 range.

One area that denotes increased investment demand is “official coins” produced by the government mints.  In just nine years, official coin demand has increased 274% from 31.6  million oz in 2002 to 118.2 million oz in 2011.  Even though China is currently ranked as the fifth  country in official government coin production, they plan on making their Silver Panda as popular as the American Silver Eagle.  To do so, they may set a goal to increase their  mintage of their Silver Panda to over 50 million annually.

According to the data provided by the 2012 World Silver Survey, total global silver investment demand has risen from only 31.6 million oz in 2002 to a staggering 282.2 million oz in 2011.  As world economic fiat based monetary system continues to deteriorate, investors are taking delivery of physical silver rather than holding on paper contracts that may not be backed by any metal whatsoever.

This has created a run on the LBMA bank… the largest metal exchange in the world.  Evidence of this can be seen by the huge increase of U.S. silver bullion exports to the United Kingdom.  In 2011, the U.S exported a mere 19 metric tonnes to London.  However, in just four months (May-Aug), the U.S. has exported 291 metric tonnes to the LBMA vaults in the U.K..

The top 6 silver miners in the world have seen their average yield decline 34% in six years from 13 oz per tonne in 2005 to only 8.6 oz/t in 2011.  As ore grades and yields decline, it takes more energy to produce the same or less silver.  The metal analysts are forecasting continued growth of annual silver production for the next decade and beyond.  To be able to grow silver metal production, the world will have to grow its liquid energy supply.

As the world is beginning to wake up to the fact that conventional oil production is peaking (or has already), shale gas & oil have been touted to be the new energy savior to keep business as usual going for several more decades.

Production statistics and financial data coming out of the Bakken oil field and the Shale gas industry are quite depressing to say the least.  While the big energy companies are cash cows, the shale energy players are experiencing large negative cash flows or are saddled with debt.  The hyped Shale Energy Boom will more than likely turn out to be a Huge Bust.

Once the world ‘s liquid energy supply starts its inevitable decline from its current plateau, annual silver metal production will decline as well (or may follow soon thereafter).  Metal analysts who are forecasting a glut of silver coming onto the market in the following years are also suffering from the ability to process information correctly.  There will be no silver glut and there will be no silver available when the world’s fiat monetary system finally dries up and blows away.

Get ready.  As the forces for pushing silver over $100 have just begun.
By SRSrocco
Comments are always welcome and can be sent to [email protected]



 2014 Silver Eagles As Low As $2.49 Over Spot!!
The Lowest Price for ’14 ASE’s Anywhere in the US!


  1. Great article SRSrocco but you could have left out:
    investors should probably brace themselves for much higher silver prices in the next several years.  Yet, investment demand is only one part of the powerful forces that will push the price of silver over $100 an ounce.
    Get ready.  As the forces for pushing silver over $100 have just begun.
    The above two comments have been spewed by hypesters for the last couple of years and I guess it could happen given time, Lol  Nonetheless great article which I enjoyed immensely.
    Keep Stacking

  2. “Unfortunately, they fail to realize that the most important value attached to an ounce of silver, is the stored energy contained in each coin.”

    How very curious that the ‘value’ of metallic money is circling back to conformation of Adam Smith’s view that labor (energy output) is the essential focal point of ‘value’ in all goods.

    • Patfields… Adam Smith’s work on the REAL BILLS DOCTRINE was quite revolutionary.  Some like Antal Fekete believe a 100% gold standard would not work without the use of Real Bills.  I agree with him except, we don’t have the energy to make that system fly.  As you know, the bills of exchange allowed the merchants to move goods to market without the use of the banks.

      Even though I like the system, it would not work today. 

  3. SRC:  Enjoy your writings immensely!  I would have liked to see (for informational purposes for the novices) importance of stacking pre-65 coinage.  Two reasons:  the premiums on this silver is small, therefore more OUNCES can be obtained for less money.  Secondly, its money, real money that isn’t subject to counterfeiting like bullion coins are. 

    • That’s a good alternative for Americans, but Canadians have to pay a sales tax on silver coins with less than 999 purity. Currently, that amounts to about a $4 premium per ounce, making bullion coins and rounds a much better option.

    • In Europe, the (typically) pre-’66 silver coins are the only VAT-exempt form of silver. We pay crazy premiums on 999 silver. $0.89/oz? Try $5 per ounce, and more.

      I would love to read on what happened to the ~’65 demonetization of silver, replacement by paper and nickel. For what, 3 billions people around the world, to go cold turkey on silver…that’s a lot of bullion to stash away in CB vaults, burn away on electronics, or whatever output. The ’79/’80 Hunt brother silver spike surely washed most of this out of people’s saving pigs and jars. Too high a profit for anyone to ignore, going from a dollar for silver dollar, to what, $20? This happened around the globe. All of Europe saw its silver diappear from wallets, pretty much overnight. Even the 70’s coins for collectors (like the Dutch 10-guilder coins) reached crazy silver prices. Too big to pass up. Many still float around the coin collector scene, but generic quality bears no premium over paper silver prices, still. Where did all that silver go? Are we still depleating those stores, from CB’s melting it down to bullion, or has it all been used up in the early 80’s, or even sold by CB’s before or at the silver spike in ’80?

      A few facts stand out for me:
      – gold mining being nicely profitable, silver mining bringing losses in curent time. Due to the deterioration of ore grades. The world become one large silver mine, but only if prices offer incentive to miners and land owners.
      – there used to be a handful of silver for every world citizen, or at least one proper coins. Now, just find a person in the streets to show you even 1 coins. De-civilized, and yet far from abundant.
      – It has become impossible to re-monetize silver to pre-’65 levels, in even one small country, let alone 200+. Unless it would take on the role that gold used to hold. It will not be the change in your pockets, but replace the larger bank notes. Due to scarsity, and gold becoming more of a corperate/intergovernment-scale currency than a noble man’s pocket currency as it once was. 

    • Ah I know how it feels like, asimee since I also live in Canada! You are right this tax. There is only one of my local coin shops who doesn’t charge me taxes on junk silver. He’s not suppose to do that but he is still doing it only for me because I buy a lot from him! 🙂

    • Except for the Romans, they earned a denarius which is about one tenth of an ounce of silver for their works all day long. Plus at that time, the values of their currency is based on the metal contents of the coins in circulation.

  4. Excellent article. I remember reading once that the Silver Users Association was very much opposed to the SLV being set up, because they were frightened that the increased interest in silver investment demand, that the SLV would inevitably generate, would lead to much tighter supply and higher silver prices. The exhaustion of government silver stockpiles around this time has also played a major part in the rise in price of silver.
    Everyone knows that TPTB basically have no physical silver left. Recent massive movements of physical silver at the LBMA/Comex and SLV tend to confirm this. As Harvey Organ keeps states it is inevitable that at some point the LBMA/Comex will default. It’s just a question of when.

