silver prices
Bankers, Precious Metals, And MF Global
Did bankers use the MF Global (MFGLQ.PK) bankruptcy to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the euro and the U.S. dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices, I have never bought the Kool-Aid the bankers were selling in this explanation for the rationale behind their creation of futures markets.
Given that today, futures and spot prices for gold and silver in the short-term are entirely set by banker manipulation of the supply and demand for paper derivatives that often have no backing of any physical metal, I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market. In other words, bankers invented futures markets to allow themselves to siphon off and steal money from other parties that wanted to invest in commodities with a mechanism, risk-free to them, that required deception and zero honest work and zero integrity.
The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air.
Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper-derivative gold and silver markets to allow themselves to defy and suspend every sound economic principle that exists.
This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks, such as Deutsche Bank (DB), Citigroup (C), JPMorgan Chase (JPM), Goldman Sachs (GS), et al, that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver.
However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper.
Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.
Collapsing of Gold/Silver Futures Markets Directly Related to MF Global Collapse?
And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices.
Today we have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.
As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver.
When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.
Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.
Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global.
In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below).
Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.
After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global’s legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options.
Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.
Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward.
In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel.
We’ve seen repeatedly, this past year in the US SP 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices.
There was also further circumstantial evidence that bankers used the MF Global collapse to collapse gold and silver futures markets at the end of 2011. For example, in an article posted on the SilverDoctors blog by Jim Willie in which he gathered data regarding the amount of physical gold and silver ounces represented by the longs at MF Global that were standing for delivery in the futures markets before these contracts imploded, he stated: “JP Morgan increased the amount of registered silver and gold by precisely the amount that was suppose to be delivered [by MF Global]…JP Morgan effectively averted both a Comex default and a European Sovereign Debt implosion.”
Silver Lining in the MF Global Debacle?
Can there be a silver lining in the MF Global debacle? I believe that in the long-term, this extremely unethical, negative event could transform into a positive game-changer in the way people buy large amounts of gold and silver. Obviously, the futures market is not a safe market for anyone seeking to take delivery of millions of dollars of physical gold and silver as many MF Global clients learned. The GLD and SLV ETFs, of course, are no safer than any gold or silver futures contract for the same reasons.
So in the future, and I mean the immediate future starting now, I believe that large buyers of physical gold and silver will now opt to bypass the bullion bank’s middle men in the futures market and go directly to the gold and silver mining companies to buy large quantities of bullion. This should eventually help usher in the death of futures markets as a mechanism for buying physical gold and physical silver and be a step towards establishing a free market for gold and silver prices for the first time in our lives.
Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same:
“Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold.”
People that want to own physical gold and physical silver never should have been buying the GLD, SLV, or gold and silver futures. Now, in light of the MF Global debacle, scores of people will stay away from these fraudulent vehicles for good.
About the author: JS Kim is the Chief Investment Strategist and founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission to help re-establish the monetary freedom that bankers have stolen from us. Despite believing that gold and silver will remain highly volatile in 2012, JS believes that long-term holders of physical gold and silver will be richly rewarded as bogus paper gold and silver derivatives start collapsing and reach their intrinsic value in coming years. Follow JS on Twitter and Facebook.
Republishing rights: The above article may be reprinted as long as all text, links and the author acknowledgment remain intact and exactly as printed above.
Article source: http://seekingalpha.com/article/316197-bankers-precious-metals-and-mf-global
Buy Silver…Now!
Silver is an amazing metal…which is why it’s likely to soar over the coming years…
You see, silver has more than 10,000 uses. It’s one of the world’s best conductors of heat and electricity. Inventors filed more patents on silver uses than any other precious metal in the world. And when silver is used for most industrial and technological purposes, it is used up forever… It simply costs too much to try to recycle the tiny bit of silver from every cell phone or casino chip.
I’m not saying industry is going to use up all the world’s silver. That simply can’t happen. But scarcity is a real issue.
Our rapid consumption of silver leaves very little to meet any uptick in demand from investors. A spike in interest will send prices spiraling higher…
Here’s a breakdown of the silver market. The table below shows the percentage of the total amount of silver consumed by each category over the past four years…
As you can see from the table above, only 12% of the silver supplied to the market made it to bullion in 2010. That means only a little more than 100 million ounces of silver became bullion for the entire investing world.
That’s a tiny fraction to sop up all the investment interest in the world.
Of that silver, about 43 million ounces went to exchange-traded funds like the iShares Silver Trust (SLV) and the Sprott Physical Silver Trust (PSLV).
That means you could buy all the extra silver bullion for about $2 billion. We could buy all the surplus silver bullion from the last four years for about $10 billion.
That’s the same as the market value of the iShares Silver Trust today. If you wanted to build another silver fund, you couldn’t. There just isn’t enough silver bullion out there to fill the order.
Even trying to amass that much physical silver would send the silver price soaring. It’s a simple market fact… When there is more demand than supply, it drives the price up.
And the economic problems confronting Europe and the United States have increased interest in precious metals… Silver gained a colossal 174% from August 2010 to April 2011.
In May 2011, however, the price collapsed 31% in just four weeks. The bull market simply ran up too far, too fast… and the decline wiped out many highly leveraged silver traders.
