Will We See a Silver Breakout in 2013?

rocketSilver has been trading sideways so far in 2013, but what will the rest of the year bring? Will 2013 be the year silver prices break out or crash and burn? What is a sustainable silver price for mining companies and where will the metal come from to supply the next generation of industrial and investment demand? Most important, how can investors make money off this volatile sector? These were the burning questions The Gold Report took to analysts, money managers and heads of silver mining companies.
The answers (from the likes of Eric Sprott, David Morgan, Bob Archer, & Jeffrey Christian) may surprise you.

 

1 Oz Gold Buffalo As Low As $74.99 Over Spot At SDBullion.com!

buffalo2

 

By: JT Long of The Gold Report

 

Silver has been trading sideways so far in 2013, but what will the rest of the year bring? Will 2013 be the year silver prices break out or crash and burn? What is a sustainable silver price for mining companies and where will the metal come from to supply the next generation of industrial and investment demand? Most important, how can investors make money off this volatile sector? These were the burning questions The Gold Report took to analysts, money managers and heads of silver mining companies. The answers may surprise you.

In an impromptu poll at The Prospectors & Developers Association of Canada Convention (PDAC) in 2012, attendees were decidedly positive as they cited increased demand for silver from sources such as electronics, solar panels and medical uses, in addition to use as an investment vehicle. One year later, Jeffrey Christian, managing partner of CPM Group and the author of the investing book “Commodities Rising,” predicts a 2.8% increase in silver demand on the fabrication front after a 1.2% rise in 2012 when solar panel use of silver actually fell about 25%. “Economic conditions actually may be a bit stronger in the U.S., China and a few other major markets this year than they were last year and solar panel use may stabilize,” he said. “The lower silver prices we anticipate would help boost demand.” The key sector to watch, he says, is jewelry and silverware, as that is the most price sensitive demand sector and uses more silver than any other segment of the market.

On the investment side, continued political squabbling can have an impact on overall stock prices, but Christian posits that the market is getting tired of politicians playing games and becoming inured to the cacophony. “Investors have heard a steady pounding about the imminent collapse of the U.S. dollar, the Treasury, the euro, the ECB, and the global financial and banking systems since 2008,” he said. “We have had some really bad conditions, but the worst predictions have not happened. Investors are realizing the real problems are not the manufactured and overly hyped machinations in Washington, but the inability of government leaders to seriously address the long-term deficit issues. Therefore, they are shifting from investing based on fears of an imminent catastrophic collapse of the global financial system to investing based on the expectation that the next many decades will see sub-par economic growth, sub-par stock market and bond market performance, persistent high unemployment, and massive deficit and debt problems in the industrialized economies.”

David Morgan, editor of Silver-Investor.com, explained that investment demand is counterintuitive. The higher the price, the higher the demand. “I am optimistic the price will increase, but it will not be a huge increase. There will be some spikes due to derivative plays, quick buck artists driving the price up randomly as they did in April 2011. Underlying that is solid buying from hedge funds. Buying begets buying and silver is a darling of momentum players.” He, too, believes that government crises like the debt ceiling are irrelevant as they are already priced in. “Central banks have one tool, to debase currency. We all know that.”

SilverStrategies.com Editor Sean Rakhimov sees industrial demand remaining robust over the next few years. “The cost of the silver portion of the end product is still insignificant relative to the price of the product itself,” Rakhimov explains. The exception is the solar panel industry, which accounts for some 130 million ounces (130 Moz) or 15% of the global silver supply. “The solar panel industry is likely to be more materially affected by the rising silver price,” Rakhimov explains, “yet, I do not see it being a decisive factor in determining the price of silver. I believe the demand fundamentals for silver will remain favorable for a continued bull market for the duration of this cycle of which we are about half way through.”

On the supply side of the equation, silver production is less sensitive to the price of silver than many other metals because it is largely a byproduct. Bob Archer, CEO of Great Panther Silver Ltd. (GPR;TSX; GPL:NYSE.MKT), which generates almost 70% of its revenue from silver and some 20% from gold production, pointed out that as much as 77% of silver produced globally each year comes as a result of mining for other metals. Depending on whether it is coming with gold, copper or zinc, the silver credit can be an afterthought in the decision to go ahead with production. “Often the silver credit is not important. It is more a function of what the primary metal will be,” he says.