  5. Steve this data is concrete and pretty much irrefutable.  The supply crunch is a foregone conclusion.  I don’t see silver mines picking up the slack through some huge increases in mine production.  As silver goes up in price so goes the prices of commodities such as oil. The EROI of both seem to follow closely
    My comments are more personal in nature and include some of the back stories to silver and gold.  From 1966 to 1981 inflation ran a consistent average of 10%.  Few people could get their heads wrapped around this fact, seemingly just accepting their fate.  Later in the 1970s decade silver and gold woke up and prices surged 2,000% in just a couple of years. I could never get ahead of inflation in my paycheck. Complaining about it got me fired twice. I tend to complain at the top of my lungs. PMS are one of the few ways to front run inflation. I learned this late in the game.
    My experience with this was trading a bag of junk bullion with 50 cent pieces going for just over $16 a piece.  That spare change I collected over the years was worth a small fortune.  People lined up out the LCS doors selling silver hand over fist. The recession was in  full swing and people needed money for gas that hit $1 a gallon.  Silver was not in short supply like now but you would think it was rarely than gold back then. GTSR was about 35 to 1. 
    Today we see 2,500,000,000 people acting like the people at the LCS only now they are buying silver gold and silver. We are the sellers now, to our long term loss.   China and India will buy 40% of the world production this year.  Interesting is that this is close to the same percentage we see flying towards LBMA. 
    Gold is getting pretty expensive for the Average Joe or Sanjay   Silver is getting some real notice in India as a replacement for the traditional gold jewelry  Silver is being used as the base with gold coatings and gold jewelry is being mixed with silver to reduce costs.  China’s history with silver is cultural and historical.  After China was stripped of its title as the silver capital by the Opium wars with Great Britain, its precious metal stocks were looted successively by the Japanese and Americans. They are not going to let this happen again 
    In their passion for accumulating rare earths, including gold and silver which will become increasingly rare IMO, they see the debasements of our western banks and culture with free flowing currency and drugs. Their battle with the Opium monster is beingnow reprised in our economic zones.  I am sure it does not escape China’s new government’s senior leaders that we have a major drug problem.  Laundering of drug proceeds through our big banks is commonplace and a sign of the embedded rot in the western society and a government without rule of law. The societal cost of drugs is nearing half a trillion in the US, adding to the QE printing that degrades our currency. If it was my decision I’d be buying something of value with an increasingly scarce supply of gold and silver.
    There is still to be seen the human factor that will show up in the rush to silver. We stackers are rushing to buy but that could change. If silver hits $100 an ounce I am not sure how much of my stack I’d sell, but 20% comes to mind.
    Just like the 1970’s with its 10% inflation rate, we will see this reflected in government statistics soon enough. Now that the election is over, the BLSBS may slow their crap spraying. The Shadow Stats inflation rate is nearing 10%. People are being hit hard with the increased costs of consumer goods while watching their paychecks drop by 10%. They will begin to vote with their silver to refill their depleted wallets. The steady downward ratcheting of our net worths and incomes will come with  a price. One of them will be some number of people selling their small stocks of silver into a dramatic price rise but far more people buying silver where ever and whenever they can in order to buy something of increasing value. They will convert their cash into silver in another attempt to front run inflation but could be late to the game.
      This sudden surge in buying, seen even today given how hard it is for LCS to keep adequate stocks, premium bumps and the general unavailability to buy large amounts of silver in real time, we have yet to see the fear factor price rise that is certain to happen once Steve’s clear references to supply issues comes to pass. When the general public hears and understands what we see here on these channels, the rush will begin.
    What is even more ironic and maybe tragic is the inability of silver mines to bring inventory to the market quickly.  New mines take 5 years to bring up to speed and the tired mines are just that, tired. Stack while you can. Sometime in the near future we’ll be discussing when to sell silver to the market price of our liking.

    • AGXIIK… interesting personal history and data on inflation and the precious metals.  I agree with your comments.  However, you may not be inclined to sell 20% of your silver stack if silver hits $100, when the price of gas hits $10-$12, or bread $6-$8 a loaf.  Overall inflation may be part of that $100 move higher.  In that regard, we may hold onto the silver as it is a store of value on an ongoing basis.

      I disagree with Sinclair that silver will fall from the heavens once it shoots up higher.  

      Lastly, I believe what we are now witnessing in the silver market is GRESHAMS LAW…bascially, bad money driving out good. This took place as you stated when silver was removed from U.S. coin and hoarded back in the 1960-70 period.

      However, today we are seeing the public and institutional investors taking silver and now competing for ownership with the industrial market. I don’t see this trend reversing ever.

    • We get to that point I will be bartering silver for wheat, corn, and meat. In the meantime I am adding to my stocks of food and other supplies even as I use from it. Currently have 400 pounds of wheat in storage in 5 gallon buckets and 200 pounds of corn, both organic. Freezers are full of meat, have self canned meat on the shelf in the pantry.Over a years supply of toilet paper and other supplies like cleaning stuff. Add in silver and I am sitting okay and still stacking what I can.

    • Sorry that you got fired twice for complaining about inflation. You should’ve ask your bosses to pay you in physical gold and silver. Someone once told me that your salary will never go up at the same rate as inflation. Unless maybe if you are a farmer or miner, then yeah.

    • “However, you may not be inclined to sell 20% of your silver stack if silver hits $100, when the price of gas hits $10-$12, or bread $6-$8 a loaf.  Overall inflation may be part of that $100 move higher.”
      I agree but also remember silver prices hitting $50 and then falling back to much lower prices afterwards.  There would be considerable desire on the part of many to collect some of that bounty BEFORE the prices can fall back again.  Not that this is guaranteed, of course… just saying, based on what we have seen in the past, which may or may not be relevant today.  One trick in all this will be to use silver to maintain our lifestyles, selling silver only when needed to buy other things of real intrinsic value.  I would be happy to sell some silver in order to buy some land and the tools that would help me farm it.  Sell silver to buy depreciating assets?  Not so much!  That is the job for FRNs, IMO.
      All stackers should be formulating a silver-selling plan that they believe will work best for them.  I have considered this in detail and am looking at dollar cost selling as a way to derive as much benefit as I can from selling any silver.  I would also only be selling silver to buy food, fuel, tools, seeds, farm animals, land, etc.  I would not be selling any silver merely to collect more FRNs.  FRNs are for spending and immediately at that.  They are not for holding or saving.  Silver does a MUCH better job as a store of value, so hanging onto it with the exception of the comments above seems best.  It would be interesting to sell off part of a stack such that the costs of that stack were then covered.  I would then be “playing with the house’s money”, as they say.

  6. @SRSrocco … “Even though I like the system (of Real Bills), it would not work today.”

    You’ve probably noticed by now that I’m a complete maverick on this monetary subject, so I’m comfortable disagreeing with both you and Prof. Fekete.

    From my viewpoint, no metal ought to ascend to a ‘standard’ of ‘value’. The ancient poly-metallic scheme, where copper, silver and gold traded strictly on weight and fineness in ratios as market conditions directed, best melded into the supply-demand matrix of all other goods. In that process, none of the money metals stayed over or under valued for long. ‘Fixing’ a fiat ‘value’ on ANY good within the matrix, mathematically forces radiating distortions to affect everything else coincident with its distribution, so as a money metal is the most pervasive of goods, the damage is immediate and drastic. Needless to say. I abhor Prof. Fekete’s promotion of a ‘gold standard’.

    Now, in that, pre-conception, you’re probably correct that Real Bills are at a disadvantage. However, in the poly-metallic, Free Market scenario of fluid rationality, I rather contend that the Doctrine’s viability in conveying the pre-consumption credit function through the productive process is … incomparable and irreplacable! One of the more damaging effects of the Loan At Interest model of credit conveyance is the depletion of circulating specie from commerce, which is offset by discounting of Real Bills from face. Since the ‘cost of credit’ is a math function only realized at point-of-sale, no debilitation of specie takes place … maximizing its velocity through trade.

    Of course, circumvanting Loan At Interest through Real Bills in the productive process would severely decrease the role of banking in society. But, who in his right mind really gives a crap about that consequence.   

    • PatFields… I actually agree with your comments.  Furthermore, Real Bills worked in the past as they were extracting their value from both LABOR and CAPTIAL that was predominantly locked up in the ground.  For instance, when a farmer issued a 30 day bill of exchange to the miller who issued a 30 day bill of exhcange to the baker, the majority of the value came from the ground and not from the labor.  Hence, the energy stored in the ground allowed the western world to florish.

      However, today, the ground as it pertains to farming holds mostly debts not captial.   That capital was removed long ago.  The only way farming works today is by injecting or spraying petro-chemical fertilizers and or pesticides to keep that system going.  At one time, the ground was the source of capital, now the oil is. 

      As you know from my work, Peak Oil is here.  With Peak Oil, we have Peak Capital.  Thus, the system can only implode from here.  However, that doesn’t doesn’t change the fact of the stored value in gold and silver. 

    • @PatFields I reckon you are spot on about the Copper, Silver & Gold multimetallic money system based on weight and not a denomination, administered by the government through the Treasury – of the people, by the people, for the people.
      @SRSrocco I read an article on it on Plata some time ago, this is the link http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=185.
      ps great work on the article, the dominos are standing in place, just waiting for the bump !

  7. I wanted to bring back these two charts from a previous post.  The first one is the Top 5 Gold Miners decline in average yield.  You will see that the gold miners average yield has declined from 1.68 g/t to only 1.30 g/t in 6 years.  This turns out to be a 23% decline or 3.8% decline per annum.

    As I stated in the article above, the top 6 silver miners have seen their average yield decline 34% in 6 years or 5.7% per annum.  Thus, the top silver miners average yield is declining faster than the gold miners.

    We can see this by looking at the Fresnillo mine as an example:

    The Gold and SIlver Mining Industry will start to run into production problems due to energy supplies-costs within the next several years.  I believe by 2020… BAU – Busniess as Usual will be over.