The big money is tiptoeing back into silver.
Last month, commodity trading advisors, pool operators, and hedge funds — the “big money” — weren’t interested in silver AT ALL…
But as they move back into the market, silver prices could soar. Let me show you what I’m talking about…
Jason Goepfert created SentimenTrader, a service that tracks investor sentiment toward various asset classes. According to Jason, silver just bounced off its most pessimistic reading in four years.
The so-called “commitment of non-commercial traders” hit 10,352. That’s incredibly low. The last time sentiment numbers were that low was in August 2007. Six months later, the price of silver was 59% higher. It rose from $12 per ounce to $19 per ounce.
I went all the way back to 2002 and found that silver sentiment bottomed near 10,000 six times… On average, the price of silver rose 33% in the next six months and 54% over the next year. This chart shows the last four times it bottomed…
Here’s how the silver price performed after each of the last four times silver sentiment bottomed out…
The best return came after Bottom No. 2, which coincided with the US banking/credit crisis. Silver soared an eye-popping 405%, including its parabolic rise in 2010.
As those numbers indicate, silver is one of the most volatile assets in the world. Over the last year, silver has seen massive price swings, including an 81% rally and two 30% drops. That forced many traders to liquidate their silver holdings in order to meet emergency short-term requirements. (Plus, the debacle at commodity broker MF Global has scared many folks out of the market.)
But the long-term drivers of gold and silver’s uptrends are still in place. Enormous and growing Asian economies like China and India are getting richer…and they have deep cultural affinities for precious metals. Plus, the Western world has lived way beyond its means for a long time…the debts and liabilities it has taken on can only be paid back with devalued, debased money. This is bullish for “real money” assets like gold and silver.
With sentiment so negative toward silver (and just beginning to turn back up), it’s a great time to take a position in this long-term bull market.
If gold and silver prices are nearly certain to rise over the next few years (and probably rise dramatically), the simplest way to play that trend is to buy bullion…real, hold-in-your-hand silver coins.
And I recommend everyone do just that… Buy some silver and store it away.
Regards,
Matt Badiali ,
for The Daily Reckoning
Buy Silver…Now! originally appeared in the Daily Reckoning. The Daily Reckoning provides over 400,000 readers economic news, market analysis, and contrarian investment ideas.
Gallium Helping Us Stay Connected
The element so instrumental in the success of CIGS or Copper Indium Gallium Selenide solar panels garners little respect. If you do some research on Gallium you will see very few articles on this element. What you see is people talking about how to make melting spoons, and talk of the metal melting in your hand due to its low melting point of 85° F or 29.8° C. Here we are going to go over the history of Gallium and its uses in technology today.
Gallium has the symbol of Ga and the atomic number 31 on the periodic table of the elements. In 1875 Paul Emile Lecoq de Boisbaudran discovered Gallium spectroscopically. He saw Gallium´s characteristic two violet lines. Gallium does not occur free in nature. Lecoq was able to obtain the free element using electrolysis.
Gallium is found in bauxite, sphalerite and coal. It is primarily extracted from Aluminum and Zinc production. The exact amounts mined and recycled are very difficult to quantify. According to the United States Geological Survey the total amount mined in 2010 was approximately 106 t and the total recycled was approximately 78 t. Gallium supply is highly reliant on other Aluminum and Zinc mining for its supply, when the prices of the base metals fall the amount of Gallium available will be highly affected. Similar to other rare industrial metals, mining companies will not invest in the production of these metals because the markets are so small.
The uses of Gallium are found all around you. Semiconductors, LED´s, medicine, electronic components, CIGS solar and new tech like IGZO (Indium, Gallium, Zinc and Oxygen) LCD screens. The new iPhone 5 will have this kind of LCD. Over 90% is used in electronic components in the form GaAs (Gallium Arsenide). Recently CIGS solar panels reached an unprecedented 20.3% efficiency once again proving that CIGS is the most efficient form of solar on the market. The technology that will greatly increase the use of Gallium is smartphones. Analysts predict that smartphone use will grow at a rate of 15-25% over the next several years. Recently LED´s backlit screen TV´s and computer monitors have been all the rage. The LED screen market will continue to grow, further putting strain on the small Gallium supply.
The top producers of Gallium are China, Kazakhstan and Germany. Once again China has a strong position in the production of a rare industrial metal. The difference with Gallium is that almost 40% of the metal produced every year is coming from recycling.
With all of the new technologies coming along using Gallium what will the market for this metal look like in a few years? Unlike some metals like Silver and Gold, Gallium is not traded on the LME (London Metal Exchange). This makes the price of Gallium very stable. Rare industrial or technical metals are small markets with big possibilities. So if you are looking for an investment that is rarely talked about, Gallium could be a good option.
By: Randy Hilarski - The Rare Metals Guy
Silver bullion demand is skyrocketing in Australia
Investment demand to buy silver bullion in Australia is skyrocketing, according to Gold De Royale, Australia’s largest silver bullion dealer.
“With the US national debt crossing $15 trillion, investors are preparing for the worst-case scenario, hyperinflation,” according to George Vo, Sales Manager of Gold De Royale.
