By SD Contributor AGXIIK:

The price of silver is inelastic.  The price of silver has little bearing on its utility.  At $33 an ounce, it is still very cheap as an industrial commodity.  As vital as silver is to the solar, electronic, medical and clothing industries, the amount of silver used in any product is nearly infinitesimally small.  A smart phone uses no more than .2 grams of silver. That amounts to pennies of silver per item.  A solar panel uses 20 grams, about $20 per panel and those panels will absorb 6% of the entire world’s supply, 60 MOZ   There is no replacement to silver in that use and the solar use of silver in China, Japan and India is set in stone.  They are crying for energy that is not hydrocarbon based.
If the world’s supply/production of silver is 1 billion ounces that’s $33 billion.   We spend more on dog food and manicures than this world supply of silver.  If silver tripled to $100 an ounce, would we blink a second that silver prices bumped the cost of a smart phone by 20 cents?  I don’t think so!
If silver went to $250 an ounce we are now talking about $250 billion in silver production/supply.  Will we bat an eye if the silver in our smart phone now goes to $2.  Not likely.  We may salvage silver from trash and recyclables but we will use silver at the traditional rate or even a higher rate, thus making an even more serious dent in silver supply.

The one thing that in vital to keep in mind is that we can’t print silver.   It is impossible to ramp up silver production quickly since 70% of the white metal production is a by product of base metals.  Base metal mining is dropping due to the world wide economic slowdown and that condition will last for years.  There is nothing on the horizon that should a clear indication that the world wide GDP will ramp upwards any time soon.

As SRSrocco has wisely pointed out so many times that even I get it, silver ore grades are dropping like a stone, the EROI is rising exponentially and the demand for silver continues unabated
China and India alone will take 25% of world supply this year, next year and to the foreseeable future
. When countries that represent 40% of the world’s population and 20% of its GDP want something, they will have it at any price.  Not having it is completely unacceptable.  Survival issues loom large in the front window for these countries since nothing replaces silver and likely at any price.
It may take a year or two for the real demand/supply crunch hits, but it will hit.  War will exacerbate this demand and world wide wars are in our future, whether they embroil us or not.  War begets every sort of bad economic condition and if some of you  remember the metal drives of WWII, silver metal war drives will replace steel and aluminum as the modern equivalent of commodities in short supply.

 

    • We can all wait and enjoy watching the cartel getting destroyed slowly. It is taking them more paper silver and energies to crush silver and their results are worst for them than before. This will skyrocket gold and silver as more people are going to buy these two metals.

  1. The quoted expenditures are annual for just the USA.  The worldwide silver market is $30 billion so comparing USA outlays with world wide makes the silver market even smaller.  In comparison, the world GDP is $65 trillion.  The world silver outlay is $30 billion or so.

  2. While manicures seem like a waste of money, dog food is not.  A good dog is an excellent investment in home defense.  Even a small but noisy dog will deter criminals hoping to come in quietly and steal goodies that they can then sell for drug money.  Lots of noise and light are bad for their business.  Spending money on dog food is not a waste, because a good dog will help safeguard any PMs or other valuables you may have on the premises.  Unlike many people, a dog rarely ever bites the hand that feeds him.  In exchange for food and companionship, a dog personifies the meaning of loyalty.
     
    Yes, the silver market is very small these days when looked at in terms of world businesses.  This does not reduce its importance, however, because of the many applications that silver has and for which it is either impossible or merely difficult to find substitutes.
     
    Those of us who stack silver know its value, especially as a hedge against inflation that is being created as a form of national policy.  TPTB are trying hard to convince us that there is little to no inflation but the proof is not only all around is, it is OBVIOUS to anyone who shops for groceries, buys fuel, pays college tuition, or buys insurance.  
     
    I have the advantage of having lived longer than many on this web site.  This gives me a good deal of perspective on the changes that have occurred over time.  My wife and I got married in 1969.  At that time, a package of “Nutter Butter” cookies, my favorites, cost $0.53.  Yeah, that’s fifty three cents, just over half a buck.  In those days, a half dollar coin contained 40% silver, so there was about 0.161 oz. of silver in that coin.  At today’s price of $32 per ounce of silver, that equates to just over $5.  The good news here is that a package of these cookies now costs about $4.50, so anyone who has their wealth in silver has not seen ANY inflation in the last 43 years.  Those who do not have silver and only save paper have seen their buying power drop by about 9x… on this single product, anyway.  Other products that we all buy are usually similar.  The bottom line is… the best way to win the inflation game is not to play it.  It’s a fool’s game and one that cannot be won if we insist on holding our wealth in fiat currency instead of REAL money.  Gold and silver are REAL money… so stack on, brothers and sisters!  :-)
     

    • Problem I see is inflation is climbing faster than the price of silver. The official inflation claims are bogus and don’t look at a lot of things that have went up 5% or more in the last year. My prescription drug coverage jumped 6% as an example.

    • Of course the real inflation is climbing faster than the rise of silver’s price because silver is way more manipulated by the cartel. Once the cartel is destroyed, silver is going to skyrocket so that it would adjust to its original price.

  3. Unas
     We installed a 110 panel solar array at our home in about 2003. As I recall, each panel cost about $400 retail.  This was when silver price was in the low single digits.   Solar panels are usually 3 by 5 feet.  Some of the smaller home generation units cost about $1,800 for 4 panels   These four panels will generate 300 watts and each panel costs about $300-350.  The power efficiency is still pretty low so it takes about 7 years of power savings to equal the price of the panels.  Newer technology is supposedly going to make panels more efficient but I don’t know anything about that yet.
    The silver content is still a small part of the overall price.

  4. I’m going to take AGXIIK’s words since he successfully well predicted the silver shortage during August 2012 that will raise silver’s price. It’s an insult for precious metals that people spend more on dog foods than silver!

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