    Lastly, this is good chart to bring back from another previous article.  It shows the amount of money invested in the U.S. Retirement market compared to gold and silver:


    • The third chart is my favorite one because it shows how much everyone is investing into US Retirement market vs gold and silver. There would be a lot of really big losses once the US dollar collapses since there are only a few people who buy physical gold and silver.

    • 100$ by January 1 2013 is way too quick! That’s what everyone was saying last year for silver. They said that silver will be at 150$ per ounce by January 1 2012 but it didn’t. I think silver will more likely hit 40$ per ounce by then instead of 100$ per ounce.

  8. Great article SRSrocco.  We have been waiting for this which appears to be a cumulative composition of your recent articles.  You Rock (the ore)!  Great work, thank you.

    I do have one question, regarding the inherent, or ‘stored’ value of silver.  My understanding is the real value of silver during Roman times, was 1/10th of an ounce vs. one ounce for ’12’ hours of labor.  If indeed this is the case, our holdings are much higher.  Can anyone elaborate?

    @Idaho – if the above is true, based on $32.30 spot, the Romans worked a 60 hour week, for
    $16.15, or .50 ounces of silver.  Sounds like good money in the day.  AND, it sounds like good money today if you have the phyzz. 

    • Sheep Dog…  I was actually using an example and not real empirical data.  I am not sure of the true value of labor in silver coin during the Roman times.  That is something I need to look into.  However, the important take away is the ENERGY VALUE of gold and silver.

    • @Sheep Dog

      For expedience I have some comments I have saved from sites & You Tube, like Greg’s channel. I started saving them because there is so many newbies asking the same questions. lol Im not calling you a newbie! But you will start to see were Im coming from. First let me say Labor=Value this is the main factor and the only factor one mans labor in exchange for another mans labor.
      1) The thing I notice most do not know the “Value” in gold & silver. Looking at weighing it’s “Value” in paper fiat dollars or re-exchanging back to paper for a dollar profet. There unaware of how the wealth transfer will take place. How we have been living in an inflated world of Goods & Services, it’s not going to happen it already has and just getting worse. How all Goods & Services will need to readjust in a new economy. Labor = Value one mans labor in exchange for another mans labor
      2) Hi I will say the market will not be like 2008, everything coming down the pike is much much worse.
      Total Collapse of the derivative and bond market = total collapse of the western banking system. This includes the Fed & US Treasury printing USD/ World Resevev and all other fiat currencies world wide will collapse. There will be no stock market! to set any price for PM’s
      That said everybody looks at the value of the metals all wrong. They try to peg it to an ever devaluing fiat currency and a highly manipulated stock market. The western banking system with fiat currency introduced us to a word “inflation” This word really means that the medium that is being used in exchange for Goods & services is devaluing. Dose it take anymore Labor to build a house today than it did a hundred years ago?
      So now look at Labor as Value, this is what a monetary system is for anyway. One mans labor in exchange for another mans labor. If your not exchanging labor between both parties in trade there needs to be a medium for trade. Historically for thousands of years Gold & Silver fit the bill as money. It is independent of all governments and valued world wide on it’s own merits. For thousand of years, a mans one day of labor was valued at 1/10oz of silver.
      So looking at 1/10oz of silver to pay the labor of a man per day prior to the introduction of the western banking systems currencies. We now can start to see were the wealth transfer will take place. A world fiat collapse will reset all value of goods & services. All the built up inflation over the past 130 years will go down with it. It has to or there will be no labor or buyers of the labor.
      Wealth transfer! Wealth Storage! In todays economy of highly inflated labor cost, the rapid devaluation of the fiat dollar. The heavily manipulated PM’s within stock market done to make the dollar look better. This all allows us to buy PM’s at a severely reduced value. I know if one man is getting paid 10oz of silver per day in todays money. That same amount of silver when we reset and inflation is gone. Will be worth 100 days of labor at 1/10oz per day per man.

    • @Sheep Dog

      Here is another one Dog, This one started with a agitator Saying there was not enough gold to cover the worlds Trillion’s of dollar assets. So I presented a question and someone else busted in and wanted a debat, I obliged 
      Person #1
       To implement Gold as real money in this entire world is an absurd and nutty notion that would have no benefit and which would be absolutely impossible to even do. There are over $800 trillion in assets in the world with around $200 trillion in the US and the global economy now transacts more than $60 trillion a year. By contrast gold is but a little grain of sand in the midst of all of that real money and the total value of all gold – 75% of which is in privately held jewelry —-
      —–is worth less than $12 trillion even at today’s absurdly inflated prices for gold. The maximum value of all gold in bullion form is around $3 trillion, but a lot of that is privately held. The US money supply alone is around $10 trillion and there isn’t even a total of $2 trillion in gold worldwide that could be used in any monetary form. Hellllooooo?
      I quoted them
      “To implement Gold as real money in this entire world is an absurd and nutty notion that would have no benefit and which would be absolutely impossible to even do.”
      Take you perceived ” Dollar Value” off the gold and there is more than plenty of gold and silver to cover the entier monetary system. What you are saying is the more fiat that gets printed we have more Value to show for it
      I presented this question to him>>> Can an oz of Gold buy 40,000 sq. ft. home?
      This is the second Person jumping in and commenting back to me.
       my short term goal for asset allocation:
      10% precious metals -(gold/silver)
      10% survival/self sufficiency items (food, water, protection, camping gear, solar panels, water storage, generator, and other off grid stuff)
      40% Real estate (investment properties, land)
      40% Stocks/Bonds/paper assets (401k, roth iras, etc…)
      p.s. my explaination is amatuerish as well, but I hope you get the point… invest in stuff that generates you the most money.
      “Can an oz of Gold buy 40,000 sq. ft. home?”

      My guess is no. Homes and property are real assets, they would appreciate like gold during times of inflation.
      The difference between the 40,000 sqft home is you will be taxed, and you have maintenance costs that go with it, meaning it can actually cost you money to own if you live in it. However if you rent it out, you have the potential to also make money, and your asset could actually make you money unlike Gold.
      in short, i doubt an ounce of gold will ever buy a 40k sqft house.
      ha ha ha Then he comments to the first person I presented the question to! and contradict himself.
      You’re confused, you don’t need enough gold for each $1 of assets. Gold would basically make up the differences between a trade. China/Inda trading with Iran is doing just that.
      Plus, the price of gold could increased (if not by market forces but by mandate) to compensate for the shortfall of gold prices.
      So that argument is bunk.
      ME to Person 2
      This is the point I was making with this comment…
      “Can an oz of Gold buy 40,000 sq. ft. home?”
      ME to person 2 comment to me
       You do not have to look vary far back to see that your statement is incorrect.
      In just 6 years the value of real estate has dropped all the while silver and gold value has increased. These two real assets are moving in opposite directions not to mention the over head cost to keep and maintain Property and Structure increased. Then the third party risk has to play in, you do not own the property the structure is built on.
      Person 2 back to me 
       I’m going to have to disagree with you. you can use any type of data to prove or disprove an argument, but I’m speaking from experience.
      I purchased a property 2 years ago for $350k, I still have the property, however it has generated $30-35k a year in rents for me, and it’s still worth $350 – $380k. In time of hyperinflation, It’ll appreciate upwards like gold, maybe at a different velocity, but it’ll go up. In periods of deflation, I still will be making $30-35k a year, and maybe more.
      ME back to him 
       Randall You missed the point. The question was presented to a agitator who stated that there is not enough gold. To cover the trillions and trillions of $ and other fiat in the system to be used monetarily. This is after the dollar and the worlds fiat system collapse. I was trying to see if they could view value in real money historically Gold & Silver. They are wealth storage unlike any other tangible real asset. Real estate is not wealth storage or money.
       Your last statement shows you how hard it is to change ones thought on money value. The value of tangibles changes when you remove fiat currency or remove the mindset of fiat as value. We have all been brain washed to think a certain piece of printed paper has value. This value is based souly on someone saying it has value. Thats why you just equated all the value of your real property into a fiat currency. After the housing bubble your real property changed value because of this.
       This view of mine is nothing against investing in real estate. So as this may generate fiat now thats fine. But further down the road? When nobody has real money to rent & buy? When labor cost plumet back to before we were born to 1/10oz of silver for one mans labor per day. All real property and goods will readjust, they have to or no exchange will take place.( Labor = Value) Labor is what a monetary system is based on thats the value. The fruits of a mans labor !
       So Labor = Value, This is were the wealth transfer will take place. One mans labor in exchange for another mans labor. You go to work make fiat spend it on another mans goods and labor. I will not be buying your property now because if I invest it in the severely manipulated under valued metals now. My stored wealth will have the purchasing power to pay the labor & goods on ten new structures at the cost of yours today. I hope you will look at Labor as value and not fiat. Metal stores wealth!
      So Dog it’s a lot easier to be constant when your mind is not all twisted in todays fiat inflated economy. My true thoughts are a total collapse of the worlds fiat system. 