We have never seen this much demand for silver, with silver price at the perfect buying opportunity. Investors are doubling up their precious metal portfolio with silver bullion.
Investors do not want to hold money in banks these days, fearing a bank run. Moreover, the financial situation in the US is not getting better.
The so-called super committee in the US, who was set up to save $1.2 trillion, was not able to reach to any bipartisan agreement. Uncertainty in the US economy will lead investors to look for safe-haven investments, such as silver bullion.
“Since the collapse of Lehman Brothers in September 2008, sales of silver bullion have been very strong. For many silver investors, the white metal is seen as a more highly leveraged alternative to gold, with greater potential.”
Historically, the ratio between gold and silver has been in the range of 12:1 to 16:1. This meant that for each ounce of gold you could exchange it for 12 to 16 ounces of silver. Today, the ratio is near 50:1 as silver is undervalued relative to gold.
As gold price increases we will see that gap narrow. This provides investors a massive profit potential.
“Our market analysis is showing that the average price of silver bullion could rise to $45 an ounce in 2012, as investment demand is expected to support it”, said Gold De Royale. As investment demand increases, we could see silver reach higher than $50 by end of 2012. – Bullion Street.
Source: http://vietnambusiness.asia/silver-bullion-demand-is-skyrocketing-in-australia/
Silver Set To Reach New Highs
So what is the story with silver – did the bubble burst? Is it headed for $50 an ounce or more? What about the gold/silver ratio: Is it headed towards new lows or new highs and what does it really mean? What is the real supply and demand picture for silver?
Silver remains a precious metal despite years of being the “bastard stepchild” to gold. An attempt to corner the silver market drove prices to historical highs in 1980 and more recently towards $50 an ounce based on several proven and unproven factors including short covering of a reportable massive JP Morgan (JPM) short position inherited from the takeover of Bear Stearns, global economic concerns resulting from sovereign debt defaults to currency devaluations to political unrest.
Technically, I have a strong case that silver has been tracing a corrective pattern off of the 2011 highs which may be complete with the larger bull market advance in full force again. Fundamentally, the same story presents itself over and over again – silver is set to advance reaching new highs that will surprise and astound many.
HISTORY
Historically, silver has been an indispensable metal for over 5000 years. Evidence can be found in Anatolia (modern day Turkey) of the first major source of mined silver dates which back to 4000 BC and served craftsman throughout Asia Minor, the Near East, Crete and Greece. More sophisticated processing of silver was developed in about 2500 BC in what is now Armenia.
Fast forward eighteen hundred years to the Greek civilization where historical writings and physical evidence suggest the Laurium mines near Athens were producing about 1 million troy ounces a year. In fact, through the 1st century AD, the Laurium mines were the largest individual source of world silver production.
After the Greek domination in mining silver spread to Spain, the Punic Wars brought in Roman rule and the expansion of exploiting Spanish silver extended to other areas of Europe. Spanish mines provided for the domestic silver needs of the Roman Empire. Historical records though, suggest the actual production levels did not rise significantly even though mine production in Spain dominated the first 1000 years AD. Expansion in production took place in the 500 year period from 1000 – 1500 AD as mining locations increased and mining technology began to improve.
During the next 375 years silver mining and production was dominated by the Spanish as colonies were established in South America (Bolivia and Peru) and in Mexico. Eighty five percent of world production was attributable to Bolivia, Peru and Mexico. After 1850 production increased substantially as the United States and several other countries began mining and world production jumped from around 40 to 80 million troy ounces a year by the 1870’s.
The 20th Century ushered in an explosion of technologies that enabled world production to jump again to about 190 million troy ounces a year. Major mines were established in the United States, Canada, Australia, Central America and Europe. Technology introduced steam-assisted drilling, mining, mine dewatering, and improved haulage enhancing the ability to handle ore and increasing the exploitation of ores that contained silver.
As the 20th century progressed improvements in electrorefining techniques ushered in easier separation of silver from other base metals which increased the sources of silver. Ultimately the increase in output of silver-bearing residue led to refined silver production.
HOW SILVER IS USED TODAY
The demand for silver can be broken down into three main areas: Traditional, Industrial, and New Technologies.
- Traditional
- Coinage
- Photography
- Silver Jewelry
- Silverware
- Industrial
- Batteries
- Bearings
- Soldering
- Catalysts
- Electronics
- New Technologies
- Medical Applications
- Solar Energy
- Water Purification
The latest annual figures reveal that in 2010 over 487 million ounces of silver were used for industrial applications, 167 million ounces were used by the jewelry market, over 50 million ounces producing silverware and over 10 million ounces in minting coins and producing medals.
Industry continues to rely on silver’s unique properties such as its strength, malleability and ductility. As well as its electrical and thermal conductivity, its high reflectance of light and the ability to handle extreme temperature ranges.
GOLD/SILVER RATIO
Under the direction and guidance of Alexander Hamilton as Secretary of the Treasury the U.S. Government set the first formal gold/silver ratio under the “American Act for Establishing a Mint” in 1792 at 15 ounces of silver for every one ounce of gold or 15:1 The act was put in place to facilitate at what ratio they would coin gold and silver. Based on the relative value that was present in Europe the gold/silver ratio was used to reflect the commercial value of each metal. While this may have been the case in Europe it did not extend further east where in India, parts of Africa and East Asia the gold/silver ratios were reported as low as 1:1.