Ross Beaty, chairman of Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ) among other ventures, counters that the same inflationary pressures impacting silver also effect other metals, thereby limiting new silver production from both sources. He uses the example of the 35-Moz Pascua-Lama gold and silver mine Barrick Gold Corp. (ABX:TSX; ABX:NYSE) decided to build six years ago on the border of Chile and Argentina at an estimated cost of $4 billion ($4B) over three years. “It could be one of the biggest silver mines in the world, but the mine is nowhere near completion and could be $10B by the time it is done. It’s causing a severe stress to Barrick, the world’s largest gold producer. Barrick will get the mine built; it’s just taking a lot longer and costs a huge amount, more than anticipated, and it will make it—or any company—rethink any decision to do the same thing again. That will, over the long run, tend to constrain new supply.”

One of the world’s biggest silver investors, Eric Sprott, pointed to the availability ratio between silver and gold for why the metal price could jump from $30/ounce ($30/oz) to as high as $200/oz as he predicted in a recent radio interview.

He quotes statistics that show once the industrial use of silver and gold is subtracted from the production and recycling new supply calculations, three times more silver is available for purchase each year than gold. However sales of gold and silver at the U.S. Mint, through exchange-traded funds (ETFs) and Sprott’s own Physical Trust, show that investors are buying many multiples more silver than gold and have been for years. Sprott firmly believes that outsized demand in such a relatively small market ($9 trillion for gold and $150 million for silver) will result in price inflation. “We are surprised that the price of silver has remained at such a depressed level compared to gold. Historically, the price ratio between gold and silver has been 16:1. Today the ratio is 55:1, so what are the numbers telling us? We believe this is one of those times when smart investors will be well rewarded if they follow the money.”

When predicting the silver price, CPM Group’s Christian was conservative. “A year ago we said the silver market had peaked in April 2011 and was headed lower. Our view was that silver would average $29.90/oz in 2012, down 11.7% from $35.29/oz in 2011. The price averaged $31.17/oz in 2012. We thought it would not trade above $36/oz during 2012. It settled above $36/oz on only one day, Feb. 28. For 2013, we projected an average price of $26.75/oz. We think the price may not rise above $33/oz this year, or $35/oz at the most.” He based the lower silver price on the belief that investors “will grow suspicious about all the hype of silver going to $50/oz or higher.”

SilverStrategies.com’s Rakhimov believes silver is in the second half of the bull market and expects increased volatility and acceleration of the trend. “I expect higher prices—substantially higher prices—toward the end of 2013 and into 2014, not unlike the trend we saw in 2010–2011.” He predicts the bond market will be the catalyst propelling silver upward, as bonds are increasingly struggling to provide safety and investors look for other safe havens. “I expect new highs in both silver and gold in the next couple of years and that may prove to be a conservative outlook,” Rakhimov explains.

How much per ounce does silver have to be in order to make most of the new projects out there economic? We asked those closest to the ground. Beaty, whose Pan American Silver produced 25.1 Moz last year, says that while most companies can make money at $30/oz, rising costs are hitting bottom lines across the industry. “Whether open-pit or underground mine, from exploration to production the price is multiples higher than it was a decade or even five years ago.” Add to rising energy and labor costs, specific country challenges, social, political and environmental realities and unique geological conditions and the capital pressure is immense. Beaty stresses that investors look at total costs. He called “cash costs” a “ridiculous notion that means almost nothing.” To really understand the return on equity, he suggests that investors look at the capital costs, which show up as a depreciation per ounce cost in annual reports, and direct operating costs along with royalties, taxes and social payments. That doesn’t even include the price of exploring for replacements for depleted ounces. “When you add all of those together, what might show up as $10 cash cost/oz becomes $25/oz. If you are getting $30/oz, you don’t have much delta there for a dividend or in case unforeseen things happen. Margins are slimmer and if there’s any weakness in the silver price, a lot of silver mines are going to be in distress.”

Ever the optimist, however, Beaty points out that the challenges facing companies to build and operate mines should lead to constrained supply and increased prices.

Ron Nichols, CEO of Dolly Varden Silver Corp., does not see one silver price determining the economic viability of silver mines. He explains, “There will be a range of prices where a silver price as low as $10/oz may make sense for a large high-grade underground deposit. A low-grade, open-pit scenario would likely need a much higher silver price to make the economics of a large tonnage operation processing much lower grades work in order to pay back the much higher capital needed to get the project up and running.” The grade of the deposit and the style of the silver mineralization are important factors.