       When I look at the metals the thoughts and talk around them here is my view in terminology.
      (1) Storage of Wealth
      This is a stackers savings account to protect them from inflation,banking theft and a collapse of fiat currencies. We convert our fiat and take in hand physical metals. This is long term storage so days to years events including spot prices do not matter. We are buying Physical not to earn fiat although it will increase in value and that is the reason we converted fiat to physical in the first place. In the end holding physical will keep your wealth the same or higher.
      (2) Investment & Investors
      This is a vehicle to gain capital or at least the hopes of gain. I do not feel physical metals is the best vehicle for this do to the buying and selling aspect. You need to be able to buy & sell on a moments notice. Stick to paper if this is your motive of buying metals. 
      I am a stacker in hopes to preserve my wealth for future use. I see what is going on and only follow the markets/banking news to be alerted to calamity. I do not hold my breath on all the Hype BS because Im not trying to chase fiat with my silver.

      Those that are waiting for silver to pop to $1000.00 and say there rich and sell back into fiat. How rich will you be if the fiat system crashes the next day?

      Gold to $100.000 Silver to $20,000 HYPE who cares? Will I be able to eat the day after a collapse is what I care about..     

    • That’s true SRSrocco. I can buy a gallon of gas for 0.25$ with a pre-1965 quarter. Today, I can still buy a gallon of gas with that same quarter because its silver content protected my purchasing power. By the way, I’ve heard that it took the Romans one full day of work to earn a denarius which is about one tenth of an ounce of silver. At that time, the Roman currency was based on the coins’ metal content.

  9. “This may not be that tough of a challenge due to the fact that the China has three times the population of the United States, and their citizens are becoming keen buyers of the precious metals.”
    and I thought China was more like 4+ times more populous?
    Also, China is openly promoting citizen stackership. 

  10. Yahoo finance will not let me post this on the JPM message board.  It keeps deleting my comment.

    To Jamie Dimon & Blythe Masters:
    Why does JPM have an $18.5 Billion Silver derivative position?  This is over 10% of JPM’s market cap.  Don’t you think that this is a bit risky and excessive?
    According to the OCC, JP Morgan has an $18.46 Billion “other (than gold) precious metals” derivative position as of 6/30/3012.
    Max Keiser of the Keiser report on RT says that this is a naked short Silver position.  If this is true, then this would equate to about 700 million ounces about equivalent to the entire Comex Silver Open interest and 20 times greater than the Comex Dealer’s Silver inventory.
    The BIS or Bank of International Settlements reported that member banks held “precious metals derivatives other than gold” of $63.2 Billion as of 6/30/2012.  If this is entirely Silver, then this would equate to about 2.3 Billion ounces of Silver, or over 3 times the Comex Silver Open Interest, or over 7 times the SLV Inventory, or over 63 times the Comex Dealer’s Silver Inventory.

    • …and your point is?  Naw, just kidding.  Sure, you, me, and most silver-minded people understand what is and has been going on in the world of fraud/greed for decades.  That’s why when I was introduced to Ted Butler nearly a decade ago, I began ACCUMULATING PHYSICAL SILVER like a maniac.

      All we can do is tell everyone who will listen that time is drawing near when it just won’t be a simple matter of taking the worthless green bills out of your wallet/purse and buying silver–at any price–.   Peace.  

    • As of June 30 “3012”? That’s way too far from our time and it might be futuristic during that unless if we return into a second Dark Age that lasts thousands of years. Perhaps Yahoo doesn’t want you to post the truth on their board which is why it keeps deleting your comment.

    • Why is the ratio still 50 to 1…? It seems to me that it’s the doing of the Silver Users Association and their enablers/helpers in finance/banking et al. Seems I read they collectively acquired 4 billion ounces of silver since 1947 at the price of $1.00/ounce.

  11. Copy that SRS  I would not normally sell any silver but my wife wants me to pay off the mortgage.  Its either gold or silver sold to accomplish that.  It’s her stack too,  so I must obey. Think The Borg when it comes to that.  
     I’m good with paying it off since it’s with ING   This POS bank was bought by Scotia Bank in August 2012.  Capital One bought part. Scotia bought part. I am not sure which owns my mortgage in any case.
     That story bothered me since ING basically failed.  But with the Fed buying $40-80  billion of MBS, the idea of Ben owning my mortgage gives me the willies.  No counterparty risk is my goal. If gold goes to $4,000 then that’s the ticket too.

    Idaho Silver  your comment on wages today and 2,000 years ago is telling.  We are still humping it for silver equivalents now as we did  then. 

    • I read and re-read your piece.  WHY in God’s name would you pay off a mortgage, presumably, which is not in arrears?  You will ALWAYS have a monthly/annual payment on that home: homeowners insurance, property taxes, and possibly others.  Paying off your loan robs you of a income-tax writeoff (for a little while longer, at least), and let’s face it, if His Majesty wants your property, wait for it–imminent domain–lurks in the background for all of us. Before you pay it off, I would explore “reverse mortgage” pros and cons.  You may be surprised! At least with a reverse, you will get a significant chunk of $$$ up front.  If one of the above disasters occurred, you’d at least be way AHEAD financially.  So, take pause (then tell me to mind my own business).  Good luck with that! God Bless you and yours!

    • According to one of the charts (5th one down) in the article, the industrial demand leads the investment demand by approximately a 2:1 ratio. The industrial demand seems to be fairly constant over the past decade; however, the investment demand is the one that is growing rapidly recently.

  12. This is a very comprehensive analysis of silver as an investment, and it is very generous of Silver Doctors to publish this information for free.
    One fact that should be recognized is that, in their function as money, the demand for gold and silver is in theory infinite.  That is, no one ever says to themselves that they have too much money.  But the function of money is to serve as a uniform, constant and proper valuation of things.  It is a metric and a standard, just like how a meter is defined.  The definition of a meter is unchanging (the length of the path travelled by light in vacuum during a time interval of 1/299,792,458 of a second), and in a similar way the US had defined the Dollar as 371.25 fine grains of silver.  Thus, it was meant for the Dollar to be an unchanging metric as defined by silver (or 24.75 grains of fine gold).
    The point is, when people everywhere decide to treat silver as money, then the demand will be infinite.  But the valuation of silver in terms of US Dollars would meaningless.  It is silver itself that would serve as the standard for valuation of things in the economic system.  The industrial demand for silver contributes to the scarcity of silver, making each unit (oz) of silver relatively more valuable in the process.  Historically, silver’s primary use was as a form of money, so that, along with jewerly and silverware, silver was not consumed (used up and discarded–people do not throw away money).  So, it was possible to maintain some sort of constant ratio of 16:1.  But now, silver is actually being consumed, whereas gold is not.  Therefore, it is only logical that the value ratio of silver to gold will drop relative to silver’s increased scarcity compared to gold.  That is why the current value ratio of 53:1 makes silver such an undervalued asset.  If we are to believe that silver will in due time revert to its natural role as money, then silver would have to be viewed as the most undervalued asset in the world at this very moment in time.

    • @Plebian … “the function of money is to serve as a uniform, constant and proper valuation of things. It is a metric and a standard, just like how a meter is defined.”

      Agreed! The … aspect … measured is where confusion is infused by those who’ve taken control of money and its conceptualization. Like any measure of distance, agreeing on hash marks of ‘meters’ or ‘yards’ is not essential. The prime object is … distance itself. Similarly, in the case of money. Nomenclature is superfluous. The true and essential … measure … is weight and fineness. Whatever ratios to other things then develop, the fundamental … measure … is universal and immutable.

    • There are three main characteristic that something must have so that it can be considered as money. Money should be a medium of exchange which means it is easy to transport it. It should have an unit of account which means there must be a way to count the numbers of it. Finally the characteristic that all fiat currencies don’t have, it should be a preservation of value which means that it preserves your purchasing power.