Beginning in the 19th century gold increased in popularity in Europe and the U.S. as a more stable monetary asset. By the end of the 19th century the demonetization of silver was well underway and picked up speed in the 20th century as most countries discontinued their silver from currency circulation and began dumping their silver stockpiles driving the monetary demand even further into the abyss.
The early 20th century saw the gold/silver ratio drop to 100 ounces of silver to one ounce of gold. It should be noted that at that time the mine production of silver was not 100 times that of gold nor was the abundance of silver money 100 times that of gold. The prejudice of governments and mints during this time predicated or perhaps manipulated the gold/silver ratio from 15:1 to 35:1 and as high as 100:1 as government dumping of silver took place. Records indicate that between 1965 and 2000 government(s) sold 3 billion ounces of silver versus 150 million ounces of gold. Currently, it is reported that governments hold only 60 million ounces of silver versus 1 billion ounces of gold. It would appear that silver is now more rare than gold.
Source: thechartstore.com
Today, the gold/silver ratio is still used by many to determine which metal is undervalued or overvalued, which in essence doesn’t make sense since the gold standard as a monetary system was abandoned and replaced by fiat currency systems around the globe. There are additional ratios between the precious metals such as:
Approximately nine times as much silver as gold is pulled from the earth each year. The majority of this silver is used by industry.
According to the United States Geological Service (USGS) the general belief amongst mining companies is that there is only about six times as much silver in the ground that is mineable, although there are published reports claiming there is 15 or 20 times more silver in the earth, (this ratio is the natural occurrence ratio and not the reserve base ratio.)
- Over the past 10 years, approximately 40 times more silver was NOT earmarked for coins and bullion and this is what the price ratio of gold to silver tends to reflect.
- 9:1 is the silver to gold annual mine production ratio
- 6:1 is the USGS estimated gold to silver in the ground ratio
- 1:1 is the year to date investment dollar demand ratio
- 1:3 (more silver than gold) is the physical ratio of gold and silver coins/bullion
THE MID & LONG TERM PICTURE FOR SILVER
Supply and Demand
Undoubtedly supply and demand for any product will ultimately rule its price. That said the demand side for silver over the past year or so propelled prices to astounding levels. Investor interest and fabrication demand spurred by the industrial segment recovery easily offset the increase in supply.
Total silver supply rose by 15% in 2010 primarily on the return of producer hedging (61 million ounces), government sales (net sales increased with Russia being a major seller) and recycling where the decline in photographic scrap was balanced by a strong rise in industrial, silverware, and jewelry recycling. Mine production saw a very modest expansion of 2.5%.
Demand for silver was robust in 2010 as well. Industrial demand rebounded 21% and was the largest contributor to the 13% increase (879 million ounces) in fabrication (see inset for detail), which includes jewelry and coinage. Together the net increases in demand offset the continued losses in photography and silverware.
Net investment jumped by 47% to an all-time high of 178 million ounces (most of which took place within the last four months of 2010.) ETFs and physical bars ruled last year with the Comex seeing less of a commanding role via silver futures.
Pent up demand remains in the market as investors seek out “safe havens” when quantitative easing in the United States remains in the near term picture and European sovereign debt problems remain unresolved. The economic outlook thus far continues to support silver’s safe haven status as monetary policies are unlikely to be significantly tightened anytime soon and the sovereign debt crisis grows.
Silver’s Fabrication Uses
Industry: Silver is the best electrical and thermal conductor of all metals and so is used in many electrical applications. The most significant uses of silver in electronics are in the preparation of thick-film pastes, in multi layer ceramic capacitors, membrane switches, and silvered film in electrically heated auto windshields. Silver is used in the fabrication of photo voltaic cells, coating material for compact discs and DVDs, mirrors, and batteries. Jewelry and Silverware: Silver possesses working qualities similar to gold, enjoys greater reflectivity and can achieve the most brilliant polish of any metal. Photography: the age of digital photography has diminished silver’s usefulness within this sector. Radiography, graphic arts and consumer photography though continue to use film manufactured with a very high purity silver. Coins: Historically, silver was more widely used in coinage than gold, being in greater supply and of less value, thus being practical for everyday payments. During the latter 19th century silver was phased out in favor of gold. Investors though remain buyers of coin and bullion especially in the U.S., Australia, Canada, Mexico and Austria. Source: GFMS Ltd. World Silver Survey 2011
Silver (Physical)
After a stellar rally to nearly $50 ounce silver put in a needed correction. The correction itself consisted of two steep and at times precipitous declines separated by a three month upward biased sideways move. The correction did fit the profile and it appears that off of the 26.15 (September intraday low) silver has resumed the larger advance. However, without strong upward momentum it leaves open the possibility for an additional down leg taking place before prices head higher on a more sustained basis.
Technically, the long term charts continue to support and suggest additional downside remains in the picture for now. The stochastic oscillator is pointing lower and is currently in neutral territory. The MACD is beginning to register oversold and the MFI oscillator continues to show money is stronger on the buy side rather than sell side.