Archer, whose Great Panther Silver operates the Guanajuato mine complex in Mexico, blames competition for increasing labor costs, particularly at the managerial level. “There is a ripple effect. Higher labor costs, materials costs and lead times are making capital costs so much higher.”

Despite the number of companies with depressed share prices and bank accounts, Archer says he does not anticipate a lot of mergers taking place this year. “It is important to have the right deal,” he says. His company has been looking, but hasn’t found the right opportunity.

Beaty also predicts 2013 would result in fewer deals. “Across the board in the mining industry, companies are less interested in growing simply for the sake of growing and more interested in their bottom line. Shareholders are demanding a return and companies have been very poor in the mining industry at using their cash flow well. There’s been a real revolt among many shareholders asking for bigger dividends.”

Pan American bought Mindfinders in 2011/2012 and Beaty says the company is always looking at deals, but not necessarily looking for deals. It has focused more recently on increasing its dividend and buying back stock. “Don’t forget it’s not just the exploration stocks that are cheap. It’s also some of the producing companies. Generally there are a lot lower multiples for mining companies today than there used to be. That factors into less of an interest in acquiring other companies in this market.”

Nichols sees the fight for survival leading to some M&A deals. “It is probably inevitable that some companies combine in one way or another to cut down on overhead, and pool their properties to increase their prospects for discovery.” Many early-stage exploration companies are running out of funding options. “Alternative financing really only comes into play at a more advanced stage such as the scoping study level or prefeasibility stage. Precious metal streaming companies are an option if the company is at or near production, but these work best for purchasing metals that are not the main economic commodity being exploited. Royalty companies are also likely to be a more viable alternative to advanced-stage companies. However, I suspect that a great number of junior companies simply cannot display enough in the way of solid potential to attract financing in this type of market.”

Morgan predicts that while there will be some mergers and acquisitions, the more common fate will be a slow death as companies run out of money.

The where-silver-companies-will-be-located question probably won’t change either. Two Latin American countries—Mexico and Peru—account for one-third of the world silver production and the experts don’t see a shift happening anytime soon. Archer sees Mexico as still possessing lots of opportunity. “It has great geology and the country only recently opened the doors to exploring again, so there is a lot of upside.”

Beaty agrees because of the realities of geology regardless of country risk. “Mines are built where silver tends to be. Mexico and Peru happen to have rocks that tend to contain more silver than anywhere else on the planet, so new silver mines tend to be there. There are only about 30 or so silver mines in the world. It’s a very small number relative to the number of gold mines and copper mines.”

He cautions that companies have to do everything right in getting their social licenses and looking after the environmental aspects of mine development, but he sees the governments as friendly to foreign investors. “They have not initiated the negative policies that some other neighboring countries like Bolivia and Argentina have enacted. They have good central banks. They’re just great places to be so I think that will continue.”

Nichols believes Canada is a good jurisdiction for silver mining, being one of the top ten silver producing nations. Many areas with a history of high-grade production are being looked at again in light of higher silver prices, which Nichols predicts will lead to an increase in Canada’s silver production. “Operating in a stable, mining-friendly country like Canada certainly is a positive factor that cannot be under estimated.”

Wherever in the world they invest, CPM Group’s Christian warns investors to “buy and hold silver intelligently, which may include hedging existing positions and buying when prices fall instead of when they are rising.” Even equity investors can hedge by putting puts on commodities to take some of the risk out of the portfolio. That is what he did for clients during the fiscal cliff when he saw the false euphoria and intuited that prices would fall once people realized that it was a manufactured problem and others loomed.

“We believe investors should hold silver as part of their portfolios,” Christian says. “The period of sharp capital appreciation in silver prices may be behind the market, at least for the next few years. Even so, owning some silver makes sense as a portfolio diversification move, as a capital preservation tool, and as a safe haven.” He is also positive about the equities behind the metal. “Some excellent silver mining companies represent growth stocks by producing silver at attractive prices. These companies could outperform silver over the next couple of years. The issue is discriminating between the companies that reasonably can be expected to perform well and the myriad of mining and exploration companies that probably represent bad investment opportunities.”