  13. Silverrrrr  I know, it seems nuts to pay off a mortgage at 3.5%   We are current as can be.  Once the present debt is paid off I replace that with a line of credit with my local bank. This would give me immediate buying power if  the opportunity to buy some particular asset if the price is really attractive.  Land, phyzz or an offshore redoubt
      Reverse Mortgages might be attractive but we don’t need that cash flow stream. 
    The loan is due to for a reset in 2.5 years.  With ZIRP to infinity and inflation looming, our decision may change. My wife is often ahead of me on some of these important subjects and sometimes behind but we talk and if inflation is going off the charts then the bank get hosed.  That sounds good to me as well.  My concern is that if things get dicey with inflation TPTB may give the bankers an Executive Order allowing them to screw the clients once again, thus rewriting the loans to the inflation rate versus the commonly accepted mortgages rates in the next few years. Our monthly payment is affordable and as inflation erodes the real cost of the mortgage we may hold off. But my wife has her own stack and that could make the decision moot.  
    The other question posed was the investment to commercial use ratio.  I heard its about 60/40 commercial to investment but that could change quickly if the buying public, banks and sovereignties reall kick a buying frenzy in gear  It’s not like the 1940-1970 time period when silver was fairly abundant.  The government was disgorging its tremendous stock of silver used in the Manhatten Project and yet the prices shot up by 1980.  Steve makes clear that the situation is different now.  We don’t have the Hunt Brothers hoovering up the silver supply and  Sprott can’t corner the market today with China and India on the hunt.  
    I’m not taking sides in this silver seeking but there will be a point when silver takes on the same sort of scarcity as platinum. It seems almost inevitable.  That will be an event horizon that shakes the world in the attention it would garner. But then people would starting looking at something else that occupies the news stations. “Look, it’s Rocky, the flying squirrel”
    It won’t be as devastating as it seems since silver at $500  an ounce  or $500 billion value in yearly worldwide production would still  be less than 1% of the world wide—GDP 2012 
    If this event occurs it may still be a reasonable price, well under the price of  gold per ounce,  still usable and relatively cost effective in the industrial use scheme of things.  Platinum is about $1,550 an ounce, scarce AND mission critical and no one seems to complain too much.  Silver would simply have inflation adjusted to its peak in 1980.  

  14. Plebian’s contentions echo mine too since silver has bifurcated to the two uses which changes the dimensions of the silver problem in ways that really complicates the former use as money  in its various forms over the centuries.  These two forces drag at silver  like a beautiful woman is pulled by two men who have equal desire for her charms.

  15. SRSRocco,

    This article finally prompted me to create an account and log in here. I’m a old poster on the Yahoo message boards, but rarely post there anymore and I am quite careful where I post the last few years. Kudos to the Doctors for hosting such fine work as you have continued to produce!
    Another worthy consideration not often referenced by the analysts is the large proportion of current primary silver production coming out of legacy mines; initially developed in prior commodity cycles when energy was MUCH cheaper. Some of today’s production cost is directly subsidized via these legacy ramps, shafts, tailings and reserves that were drilled off decades ago and long since depreciated off the books or fell into bankruptcy in the 90’s. I believe you must consider all this ‘stored energy’ is currently skewing EROI calculations as well!

    Future development at today’s input costs will require $100’s Millions in new investment as these legacy assets are played out. Proof is the near total lack of greenfield mine development in primary silver mining today. Factor in your work, Steve; and it is a lock that MUCH higher Silver prices MUST transpire. Do any of the current primary producers even acknowledge the degree to which their current costs have been reduced via leveraging these legacy assets and yet many are still barely making a profit? 

    The paper shorts are creating massive future structural supply deficits and an inescapable short squeeze bringing the GSR towards or below 10:1 WILL be the result.

    • Welcome to the website! 😀 I don’t see why we should be careful when we are posting our comments. In fact, the Doc encourage everyone to post comments and participate!

  16. Another excellent piece there Steve.  Right now I’m drilling offshore on an emerging gas play in 3,000ft of harsh stormy water.  For the simpletons you can perhaps see why the notion that you can run along to ND or TX and bang in a few vertical land wells, frac ’em and make money seems attractive versus the kind of alternative I work on.  I think we will see significant numbers of failures in the mid-sized independents who have jumped on the shale oil/gas train.  The super majors can have a play with their huge cash surpluses, maintaining an illusion of confidence for everyone, then buy up the minnows for cents on the $…..probably just shutting in the shale wells as they die off naturally and then applying themselves to trawling the more choice properties and acreage they acquired.  I believe shale oil & gas will be the next big AAA rated thing that turns out to be junk. 
    Good comments on agriculture too – as currently practised by the big agribusinesses it truly is the science of turning hydrocarbons into food.  I am hopeful there is a growing movement and a way to reclaim the land for healthy wholesome food production. 
    Given the emergence of a growing shortage of physical silver for investment purposes…..how much paper is chasing non-existent physical silver?
    Maples, Pandas whatever….I’m steadily stacking.  The relationship between PMs, energy and sweat-equity down the millennia is very interesting.  I look across from our modest farm and wonder how much silver my neighbour will eventually accept per acre 😉 

    • I’ve heard about six months ago that there were 100 ounces of paper silver for every ounce of physical silver in the market. Now, I think there are more paper silver than the physical ones since that was a long time ago. Like always, stack the smack!

  17. MaryB  I am very impressed with you stack of food.  Food will get you through tough times better than silver IMO.  OPSEC
    Silverseeker123  Welcome to the forum.  Your point got me to thinking about the viability of the huge number of marginal or played out silver mines that dot the landscape about 50 miles from my home.  Tailings are being culled for residual silver but that must be a hand to mouth operation.  There are active mines and Nevada still ranks high on gold and silver production but it still  must be hard scrabble since the ore yields are dropping. Nevada has been played for 160 years.  Mark Twain was right when he said a silver mine was hole in the ground with a fool at the bottom, (hollering  “Come on down, good times are here again).
    The optimism of business owners is equal to their myopia when a business model starts ebbing.  Technology  is filled with failed obsolete businesses and products yet someone will always be willing to reinvent the 8 track tape or vinyl records.  If these legacy mines are the last hope of some silver miners the situation is even more grim that most think.  Because the fool is still whooping and hollering that his mine is the best thing going.  Maybe there’s a lot of optimism but after Steve’s stats those old legacy mines might by fools gold, rendering faint hope that they can bail out the shortages, high energy costs and poor yields.

    • Thanks AGXIIK,
      I’ve been a lurker here daily, along w/ TFMetals, BrotherJ, etc. I appreciate the exchanges and contributors to the disscussion here, and especially Steve’s efforts over the last several months.

      If you dig through many of the current primary Silver miners assets, they’re taking advantage of prior investments in the ground in nearly every currently producing mine… Yes, there has been new drilling funded during this cycle adding to reserves on the books and extentions to aging ore bodies, but very little new ore from this cycle has actually been developed yet. The current cash flows are not accruing at a rate sufficient to fund much of future anticipated sustaining greenfield projects. Yes, the miners can finance, dilute, etc. and at best, they may sustain some production on the backs of shareholders…

      There are a few exceptions of well run primary miners that are accruing cash @ $30 silver, but $50+ is needed to sustain the next wave of development of new ore bodies from ~ 2020 and beyond, (regulatory and environmental hurdles and delays aside). The paper traders seem oblivious to this looming supply crunch. If even 1% of the current investment pool of $18Trillion comes towards Silver in this time frame($180B); that short squeeze will be something to behold; and sadly something we must fear. I don’t think the paper pushers or the  bankrupt officials around the world are going to play nice or ‘fair’…

    • @silverseeker123…Welcome.  Now that you have tested the waters I hope you become a regular.  You obviously know your way around the gold/silver space.  And agreed, neither the paper pushers or the bankrupt officials around the globe are going to play nice or fair.

    • Exactly as UglyDog just said silverseeker123, your thoughtful comments are very much appreciated and let me also welcome you here.
      Once again, words are inadequate to express my gratefulness for you and your efforts–YOU ROCK!

  18. That silver prices are going higher in the future for all the various reasons discussed is extremely useful info and MUCH appreciated!

    What has not been well discussed, however, is an exit strategy from silver, if any.  If the US dollar implodes, real money, such as gold and silver, will be incredibly valuable in terms of what they can buy.  Just how valuable they will become is not yet clear.  Also not clear is what happens post US dollar.  Do we get a new US currency?  Will that currency be backed or partly backed by a commodity or basket of commodities?  Will there come a time wherein it makes sense to sell our silver stacks?  If so, in return for what?  Multiple scenarios seem plausible but it is difficult to rank them in terms of which seem more or less likely.  An article that addresses this, even in part, would be quite valuable as well.  I understand that a lot of supposition would be involved when discussing future scenarios but they could still form the basis for some very interesting conversations.