The chart below (courtesy of thechartstore.com) reveals silver’s upside potential when prices have been adjusted for inflation (PPI) and suggests silver will reach $100+ levels over the longer term.
iShares Silver Trust (SLV)
In contrast the weekly chart for SLV reveals a more convincing picture that the larger advance may indeed be back in force. The stochastic and RSI oscillators support the advance continuing over the midterm with MFI oscillator being the caveat; pointing lower indicating money is exiting rather than moving into SLV.
Silver Mining Companies
Some have argued that silver mining companies have lost their appeal (luster) and a check on the table below does show some dismal year-to-date returns. However, when compared to the outstanding and incredible returns on a two and three year basis the picture becomes much clearer. As in the physical metal itself, silver mining companies have been in the process of tracing out corrective patterns. The longer term supply and demand picture continues to support higher prices for mining companies as well. The companies included in the table below are focused (earn 50% or more of revenue) in silver mining and exploration with a market cap of $1 billion or more.
Coeur d’Alene Mines Corporation (CDE)
Coeur d’Alene Mines Corporation is the largest U.S.-based primary silver producer and a growing gold producer. The Company has three new, large precious metals mines that continue generating significantly higher production, sales and cash flow. In 2011, Coeur will realize the first full year of production and cash flow from all three of its new, 100%-owned mines:
- San Bartolomé in Bolivia;
- Palmarejo silver/gold mine in Mexico,
- Kensington Gold Mine in Alaska.
In addition, the Company is expecting new production from its long-time flagship Rochester mine in Nevada. The Company also owns non-operating interest a low-cost mine in Australia, and conducts ongoing exploration activities near its operations in Argentina, Mexico and Alaska.
Pan American Silver Corp (PAAS)
Pan American Silver Corp. was founded in 1994 with the mission to be the world’s largest low-cost primary silver mining company. Achieving this by constantly increasing its low-cost silver production and silver reserves. Pan American owns and operates seven silver mines in Mexico, Peru, Argentina and Bolivia. In 2010, Pan American produced a record 24.3 million ounces of silver. In 2011, the Company expects to produce 23 to 24 million ounces of silver and 76,000 to 78,000 ounces of gold. Pan American operates the La Preciosa silver project, located in Durango, Mexico. Pan American also owns the Navidad silver project, one of the largest undeveloped silver deposits in the world, located in Chubut, Argentina.
Silver Wheaton Corp. (SLW)
Established in 2004, Silver Wheaton has quickly positioned itself as the largest silver streaming company in the world. Silver Wheaton has entered into a number of agreements where, in exchange for an upfront payment, it has the right to purchase, at a low fixed cost, all or a portion of the silver production from strategically selected high-quality mines. The company currently has silver streaming agreements covering 16 operating mines and three development stage projects around the world. Silver Wheaton’s portfolio includes silver streams on Goldcorp’s Peñasquito mine in Mexico and Barrick’s Pascua-Lama project straddling the border of Chile and Argentina. With low fixed cash costs and unhedged silver sales creates significant shareholder value by providing considerable leverage to increases in the silver price while reducing many of the risks faced by traditional mining companies.
CONCLUSION
Silver may indeed still be in a correction with an additional down leg on its way, but the longer term picture continues to favor the trend remaining up. Due diligence remains important for each investor to perform in accessing whether silver is appropriate in diversifying portfolios. Should additional price weakness drop prices below $30 (basis silver futures or SLV) a long term buying opportunity would exist. Silver mining stocks are an additional way to add silver to one’s portfolio. Here again due diligence is recommended in choosing which company is appropriate.
Both gold and silver remain important investment choices in protecting against the ongoing global economic calamity. Long term planning and portfolio diversifying should include the addition of both.
Again, I am drawn to quote an old Mercedes advertisement where the announcer states
“Perception is not always reality.”
This quote continues to rule the day as speculators flood in and out of the markets taking their turns at controlling the price, albeit short term, since there is much more paper silver than physical metal to cover the commitments. The price of silver has dropped (within the context of a correction) as the fundamental picture favors higher prices. It can then be said that misconceptions weigh heavily as traders (speculators) move in and out of positions.
By: Michael Filighera
Source: http://seekingalpha.com/article/306118-silver-set-to-reach-new-highs
Bismuth, Stepping Out of Leads Shadow
Today we hear much about the demise of lead and its uses because of its toxicity. This will have a huge impact on the value of the rare industrial metal we will discuss today. Enter bismuth, the brittle white metal an element symbol of Bi and atomic number 83. Bismuth was discovered in 1783 by Claude Geoffroy the Younger. This rare industrial metal is mined as a by-product of lead, silver, copper, molybdenum, tin and gold. The element is 86% as dense as lead. Bismuth is the most naturally diamagnetic metal meaning it is the most resistant to being magnetized. Mercury is the only metal that has a lower thermal conductivity. It also has a high electrical resistance. Bismuth has been classified as the heaviest naturally occurring element.
One of the most interesting aspects of bismuth is its crystalline structure that forms a spiral stair step structure. It is caused by a higher growth rate around the outside edges than on the inside edges of cooling bismuth. The beautiful colorations of the crystals are caused by variations in the thickness of the oxide layer that forms on the crystal surface which causes wavelengths of light to interfere upon reflection. When bismuth burns with oxygen present it burns with a blue flame.