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) The following companies mentioned in the interview are sponsors of The Gold Report: Great Panther Silver Ltd. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

2) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise – The Gold Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8999

Fax: (707) 981-8998

Email: jluther@streetwisereports.com

 

2013 Silver Eagles IN STOCK As Low As $2.59 Over Spot at SDBullion!

Comments

  1. I sincerely hope we aren’t going to start seeing the grand backpedal now, after 2 years of manic cheerleading. Maybe that would be good though on second thought reverse psychology. Have us all fake throwing in the towel so the cartel can go net long finally.

  2. Banana Republic on the way? Does anyone know? Major banks are saying GDP outlook is good for 2013 as people continue to lose their jobs.
     
     

  3. I don’t know why the silver miners just don’t raise prices to $50+ an ounce.

    • Well Smeagles,
      The banks are loaning little to the miners which has caused a great slowdown, The other is if the miners were to sell at $50.00 the banks know what the cost of producing Silver is and would probably not loan the miners the increase in the paltry sums that that the banks are loaning right now. The banks want to hold back increases in Gold and Silver. 

    • Smeagles good question.  There are many laws like the Sherman Anti Trust Act which keeps companies from getting together and deciding to not sell silver for under $50.  If this was legal then all the car companies could get together and decide not sell anything for under $50,000 and they’d all make huge profits from decreased sales. 
       
      However, where the rules are much more gray and lightly regulated is when using blind naked short and derivatives to effectively control prices as seen in the silver market.  If you remember back from the 2007 Crash there was a lot of coverage about the speculators running oil up to $150 barrel. 
       
      The rules to control these speculators used to be in place and it was called the Glass-Steagall Act.  It was torn to pieces during Clinton’s Presidency in the 1990′s.  What’s ironic is the Glass-Steagall Act was initially put in place after the 1929 Stock Market Crash to keep speculators and banks under control so another 1929 Crash and resulting depression would never happen again.  It only took about a decade after the Glass-Steagall Act was removed to have another massive stock market crash again similar to 1929 and now we have the ensuing Great Recession which is turning into a depression in many parts of the world like Greece, Italy and Spain.  Sometimes its funny how history repeats itself?

    • Depression (def.):  An extended period of decreasing national production coupled with persistently high unemployment.
       
      Hmmm… sounding familiar?
       
      As to speculators… it is interesting that when their efforts cause higher prices they are considered as “bad” but when their activities cause lower prices, such as in the case in the gold and silver markets, their actions are seen as “good”.  Perhaps some consider that speculators and manipulators are different breeds but they both seem like a variety of skunk to me.

  4.  
    This is propaganda paper silver and no more.

  5. It does sound like a lot of the pundits are backpedaling.  David Morgan for example, not long ago called for silver to have a good year in 2013, not a banner year this year.  He said silver would be volatile  touching 49 several times this year, but settling in at about 40.  Now, he is singing a different tune.  He basically admits that he has no idea what is going on with the silver market.  Which, is at least an honest statement.  Most of these pundits have been totally wrong in the past 2 years including David Morgan.  Now, they are admitting that they are just stumped.  I think this is bullish for silver.  I have no clue how silver will perform this year.  Sentiment feels horrible. 

    • I buy because it’s pretty!  Also, when they means test start for Social Security someday, the last thing I want to be is visible as holding assets that are traceable. Buy and stash is my motto. I have quite a few years before I retire, so maybe this works for me. If I were already retired though, I would agree completely with your sentiment. Peace Tiger

    • “Sentiment feels horrible.”
       
      Indeed it does and I find that encouraging.  Maybe it is my basic contrarian point of view on most things but when everyone is feeling down about something it is likely that will be THE best time to be stocking up on it.  Like others here, I have been buying this dip in both gold and silver.  If prices drop further, I will buy more.  Hell, I MAY buy more anyway because having it is better than not having it and we can always haggle about prices later.  :-)
       
       

  6. Too bad paper dictates physical price. I’ve said before this whole “hey my stack is still shiny” thing gets old. The sad thing is that the majority of people who bought post may mega crash would have been better served to have waited with their “worthless paper” until now and bought NOW.
    The cartels would be acutely aware of this and no doubt want a terriblke sentiment in metals, which they have in a mainstream sense achieved, in spades.
    I’ve laughed ad nauseum at the “hey what a gift at this price”  people. End the gifts. We need silver to get traction, go up to 35 and get hot money in. The same 3% of the north american population buying silver eagles and laughing at the low price isn’t going to be the catalyst for this thing to go nuts.
     The battle cry “buy the dip” has thoroughly tarnished, as the last almost 2 years have been nothing BUT a huge escalating dip. Full disclosure again, I’m all in in silver in my personal investments (I am part of a holding company with varied investments). To me every piece of silver is me extinguishing my dollars and walking away from the system.
     