  19. Sun Valley was made by the Railroad and Averill Harriman. The Wood River Valley in Idaho was Built on Silver. But now it is for Skiing and for globalists to “get away from it all.” (Soros too)

    This story is about the Famous Minnie Moore mine that was one of the all-time greatest output in Idaho. The geologists claim 12-15 potential Minnie Moore sized mines in the area but the area is big on NIMBY although the millionaires are getting kicked out by the billionaires which we all know are horribly stingy. I have lived there 30 years and I have found very potent ore but a) the public b) no mo railroad c) no mo refinement plants.  The famous Philidelphia Smelter is the site of condos.  The ore wagon with the “big hitch” similar to the 20 Mule Team wagon is paraded out each year for Wagon Days but Mining is frowned upon.  The whole controversy about ground water holds no weight. Just south of there are immense open pit gravel yards for…driveways for the McMansions.

    I’ll attach some pictures of ore from the Idaho Eagle    


  20. @clambake … The excellent article you cited (thanks) concluded by saying, “Thus, it is our opinion that the path to the restoration of gold as money, would have to take place after the restoration of silver as the basis for a silver monetary system of the US.”

    All structures are built up from a base. So it is with a monetary scheme. Humankind have been brainwashed by governments to incrementally dismiss silver and gold as money … only after having first done so in the case of their … base … copper. To weaken the ‘walls’ of the ancient fortress monetary scheme, the principal task was to undermine their foundation,

    Even under ideal conditions, where every ounce of silver should be recovered and recirculated, the world per-capita distribution is only about seven ounces for every living man, woman, and child. Even allowing for unlimited rationality, the sheer physical size of resulting trade pieces would be miniscule and un-handy if money were restricted to silver and gold alone. Copper is therefore an indispensible … base metal … upon which the monetary superstucture must be erected.

    This is why I’ve been arguing (withstanding ridicule in the process) for years, that the restoration of Honest Money must begin with copper, equated to REAL banknote depreciation, from which silver’s ratio can form in free markets, then gold.

    • Exactly! Copper is way more undervalued than silver. At least silver is still considered as money but as for copper, it is just a scrap metal. Because of that, I hoard copper pennies since they are the only true money left in our fiat currency’s circulation.

  21. As fighting inflation impact is the main name of this game, we will not get rich from our silver IMO. we may get rich by swapping to other asset classes at appropriate moments.
    Trading the GSR is awesome. I wish I’ve been in this game a decade earlier. I recently got interested in trading currencies, and then stumbled upon silver. Hard to ignore articles such as this one, I am currently all in.
    As articles as this one are basically preaching (wonderfully) to a choir, I think a new generation of pro-silver articles should be on exit points, not nominal targets.
    How many ounces per m² of farmland now, per country? How many m³ of proper housing, rural or urban?
    And I look forward to learn about other assets classes which float relatively to silver, to catch a nice ratio dip. The next GSR dip may be a very long ride out, and may coincide with an strong exit indicator, out of PMs into other assets. That will be the really scary part. Patience and hope can become a way of life, exit is a moment and direction to pick.

  22. great job….gonna link this on my sites tonight

    also, i think what may get the ball rolling is the impending tax cut expiration… anyone thinking of taking their capital gains in the next year or two will liquidate before jan1.  what will they do with it? surely a fraction will put it into silver. and since the market is so small, the result of any increase in demand is shown in your article.

  23. @SRSrocco

    Thank you for such a fine article and thank you also to all the many quality commenters. I hardly ever comment and mostly read because I have little knowledge to contribute. This is the best thread by far I have seen on SilverDoctors. I was getting discouraged about SD and about to quit because of all the mindless NWO conspiracy comments and Jew bashing. I think now I will continue to hang out and just sort through the trash to get to the good stuff.

    PS: Where I’m coming from; subscriber to Ted Butler and have read ALL his material, started stacking SI in ’08, currently “all in” with no paper investments. Again, thanks to all for helping me learn more about the store of value I am 100% committed to.


  24. @427, I seldom post but active SD reader almost a year.  
    Actually …. the UPS man is coming by again this afternoon.
    All he knows is I get a lot of heavy packages. 
    Trust me, I am getting ready to the best of my ability for an inevitable financial collapse.  

    I can eat for six months now.  
    Doubling the size of garden this weekend with some help.
    Take care brothers!

    • @Sheep Dog
      I see you around all the time! Keep staking, Keep posting and don’t forget to have fun. If we don’t have fun now we might not be able to later. 

  25. The question is when will the liquid energies’ supply start to decline? It is amazing that we are now able to afford a precious metal at a cheap price compare to its historical value which was a lot higher. It’s all thanks to gasoline that we are all able to produce a lot of commodities to keep up with the demands.

  26. No worries about the jobs Sumkid.  Both bosses were dicks and I always got a better job after being fired.  But being paid in gold and silver—-wish i was that smart back then.  At that time all I had was a chip on my shoulder.

    • @AGXIIK Well if that’s the case, then that’s great! 🙂 I was about to get fired two weeks ago from my job because I didn’t work well. But last weekend, I’ve showed the manager that I’m doing the job very well and now, I can still keep this job. It was really hard to get a job!

    • “Then there will probably be some high frequency trading in lead in the follow up.”
      Just remember that, “It is better to give than to receive”.  😀

  27. As Charlie mentioned in his comment from 1.5 yrs ago, this is why you can’t make any predictions on price and/or timing in a rigged market. As spot on as the analysis might be, how it is allowed to unfold is another story.

  28. It is interesting to reread the comments and see how the silver story has unfolded.  This was printed just before the ammo shortage too.  Now if we could just get a good old fashion silver shortage going.

    • “Now if we could just get a good old fashion silver shortage going”
      Not so hurry AG ! There are some guys like me, just start stacking Ag, need/hope this soft prices during 1 or 2 years again.

    • I get that everywhere I go actually. Thanks. Let me tell you, if I can get even 1 person to crack a smile ( besides me ) then it makes me happy.
      and Mammoth, I sure the hell hope the force is with all of us and appreciate the sentiment, since as of the time of this comment we have been subject to “the farce.”

  29. Hey now, this is the 100th post.  Whoo hoo.   Ok Maxsilver   Here is the deal   I promise that I won’t send silver to $100 an ounce if you promise to complete your stacking in 1 year.  Because after that, it’s all hands on deck.

  30. Oh goody, its story time with all the boys and girls!….grow up the lot of you. Silver does not equal energy.
    You can not power machines with silver. Its an industrial metal, used for jewellery. It can be replaced with inferior product if the cost goes too high.
    There is nothing that Silver can do, that can not be replaced in industry or jewellery. It hasn’t got a Unique selling point. To that end it is being priced into the market for what its currently worth, if the costs of the materials go too high, then no doubt man and his inventiveness will replace it in society with an inferior product.
    Take gold for example, its cost at the moment is prohibitively expensive for Jewellery, so, it has been replaced with lesser quality product, I have seen silver in shops replacing the product where gold used to sit. There is a limit to how high you can shoot without spooking the market. $100 is way too ambitious in the short term, I would be more than happy with a steady $30!
    Give me as many graphs, facts etc as you like, the only FACT of the matter, the price of silver, is what the MARKET says it is, not the industrial need.
    Rhodium anybody….lol

    • You are a bit off target there Kermit…
      Pure silver is the best conductor of heat and electricity of all known metals.
      Silver is also the best reflector of visible light known.
      High capacity batteries can be made with silver and zinc and silver and cadmium.
      Sliver nitrate (AgNO3) is light sensitive and is used to make photographic films and papers.
      Silver iodide (AgI) is used to seed clouds to produce rain.
      Colloidal silver is known to kill well over 600 different microbes.

    • @SilverSlicker,
      Not ONE unique property. It can be replaced. We Don’t have Silver wires in our houses, why? Too expensive, so we drive a higher current through copper. Yes silver is the most reflective, but we can make do, there is no need for super reflectivity, unless we are talking about telescopes, in which case, they have been superseded by better technology, radio telescopes etc. Batteries, too expensive, Film based photography is dead, I live in Britain, in the last couple of months I have seen enough rain to last a lifetime. As for Colloidal Silver,  good luck with that one, I seen the Smurfs movie, I don’t want to turn blue!
      The only product that I have seen that is pretty cool is using it as an antibacterial agent in products and you missed out Solar Panels (a very large Chinese firm went bust this week.).
      But Silver is not unique for antibacterial properties, I recently had a gold crown fitted for the same reasons, most noble metals have antibacterial properties, including palladium. Copper also has the ability to ward off the nasty bugs, NHS in England have been experimenting with copper beds for the same task.
      I get silver, I have stacked to the max, but I am no fool. $30 in the next 2 years will do me plenty, I am patient, not some petulant child.
      I find these articles insulting to my intelligence. I don’t need tub thumping articles, I need facts, where are the articles on the FX City trading fixes? That will bump up gold.
      Specially when we got a Canadian Governor of the Bank of England, keeping it all low key, reports going back to 2006!