Bismuths uses are growing all the time. Some of its largest uses are in cosmetics, pharmaceuticals, catalysts, metallurgical additives, galvanizing, solders, ammunition and fusible alloys. The one most people associate with bismuth is, Pepto Bismol. Lead-Bismuth Coolant is also used as a coolant for nuclear reactors.
There are a few issues that are causing alarm within the industries that use bismuth. The first is that China is implementing export controls over all rare earth elements and rare industrial metals. China produces about 80% of all the world´s refined bismuth. The second issue is lead acid batteries will soon be replaced by nickel-cadmium and lithium-ion. Lead mining is the main source of bismuth mining worldwide. Crude lead bullion contains approximately 10% bismuth which is taken out when lead is refined further using the Kroll-Betterton or the Betts process. This leaves us with 99% pure bismuth. The long-term sustainability is in jeopardy because of the lead storage battery. There is a distinct possibility that we will soon see this battery replaced. Overnight 80-90% of the lead market would be gone. This will be catastrophic for bismuth industries. The mining of bismuth would then have to rely on its other sources which provide much less metal. Recycling would have to be a major source of bismuth in the future. The problem with recycling bismuth is that many of its uses, almost 60% in pharmaceutical and cosmetic uses, would make it very difficult to meet the demand.
Once again we have the story about a rare industrial metal that is used in so many products that we use every day. How will this affect the end prices of these products? History tells us not much initially, but in the future the story could be much different. Bismuth with its many uses may be worth enough that mines open exclusively for this metal. Recently the British Geological Survey 2011 put bismuth on its list of at risk metals. Countries like Bolivia, Canada, Peru, Mexico and China will no doubt profit greatly if we have a significant rise in the value of bismuth. How will you profit?
By: Randy Hilarski - The Rare Metals Guy
Source: www.buyrareearthmetalschinaprices.com
Silver Futures Near 31-Year Highs On Economic Recovery, Inflation Fears
NEW YORK (Dow Jones)-Silver futures neared 31-year highs Friday as investors flocked to the metal as both an inflation hedge and beneficiary of the global economic recovery.
Silver for February delivery rose 72.6 cents, or 2.3%, to settle at $32.298 a troy ounce on the Comex division of the New York Mercantile Exchange. It was the metal’s strongest close since March 7, 1980.
“It’s riding on the back of gold at the moment, which is being driven by inflation fears,” said Stephen Flood, director of Dublin-based bullion dealer GoldCore.
Silver, a precious metal akin to gold, is benefiting as a hedge against rising consumer and producer prices, with inflation gaining in Europe and China. While inflation in the U.S. remains tame, some believe the Federal Reserve won’t be able to control longer-term price pressures stemming from ultralow interest rates-which also boost the allure of non-interest bearing silver and gold-and Fed purchases of U.S. Treasurys to stimulate the economy.
At the same time, the economic growth that is sparking inflation fears is also prompting a resurgence in manufacturing and consumer purchases. That’s a further boon for prices of silver, which is more widely used in manufacturing than gold.
“It’s benefiting from optimism on the global economy,” said Ralph Preston, market analyst at Heritage West Financial.
Silver’s use in electronics, solar panels and medical applications is helping offset declining demand for use in photographic film as digital photography becomes ever more ubiquitous.
Silver, which has gained 5.4% this year and 20.5% since a two-month low hit Jan. 25, would probably be at record highs now but for that spike in 1980, when the Hunt brothers of Texas famously attempted to corner the silver market and pushed prices above $40 per troy ounce.
“It’s a much more orderly market” nowadays, Flood said.
But as silver’s allure as an inflation hedge and quasi-industrial metal rises, short-term investors have been piling in, prompting some concern that the metal may be due for a big price pullback.
Recent buying in silver has been a “fund feeding frenzy,” including a “camp that refuses to see it for being a bubble in the making,” Jon Nadler, an analyst at Montreal bullion dealer Kitco Metals, said in a note.
Silver is a short-term investor darling because it is cheap compared with gold prices, and its market is much smaller and more volatile than gold’s, increasing both the risk and the chances for quick profits.
“It continues to be the favorite of speculators,” said Bill O’Neill, a principal with Logic Advisors.
Investor interest is also surging in silver-backed exchange-traded funds, which trade like stocks and back their shares with bullion bought on the market.
Holdings in the world’s largest such fund, iShares Silver Trust, rose 1.611 million ounces in the week to Feb. 17. Zurich Cantonal Bank’s silver ETF reported silver inflows of 296,000 ounces over the same period.
In addition to the outlook on the economic recovery and rising inflation, silver is gaining extra support as a cheaper so-called safe-haven investment than gold amid worries about unrest in the Middle East and sovereign debt problems in Europe.
On Friday, Portugal’s debt problems were of particular concern as the cost of insuring Portuguese debt rose amid renewed pressure from within the euro zone for the country to seek a bailout from the European Union and International Monetary Fund.
Amid the price gains, UBS upped its one-month silver forecast to $35 from $25.50. The bank also increased silver’s three-month price estimate to $33 from $27.