    • No one wants to talk about the fact that those who bought after the May crash are underwater now.  This is because it is not in the best interest of the sites that talk about silver.  But, it is a fact.  This consolidation could last another year and we have to buckle down to this reality.  If we can get a rally that takes us to 35 than it will be a nice surprise.  The buy the dip battle cry has lost its luster for the moment.  I still see postings thanking the banksters for a raid so they can stack a little cheaper.  We will see if the banksters are really presenting gifts or not.  Now, if you solely look at silver as an insurance policy against a dollar collapse or hyperinflation than current market pricing is not really applicable.  I understand that argument.  In my opinion, if you are buying silver solely for that purpose than no more than 20% of assets should be invested in metals.

    • I don’t even think the banksters are concerned with “buying gold and silver on the cheap.” They won’t go net long until the wheels are set to fall off and they absolutely have to.
      Society is interwoven with their financial ponzi nexus. They would be infinitely happier keeping their shit show in place because it is more peaceful (for them) and profitable. The increasingly naked manipulation is evidence of that.

    • I agree a lot with what Jim Sinclair states.  The metals have been flowing to the Eastern Countries big time and once they have the desired quantities and when they want the manipulation to end it will happen quickly.  Remember the Gold Rule:  He That Has The Gold Makes The Rules. 
       
      Until then I expect nothing but sideways movement with the occasional market raid.
       
       
       
       

    • “The sad thing is that the majority of people who bought post may mega crash would have been better served to have waited with their “worthless paper” until now and bought NOW.”
       
      Sure.  But if it is cheaper yet in 3-4 months, then you would want us to have waited until then to buy.  Problem is, Dirt, none of us knows the future so we not only do not know when the best time to buy is, we CAN’T know!  I deal with this by buying regularly and by measuring my stack in ounces and not in fiat.  Fiat can and will go away one day but my stack WILL still be here and doing just fine.  As you can probably guess, I am not in this for the short-term.  I have any number of other investing vehicles available to me for that purpose, so short-term moves measured in fiat are not all that significant to me.  I can understand that others would think that they are and if they do that’s fine.  There are MANY ways of looking at things and we all have our own.  I will say this, though… my way does not keep me awake at night.  ;-)
       

    • @ Canadian Dirtlump – Where were you all summer when silver was 26$? Myself, Personally, I was backing up the trailer day in and out. I sat on the sidelines most of the fall and am now back in buying anything under 30$.

  7. We are more likely to have a breakout here in The U. S. of The Novel-Corona virus that no anti-biotic known can cure, that is starting to take lives in the Middle-East than a breakout in Gold and Silver.

  8. Will We See a Silver Breakout in 2013?
     
    NO……..as long as they can short & manipulate like they can do & get away with it we are kidding ourselves $50 silver & $2000+ gold will allways be 6 – 9 months away
    untill the frauds & crimanals are brought to justice nothing is going to happen

  9. The road is hard and the journey long,it  all starts with that first step. Buying physical silver is the first  step to protecting your financial future from the reckless printing of currency that is in essence robbing your buying power.
    When the value starts to climb on silver and gold the markets will be in a state of utter turmoil. It will not be a happy time at all and the notional value of a bar of silver or gold will be the least of your problems.(I am guessing)Hopefully you bought enough at a low enough price point to weather this correction. If you didnt..then buying now is like stepping back in time.My personal break even point is 26.80 and we  are close enough to that to make me nervous short term.
    Long Term….let them do what they like…time will be my friend.

    • Agreed.  The current conversation could well turn out like two old gold buyers arguing over which of them bought in at $50 or $100 an oz.  As if it matters anymore!  lol
       

  10. bull run is over

    • Bull Run on silver has not even started yet.

    • “bull run is over”
       
      What?  Did I miss the news?  Are they no longer spending more money than we have?  Have they stopped printing HUGE amounts of fiat?  Do they no longer dump cheap and even free fiat into the banks at the rate of a trillion or so new dollars each and every year?  Did they raise interest rates?  Can those who actually need a bank loan actually get one?  All quiet in the Middle East?  Japan doing better now?  The UK and EU not verging on collapse?  Man… I need to pay more attention!
       