    • I would say that you are together more or less right.
      YES, silver has unique proterties that cannot be replaced in some cases.
      NO, if the price is too expensive, it will be replaced in some domains, but not all. I remerber that some chimical products connot be created without silver. In some cases new products will replace silver (graphene etc…), in some cases not.
      Electrical properties are a good example. Like says WFS, wires in home are not silvers wires. We use copper. And for electric power lines, cooper is too expensice, we use aluminium
      So when the shortage will occur, the price will soar, but will be limited by the consumption reduction, scrap recycling increasing, new mining suddently economically interesting.

    • WaitingForSilver … “the only FACT of the matter, the price of silver, is what the MARKET says”

      No, the TRUE FACT of the matter is that the ‘price’ of silver is what government banknote credit can psychologically manipulate it down to; coincidentally puffing up those Notes on pure propaganda (of the sort you inject into discussions here).

      Silver’s most important determinant of value is it’s relative quantity in ratio against that of all other goods. It embodies the ultimate reality of truly objective price between any two things … their ratio of availability on the grand scale. Only the vagaries of local conditions at a given time and place, incidentally affect that more inflexible price/ratio anchor. This is the most beneficial feature of the Money Metals that made them evolve into the Perfect Medium for trading. Their naturally occurring rationality derives the most fair and unambiguous prices achievable between disparate items.

      This excessive focus on silver’s ancillary manufacturing uses is a red herring. Humankind’s most precious application of silver and its companions among the more rare metals, is its role as Honest Money to avoid being plundered of their life’s Labor by slick-talking Paper-Boyz with their meaningless, convoluted ‘econo-metric’ yammering.

    • PatFields
      YES (please note childish bold type, as if this makes a difference to its importance.) the market price is the only (more childish bold type coming up) TRUE price of silver. There is no connection between Fiat money, and the price of silver, barring an absolute collapse in world economy and the artificial construct known as inflation kicking in.
      Silver is not legal tender. That is the important point that is flawed in your argument of silver = goods. If there was a direct relationship between goods and silver, then the price of silver would be fixed. But its not. It fluctuates in the open market (bwah ha ha!) finding its optimum price (bwah ha ha!). there is no fixed point, the fulcrum is measured using the Dollar/Pound but the ratio is measured to how far you move the plank, as if the market is a see-saw. The perception is that the Fiat currency is the Fulcrum, the fixed point, in reality its nothing more an obfuscation, to allow the market to place in price fluctuations, that the Fiat currency depend upon for its survival. The function of artificially controlling the price of Gold/Silver as you very well know is to hide the truth behind the system, to give people the perception that Fiat is sound money, and not some Pyramid/Ponzi scheme for the rich.
      The ratio means nothing, there is no supply and demand for silver, the price is speculative only. Come on Pat, keep up, you been doing the silver game for as long as me. We can all sit on clouds pondering the vagaries of reality but reality is, silver is priced by robots controlled by speculators.
      Your psychological argument holds some truth, but its not psychological, its physical. When I read the graph, every morning, the price of silver is there in black and white. How I interpret that depends strictly on what I believe silver represents, and an out and out, act of faith on my on beliefs.
      So, the price IS fixed by the market, what you want the price to be is irrelevant. Is the price of silver under valued. YES. Should we buy more? NO. I strongly suggest we let the price fall, and then buy more when it hits lower prices. Until then, cover yourself with purchasing gold. Gold IS money.
      Saying that mind, the GSR is useful in figuring out if gold is bieng over bought, at the moment it might be. 65/1 is high, but does that mean that the price of gold is too high, or the price of silver is too low? And what do we use as our “anchor” point. The Dollar. 🙁

    • The dollar is represented as a value of debt measured against Growth Domestic Product (GDP). In other words, the dollar is a statistical value, measuring the ability of a nation to pay for imported goods, based on trust and good will, and the accurate measurement (or perceived measurable quality) of its value, when compared to external country creditors. For example, a country with a weak GDP will trade more with a country with a strong GDP because it perceives it to be more wealthy . Thus making the money cyclical. Hence why economists bang on about trade surpluses. GDP should rise and fall according to the law of supply and demand.
      Yes, I know, the anchor point is not really anchored. But only the educated know this Pat, try selling the idea that its all smoke and mirrors to the general public, you know as well as I that its a tough sell.
      How do you measure Silver Pat, or Gold, without fixing its price to say $35 a Troy Oz? The Bretton Wood system was all about trying to create the illusion that the Dollar was worth $35 a Troy Oz. Guess what? its perceived value was found wanting, 1971, Nixon Shock.
      Its all a matter of perception, whether you measure something using a mathematical equation or some arbitrary figure plucked out of thin air. One thing is certain, we all need an anchor point. Society , wrongly has based it on the Dollar.
      So why do we pay for Gold and Silver and exchange it for its dollar worth? Because we have lost faith in the Dollar and the measurement system that describes its worth.

    • WaitingForSilver … “The dollar is represented as a value of debt measured against Growth Domestic Product (GDP) … a statistical value” (sic)

      Oh really? Well, the Constitution for the United States of America, which is the Supreme Law of The Land, says that money is Coin of silver or gold and goes on to say that value as assessed by money is in units of dollars. viz …

      Art. I, Sec. 8, cl. 5 “The Congress shall have Power To…coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” and at Amdt. 7 it says “In Suits at common law, where the value … shall exceed twenty dollars, the right of trial by jury shall be preserved”.

      So, no ‘dollar’ of ‘money’ is “debt measured against Growth Domestic Product (GDP)”. Unless, of course, you operate in a jurisdiction foreign to the Lawful United States of America, where ‘dollar’ is just a word to be defined any way a statute of that jurisdiction mercurially decrees on the whim and fancy of its legislature. Sounds dictatorial to me. I thought you didn’t approve of dictatorship?

    • Patfields
      For a man who has little faith in the fiat paper dollar, you have a lot of faith in bits of paper with words on them. Yet again you childishly cry foul ball. It is what it is. As my brother constantly reminds me, the laws are more like guide lines. So your piece of paper is worthless. You surprised?  You asked me what the dollar is. I told you. Live with it. You want facts but hide behind Congress?
      The Fed was an act of stupidity
      The dollar is what others outside of your country decide it to be. No expert on your constitution, and to be honest, I really dont care about it. I am a pirate.
      As a country Britain has been there done it worn the t-shirt. Before us, Rome lied to its people. Why do you think that America is any better? You dont have the means to change the system Pat, I wish we did, but that is it.

    • WaitingForSilver … “No expert on your constitution, and to be honest, I really dont care about it. I am a pirate.”

      Well, there’s where I think I’ll rest my case. Open Confession to Piracy is Crime against Humanity and that’s about the best I could hope to obtain from my examination of the evidence.

      “A pirate is an enemy of the human race.” 3 Co. Inst. 113.