Gold and silver are also receiving a lot of attention from the physical market, particularly in Asia, where demand for metal bars, coins and jewelry is particularly high.
Some support may also be coming from silver miners boosting their hedging programs as they expand production and seek insurance against increasingly volatile prices.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com
-Francesca Freeman contributed to this article.
Are We Running Out of Silver?
Silver has been on fire over the last three years - substantially outperforming its spotlight-grabbing cousin, gold.
Because we believe this bull run is far from over, we advise investors to always maintain exposure to the precious metals markets. Even if you haven’t yet participated in the run-up of both gold and silver, I’m glad you’re ready to take a look at the investment potential of silver.
The question every investor faces in a bull market is: Do I buy now, anticipating prices will continue higher â and chance getting clobbered if a correction arrives? Or do I wait for a pullback and possibly miss out on big gains? There’s risk either way.
Our goal in this report is to suggest various ways you can invest in silver, while underscoring the importance of patience and discipline. Investors must remain patient to avoid chasing silver, overpaying, and draining their cash. Instead, we recommend that you use temporary price declines to steadily accumulate the best silver stocks and your preferred form of bullion.
Looking back after this bull market has finally run its course, we think gold and silver will have amply rewarded those who bought smart, had meaningful exposure, and stayed the course.
Silver: The Lay of the Land
There is ample data on the silver market to consider, but there are two specific issues regarding supply and demand that are critical to understand.
The first is industrial use. Demand from a number of industries that use silver has been flat or falling. Household demand for silver like cutlery, flatware, and candlesticks hasn’t risen in ten years. Jewelry fabrication is up but a blip. With the shift to digital photography and image storing, use in photographic film processing continues to fall. And yet, total demand from industrial users keeps climbing.
So what’s driving industrial demand?
Uses for Silver Are Growing
Since 1999, consumption in electronics has increased 120%. Silver use in solar panels began in 2000, and usage is up 640% since. Silver was first used in biocides (antibacterial agents) in 2002 and, while a small percentage of total silver use, it has grown six-fold.
The point is that not only are the number of uses for silver growing, the demand within each of those applications is rising as well. This is important to keep in mind because, traditionally, the industrial component of silver tends to keep the price soft in a poor economy â and Doug Casey is convinced we’re on the cusp of the Greater Depression.
However, these increasing sources of demand are now more likely to keep a floor under the price in the future. In fact, the Silver Institute forecasts that total industrial use of silver will rise by 36% over the next five years, to 666 million troy ounces/year. That’s a lot of silver, meaning this portion of demand, which is roughly 60% of all fabrication, isn’t letting up anytime soon.
The second issue is mine supply. Silver mine production has been increasing over the past decade, largely due to rising prices, allowing companies to ramp up production and bring more metal to the market. In fact, global mine production is up 33% since 1999. Meanwhile, total demand, as you’ll see in the chart below, is also rising.
Mine Production Can’t Keep Up with Demand
So what’s the concern?
In spite of miners digging up more and more silver, production alone can’t meet global demand, and the gap has to be filled by scrap silver coming to market.
And there’s a catch with scrap. While scrap metal comprises about 20% of silver’s total supply, many of these new applications are difficult to reclaim. Some applications contain such small amounts that they’re uneconomic to recapture, such as many biocidal and nanotechnology applications. With others it’ll be a long wait. Solar panels, for example, have a 20- to 30-year life. Still others are waiting on more effective recovery programs; more than half of all silver in cell phones, TVs, computers and other electronics, for instance, still ends up in landfills.
In other words, a growing portion of the silver that’s consumed won’t be returning to the market anytime soon.
Jeff Clark, Senior Precious Metals Analyst
June 16, 2011 6:05pm
Silver to outperform gold
Eric Sprott believes that silver is likely to be the investment of the decade and could easily get to $50 per ounce by the end of the 2011. Eric Sprott is the founder of the Toronto-based investment firm, Sprott Asset Management LP. His renowned hedge fund, Sprott Hedge Fund LP, is heavily weighted in precious metals and has generated an estimated 23% annualized return over the past decade.
Silver promises to become the next big buzzword among investors in 2011 and beyond, according to one of the investment industry’s most prescient and successful experts on precious metals. “I think that silver could easily get to $50 this year,” Sprott tells BNWnews.ca.
Meanwhile, Sprott says the big catalyst for surging silver prices in the coming years will be exponentially increasing investment demand, which is already beginning to overwhelm existing silver supplies. The mining industry only produces around 800 tonnes of silver per annum. This is a relatively inelastic supply, regardless of silver prices, he adds.
As household investors are becoming increasingly jittery about the debasement of the U.S. dollar and other major currencies, they are loading up in record numbers on silver bars, coins and silver-denominated exchange traded funds, Sprott says.
However, there’s also a quantum shift in investment demand taking place among big players in the precious metals market, including India (which is aiming to increase its imports by about 77 million ounces per annum), and of course China.
“China’s net imports of silver were 112 million ounces last year. In 2005, they were net exporters of 100 million ounces,” he says. ”That’s a 200 million ounce shift in an 800 million ounce annual market that seldom ever grows because production hardly ever goes up. So where’s it all going to come from? We don’t know.”