  11. David Morgan is now backpedding. Sprott is surprised about silver, remember that Sprott said a month ago he did not expect any inflation for several years, so why own gold or silver then?
    The simple fact of the matter is, there is no real demand for physical silver, plain and simple. That is why we are at 28 oz. Buying paper silver is not a silver investor, until that changes (if ever) silver is going no where.

    • @zman:  It’s one thing to be a bear on silver and quite another to hit and run with total malarkey.  “No real demand for physical silver,” you say?  Sprott of the view that there will be no inflation for serveral years?  At least most real bears make real arguments and not totally fabricated statements.  You sir are not a bear.  You’re a little cub — and probably not even cute.   Go hang out with real silver bears and learn a few things about their arguments.  After you’ve played with the big bears, come back here and give us some real challenges to our biases.

    • SMACK!  lol
       

  12. It really makes you wonder why? They don’t want silver to break $29.00. Just seems to go parallel daily and then there is a raid or a move downward. 

  13. I have A QUESTION for all my learned silver stackers out there.  Your answer, if your honest, will clearly define what lies ahead, and your role in silver going forward.  Here goes:
    Tomorrow you wake up and look at the price of silver.  It registers $50.00.  What are you going to do TOMORROW?  You  have three choices (there is no wrong answer) you can run out and buy some (if you can find it), sell some, or just sit tight and see what happens.
    Now my stackers out there.  Is your fears about 2013 answered?  I think so.
     

  14. Flying Wombat,  Sprott did say in a very recent (3-4 weeks ago) interview that he did not see any inflation for several years, I am not making this up, I am sure I could find the intervew if i wanted.
    As far as the physical demand of silver, if there was more physical demand, the price would move higher. Look at it this way, it’s a 1 billion oz market per year, or a $30 billion market, at least 50-60% goes to industry, which means there is only $15 billion or 500 million ozs or Sprott says (only 300 million ozs) available for investment.   So anywhere of $9-15 billion available for investment in the whole world.
    This includes China, India, Europe, US, Japan ect.  Only $9-15 billion for all of these investors, where are the buyers then?   What happened if $50 billion entered the market, the price would soar higher. The real demand is not there yet, why is that so hard to understand?
    I am sorry you don’t like some the of recent facts, but they are true.  
     
     
     
     
     
     

    • “So anywhere of $9-15 billion available for investment in the whole world. This includes China, India, Europe, US, Japan ect.  Only $9-15 billion for all of these investors, where are the buyers then?”
       
      Ever heard of the fractional reserve system?  Or rehypothecation?  For every single oz of physical Silver, there is at least 100-200 times that amount in paper Silver, or probably more.  That means that each single oz of physical Silver is sold 100-200 times, since so few ‘owners’ bother to redeem physical metal.  Suddenly your $9-$15 Billion of Silver supply has turned into $900 Billion to $1.5 Trillion of Silver supply, through the fractional reserve system or rehypothecation.  That is what allows the manipulation of precious metals prices to continue.  But the time is coming when the fractional reserve system and rehypothecation process will come to an end.

    • @ ZMan
      Yes, it’s very beautiful – show the total world supply of silver, but fail to mention that the main source of supply of silver in the face of China, has now become the largest net importer of silver. LOL

      In my opinion, you made a mistake with the choice of opponents for a chat here on the SD.

    • @zman:  I don’t think you understand how the paper market has been used to manage prices. If you stick around here long eough and keep an open mind, you’ll gain a powerful education from many of the folks here. 
       
      As for Mr. Sprott, you probably misunderstood or misheard what he said.  He might have said that he doesn’t necessarily see HYPER-INFLATION in the near future.  Nevertheless, with everything he’s said and written in the last decade, he’s been consistent in noting that we live in a world of high inflation right now, and that it’s understated. He’s also talked about deflation in specific sectors (finance), but even with that force the net outcomes expressed in our economy are on the side of inflation.
       
      Produce a link to the interview you claim exists.  Otherwise, I’m just going to have to leave it the way I did before:  pure malarky on your part, or just a misunderstanding.

    • Mr Zman.  If you are a bear I suggest that you sell your silver and buy stocks.  This site is biased towards silver.  The fundamentals for silver all look good.  Silver is in a consolidation period now.  Not at the end of its bull run.  You are welcome to hang out with us but please try and give inteligent arguments for your bearish views on metals.   