      “When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” –Frederic Bastiat

    • PatFields
      Your Naivety appauls me.
      As a pirate, I don’t require pieces of paper to TELL me what right and wrong is. I KNOW. As a Pirate, I don’t need the state to control me, I have faith in society to do the right thing under natural law. Just because giving definitions to labels makes your life so much easier to argue, does not make what you try to argue about right or wrong. Your a free man Pat, first and foremost. You came into this world without law, and by god you will leave without any.
      As a pirate I am free to choose also who to steal from, rich, dumb people are my target. But make no bones about it, any pirate is a profiteer, the only difference between a pirate and a capitalist, a pirate will tell you he is taking something from you, in front of your face, a Capitalist does it sneakily, reverting to a base form of an uncivilized human being.
      Yes I steal from people, isn’t that what Capitalism is? The legal theft of someones possessions, be it time, money, energy or resources? Capitalism operates from ignorance, the deal is always one sided, there is no Pareto efficiencies in the trade. If there was, I wouldn’t be here trying to educate you to the ways that the world work, not how you would like them to work.
      If your opinion of humanity is so base as to think that all are out to harm you, unless you have a piece of paper to protect you, then Pat old chum, you need some help. If your paper was so powerful then why do you need Arms to protect yourself?
      Plunder? Isn’t that what Algo traders do everyday, robbing naive stupid Grey old wrinkly people of their hard earned life long earnings?
      As I said Pat, I don’t care for your Constitution, its a worthless piece of paper, written up at the time by men in revolt of the state (Kingdom), for being Taxed by a fat old mad English King. They wanted to avoid tax, so created a country. Amazing how people always think that the constitution was about anything else, other than the control of Taxation of money, and who receives it.
      You can argue the toss about what you THINK money is. But money is what the exchange says it is. Not written in a Dictionary proofed statement of intent for future generations. Money evolves, changes its purpose, changes its design.
      As a pirate,  I don’t believe in Fiat money. why? because I see it for what it is. A means of control. A means of taxation by the wealthy on the poor, for the requirements of the wealthy to remain so. A Ponzi scheme (Pyramid scheme, as it should be called) only ever benefits the few.
      Legal Tender is Taxable Tender. As I stated I don’t believe in Fiat Money. I believe in Commodity.  Gold/Silver are commodities that can be used as money, but they are not. They are commodities.
      Do you really need the state? If you answer this “Yes” then my friend, you have socialist leanings. Me, I don’t believe in a state that doesn’t operate correctly. I don’t believe in the USA, where power is controlled by a few wealthy individuals, they may as well be Barons, Dukes and Lords, without the titles. Power comes first, the title came second. The function of  titles in Europe, was to proclaim their power over people, a way of warning people to tread carefully. America doesn’t have titles, shame, at least then you would know who your enemy is. Set the Guillotine up and chops some heads.
      All laws revert from an accord. The law is not gods law, but mans. By gods 10 commandments I abide. Give or take a few indiscretions.
      A crime against Humanity? only if the crime is seen to be unjust through the eyes of god, and god alone. I answer to no man, but abide by god. The only time I feel the need to be controlled by man, is through the use of usurped power that will harm me, or people I love in any shape or form. Is this the true state of governance that you strive for Pat? A society bound by chains, created by a constitution that gives no choices or the ability of free will?
      One final note, before I leave this for good:
      In a room, one man has a gun, the other has the full weight of the law behind him, 40 million men, all agreeing in accord to act upon the law (torte). Which man has the true power, when the man with the gun, points it at the man with nothing but a scrap of paper?
      As the Indians (country of, not Native tribes of America), say “Might is right”.

  31. You can make an awful nice presentation about supply and demand of gold and silver.  It seems like a slam dunk.  But what if the prices have nothing to do with “fundamentals”?  As long as naked shorts are allowed in a paper futures market, where does supply and demand enter into it?  The time to go long is when the market manipulators go long.  If you can tell me when this will happen, I’ll listen.

    • someone has to take the other side of those shorts.  Everyone is keen to remind how small in total dollars the PM market is, which would lend itself much more to upward, rather than downward manipulation.
      Only one poptart left on the planet and i have it in my hand… guess what, i don’t care what the paper price of poptarts is, i’m searching for a fatty with a $100 bill!  

  32. Excerpt: “According to the  2012 World Silver Survey, total global silver investment demand has risen from only 31.6 million oz in 2002 to a staggering 282.2 million oz in 2011.

    I know it’s most often an innocent ‘manner of speech’, but I simply can’t fend off an uncontrollable cringe each time I hear that phraseology used to encourage or even incidentally discuss silver accumulation. It’s deeply disturbing in it’s subliminal conditioning.

    An ‘investment’ portends by inherent implication that a ‘profit’ is to be garnered at some future point af the holding’s maturation. Yet the truth is that … silver is the profit.

    For the metaphor of ‘investment’ to be accurately conceived, it would relate to ‘dumping’ of banknotes as a … bad investment … to hold cash (silver) until exchange for a better money appears (like swapping for some rhodium in the current environment, or for gold as their ratio tightens back to its natural state).

    • Pat Fields  You make an interesting point if I understand it correctly.  When I analyze a current financial statement and those of a business’s past financial periods the profit, after taxes (wretch) the retained earnings are put in their normal place on the liability side of the balance sheet, growing year over year.  Registered in dollars, these retained earnings do not normally accumulate greater values by themselves.  They grow as more profits are retained.
      In the case of a commodities producer that has the luxury of holding non-perishable commodities like silver do not hold them in the R/E.  It might be shown in long term assets or some other balance sheet entry. I seldom see a firm with these types of holdings since most firms sell their inventories quickly to bring fresh cash back into the business to pay bills, employees and other hard costs.   Few firms can just leave inventory sitting in the ground or warehouses.
      But as you note, silver is the profit and is real money.  The sad tale is that silver prices in relation to dollars make that holding of silver a dangerous proposition.   I think it was Sovereign Economist or Willnotbeaslave that noted bad things happen to those who hoard their silver as their profit.  They find their companies and mines forced to disgorge their ‘profit’  at what is probably a loss.  No matter, the silver must flow and suffer the damage of the long suffering real money that it is
      I wish this was not so as I hate to see entrepreneurs and  businesses suffer due to the criminal activities of others.
      Legal tender, like beauty, is in the eye of the beholder
      I find few things more beautiful, other than my wife, than a well crafted and artistic silver or gold coin. There is a lot of artistic esthetics and presentations in these coins, even if they often have the picture of a dead tyrant on one side.
      That beauty seems to infect, afflict and affect most of humanity, except for the Boyz.  

    • “I find few things more beautiful, other than my wife, than a well crafted and artistic silver or gold coin.”
      Nice AG, I like a little bit of poesy in this scary world ….:)
      “There is a lot of artistic esthetics and presentations in these coins, even if they often have the picture of a dead tyrant on one side”
      So I mostly bought Austrian Philarmonics, and also I have one 1kg Horse Lunar II with glossy/mat finish. I’m never tired to watch them.

    • @AGXIIK , “I find few things more beautiful, other than my wife, than a well crafted and artistic silver or gold coin. There is a lot of artistic esthetics and presentations in these coins…
      That was very, very nice!
      O.k. now – back to reading flame-posts!

  33. I frequented this site before they sold ammo, before they sold bullion, before they upgraded to the current new look web site. I put down a few hundred grand in silver and gold bullion in 2010-11. There was only one factor pointing me to a total screw up…OBAMA. The news for me is not oil, mining, the FED, derivatives, Comet ELENIN, Niburu, EMP attack, China, Russia etc., the news for me is the fact Obama is being protected by the press, by tptb, by the Federal Reserve, the NSA, CIA, and every swinging dick in the Pentagon and Congress. This is what told me there will be no crash. I sold off by March 2012 and have my money back in equities. In fact, equities are soon going to price Joe Blow out of the market leaving HF’s, pensions, money managers, and people like me who know a bull shit story when we hear it able to set up for a generational wealth transfer when we die. That being said, as long as the Fairy in Chief is being protected, as long their is continuity in the WH and Congress to carry out the bankster plans for a one world banking system, up or down, the stock market is my bastion. If the power gets cut off by any reason, for years, everything will be worthless for no one is going to get by that scenario regardless of what they think they know. Climate alone will kill off 2/3rds of the people dependent on AC and heating oil. So, for those new here, do your own thinking because one sided coins are an impossibility.

    • Thomas … “have my money back in equities”

      Jeez … now how is it my ‘wild guess’ that you’re a Paper-Boy subversive lurker, turn out so instinctively accurate?

      Now, recite ten Hail Mary’s, ten Our Fathers and then go in peace.

    • PatFields,
      Everyone is entitled to an opinion. Unless of course you like living in a country of dictators?
      Me personally, I would never buy into stocks and shares, Its a personal belief system. We are each entitled to one, even you Pat.
      Nothing wrong being a windmill chaser.

    • I can survive just fine without modern niceties… bring back the days when a handshake was a contract, when your own sweat decided if you were going to eat or not…

    • MaryB … “bring back the days when a handshake was a contract”

      That’s good, Mary … just don’t forget the ‘Two Credible Witnesses’ and you’ll be just fine.

    • I like MaryB stance. A handshake should be a mans bond. Only untrustworthy men need witnesses. If the deal goes sour, or one man decides to welch, let Darwin decide who is right or wrong. Hopefully god will intercede and help the innocent man to a righteous action.

Leave a Reply