In fact, silver promises to outshine gold over the coming years, Sprott says. “Silver is the poor man’s gold. Gold has had a great run for the past 11 years. But I absolutely believe that silver will outperform gold this year. Currently, there’s more investment dollars going into silver than into gold.”
Such a game-changing scenario should recalibrate the gold to silver pricing ratio in silver’s favor, thereby eventually restoring it to its traditional level of about 16 to 1, he says. “It’s the easiest call of all time.”
“Silver as a currency always traded in a ratio of around 16 to 1 compared to gold, when it was a currency in the U.S. and the U.K. The current ratio is 48 to 1. If we go back to a 16 to 1 ratio, the implied price for silver would be $85.62 (per ounce).” he adds.
“On that basis, if gold goes to $1,600, then that would value silver at $100. And we certainly think that gold is going to $1,600. In fact, I’m willing to bet that this ratio will overshoot on the downside. It might even get to 10 to one.”
The only reason why silver is still trading at a 48 to 1 ratio to bullion’s spot price is that its price is being “manipulated” by big banks, Sprott says. That’s because they don’t want precious metals to become a popular alternative currency to Fiat money (currencies that are not backed by hard assets).
“Then there’s also a huge short position out there on silver,” he adds.
But time is on silver’s side, he says, as the sovereignty debt crisis deepens in Europe and a continued policy of qquantitative easing in the U.S. continues to undermine the value of the greenback.
Silver may outshine Gold this year
Kunal Bose / January 18, 2011, 0:41 IST
In line with many other commodities, including precious metals, silver, often described as poor man’s gold, has shed some gains from a 30-year high at $30 an ounce in December to trade now at a little less than $29.40 an ounce. Such correction is in order as the November US unemployment rate fell to 9.8 per cent, this year’s GDP growth forecast for the world’s largest economy is three per cent and the dollar rally is finally on.
The past year saw some spectacular rallies in silver with prices rising 80 per cent on perception of it being a store of value, continuing shrinkage of above-ground refined silver and demand staying ahead of supply. The fact that for the past two decades, demand for silver was more than mining supply, the above-ground silver float had hit historical low of less than one billion ounces. In response to tightening supply situation, the world has seen drawing down of stocks held on government and private accounts. Though, not in any significant quantities, physical shortages and good prices off late are also leading to silver recycling. There will be more of recycled silver if prices rise as the year advances.
An umbilical kind of relationship in terms of prices exists between silver and gold. Both the precious metals have gone through some corrections as the New Year dawned. Gold over the last two years and silver in 2010 saw impressive price appreciation and therefore, irrespective of their fundamentals are likely to experience occasional dips. At their respective prices, silver at this point on a historical basis is grossly undervalued vis-a-vis gold. This is in spite of silver outperforming the yellow metal by a very high margin last year. Most precious metal experts have forecast that silver once again this year will gain more, principally on safe haven demand than gold. At the same time, if gold gets a boost for reasons such as concerns about Portugal’s sovereign debt and UN world food prices index climbing to a record level in December, then silver also stands to gain, very likely more than its illustrious partner in the precious metals basket.
Silver’s demand is both for its store of value and industrial applications now also embracing new generation products like flat screen panels, iPad, solar panels. No doubt, industrial demand for silver took a hit as raw film-based photography made way for digital kind. But many new applications, including use of antimicrobial and antibacterial properties of silver in the medical space are compensating for the lost ground in photography. Silver is no longer a metal used for making jewellery for the masses only. It is now seen as an ideal material for making jewellery for high fashion women too. Moreover, silver jewellery made in our country is coming for growing appreciation in the world market. However, the mainstay of silver demand is its application in a wide range of industries.
What is mostly going to help the cause of price of the metal is the existence of a limited number of pure silver mines with their reserves getting depleted over time. But for a long period, silver almost to the extent of 80 per cent is derived as a by-product of base metals like copper, zinc and nickel. Supply of silver as a derived product got squeezed since the second half of 2008 with the world lapsing into a scorching recession on the back of a systemic financial failure. Simultaneously, as there was loss of confidence in currencies with stimulus programmes running full steam in several countries led by the US, investors thought it wise to turn to gold and silver to protect their wealth.
To add to supply concern, China, the world’s third-largest producer of the metal after Peru and Mexico, effected major cuts in exports of this high value metal to take care of the domestic investment demand and industry requirements. According to an observer, the Chinese demand is coming from all areas, including investment, jewellery and fabrication. China is not short of millionaires with huge appetite for gold and silver. The country that exported 3,500 tonnes of silver in 2009 sold nearly 60 less in the world market in the first three quarters of last year. China is also taking considerable physical silver position. The country, now the world’s largest gold producer, caused a stir by importing 6.7 million ounces of the yellow metal in the first ten months of last year against imports of 1.6 million ounces in 2009. But China does not export gold.
With so much cash to spare, China is in an enviable position to splurge on precious metals like no other country. Experts say the bulging inventory will come to Beijing’s aid whenever it seeks a major world status for its currency. Where will you see silver prices at 2011 end? Bullion experts say the price will be in the range of $35 to $45 an ounce. Though silver will forever draw inspiration from gold, chances of the white metal outperforming the yellow metal once again this year remain a distinct possibility.
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