  15. I happened to find two ROMAN coins yesterday while out Ag hunting. I got them both for 5 FPS!!  I THINK THEY ARE AUTHENTIC! The father- VALERIAN 1

    • My guess is they are NOT.  Weigh them, measure them, then test them. 

    • Did you use a metal detector? I found an old penny 185? and an 1 ore colonial 174? years ago in a corn field right after it was plowed here in western NY (will upload some pics, maybe). Found a lot of arrow heads and some flint nappings, but those coins are my only numis finds! Where in the world are you? Good job, cool find.

    • @Silvermail: @Tiger: Rome had debased their currency by the time these guys were co-emperors. most likely they are copper with a wash of silver. BUT ,,, they are like 2000 years old!  Man I tell you though, they have the right feel and the right RING to  them. Tiger, I found them at a LCS while out silver shopping/hunting. SW Ohio has lots of coin stores and you never know what you will find.

  16. The Son GALLIENUS & Co Emperor. These pics are off the internet but these are the same kind of coins I found.

  17. I agree Piebian, but paper buyers of silver are NOT SILVER INVESTORS, they are buyers of paper, thus are not silver longs in the real sense.
    Will silver paper longs ever buy physcial silver?   Who knows, but they have not yet.
    The reason I invested in silver was on the premise that others would take physical silver off the market, why would I count on the paper market at all?
    The question remains, where are the real silver investors?     Sprott goes around the world asking huge investment firms if they would want to buy into his PSLV fund, and all he gets is a lousy $300 million to do a offering sometimes, pathetic if you ask me. Why can’t he get $10 billion?   Which is not a lot of money in the investment world.
     

    • In Russia, two days ago there was a change of director of the Central Bank.
      Now Russia is considering changes to the structure of the gold reserves.
      They want to include silver in the gold reserves. They want just exchange from some part of U.S. Treasuries, to the physical silver.
      If Russian so decide, it will be a much larger amount than the measly $ 10 billion.

    • Silvermail, I wondered if silver numbers are available for central banks?

    • It is possible for an investor to buy both paper and real assets.  I do.  I have no idea how many others do as well but it could well be that the numbers are not great.
       
      As to Sprott raising money, it is difficult to get paper investors into real things.  This is a very strong bias, just as strong as is the bias here for physical metals.  Professional investors make their money in the paper realm for the most part.  Yes, there are some like Jim Rogers who specialize in commodities but even they will buy paper variants via futures, options, ETFs, and ETNs.  Commissions are based on paper, so those who work in the investment world want paper that they do not have to store somewhere, insure, or truck down to the commodity exchange when they want to sell.  They want what moves quickly with a few mouse clicks and that they can buy and sell all over the world.  In these terms, gold and silver are anti-investments.  If the paper house of cards comes tumbling down, which it very well might, physical gold and silver will be great insurance policies against utter financial destitution.  This is why I buy and hold physical gold and silver.  Like any other insurance policy, I do not consider them as trading vehicles, although it is possible to do some of that if an investor wants.

  18. Silvermail,  We all know about China’s large production of silver, and China has become a net importor of silver on top of that fact, a very bullish factor, but how does that change the fact that the rest of the global investment world is not buying physical silver?
    If China is keeping all of it’s mined silver inside China, and then imports even more off the global market, where would the price of silver be without China?
    We have currency debasement all over the world, where are the rest of the buyers of physcial silver?   Are you not surprised that investors from all over the world would not buy silver in this climate?    Even if a tiny fraction bought silver, the price goes to the moon.

    • @ ZMan 
      You talk about the rules of the market, buyout does not work now because of market manipulation. But more and more people are demanding the physical delivery of silver.
      Look at the increase in seizures of physical silver from storage of COMEX and look at the record-high sales of silver coins.

      In addition, if the gold will go up, silver will be go up twice as much.

    • Silver prices do not depend on the demand. Always, when silver prices were higher than at present, the demand for silver was lower than now.

  19. @ Tiger
     
    I’m sorry, I did not understand what you mean as “silver numbers”?
     

  20. With the largest silver producers in unstable latin american countries a real shortage could develop if some dictator gets in control and says no more mining

  21. We have been saying that silver will have a breakout in 2012 but it didn’t happen. On the long term, silver is slowly moving up so we just have to wait and see.

Speak Your Mind