Placing my a**
hat on the table in front of me, I predict that silver will go into a
severe supply shortage by August 2012 or sooner.
Greek sort of
got bailed out, leaving the price of silver to float upwards as opposed to
downward should central banks and private owners need to dump PMs to get
liquidity.
Why?
Greek sort of
got bailed out, leaving the price of silver to float upwards as opposed to
downward should central banks and private owners need to dump PMs to get
liquidity.
Absorption of
silver continues apace with speculative and aggressive longs outnumbering
shorts two to one.
The discount to
real silver value will not go unnoticed for long. Sovereign wealth funds in
China and Middle East have over $2 trillion in funds ready to deploy. War
brings out the best in wealthy buyers. They buy for safety when the chips are
down and financial insecurity abounds.
The physical
silver is being held for personal investment and industrial and commercial
purposes. Miners are holding supply hostage to buyer requests to avoid the
taxes on the profits of their silver sales.
The numb-nuts
at EPA are stopping mine production due to environmental issues.
Miners are
starting continent-wide strikes in Africa for gold, silver, platinum and
palladium.
Nearly 100
million ounces were kept from the market in those recent strikes.
Nationalization
of silver mines continues apace in south and central America.
Thanks to The
Doc for getting the price of 100 ounce bars down so low I could not resist
another purchase. I topped up on those 100 oz bars Friday. That took
about 100,000 ounces of paper silver (1,000 oz of real phyzz) out of the
physical supply.
I found a new
hidey hole.
Door stops!!!
Kid you not.
I plan to put a
few in small colored plastic boxes like Tupperware(R) and hide them in plain
sight.
But back to
silver supply.
In another
four months I expect that silver supplies to hit crunch time.
High costs of
extraction due to skyrocketing fuel prices. Diesel could go to $9 a gallon.
Economic slowdown reduces demand for zinc, lead and copper (silver being a
byproduct). Mines are buttoned up due to extraordinary costs of production.
Rapid buying of
silver by Asian central banks and sovereign wealth funds.
Since silver is
a strategic metal used in vital communications and weapons manufacturing, and
war with Iran is a certainty, this demand for silver will get very interesting.
We have not had a war in which strategical metals was in critical shortages.
But we do now and our purported allies are not quite so friendly to us now.
The lack of
this strategic metal will curtail the war efforts. China and Russia doing
anything they can to strip-mine silver from the supply chain will cause us to
use our already depleted inventory of war materiel, soon finding ourselves
unable to replace these silver-laden items.
Without firing
a shot they will effectively round up supplies to hamper our efforts. China has
a lock on over 90% of the rare earths too boot.
Do I have exact
numbers on each of these factors?
No.
But with about
700 million ounces of silver available in a year, 200 million ounces coming
from scrap, the US producing less than 10% of the entire world's annual supply.
That is the key
figure. We have less than 10% of the world's annual supply and things are going
to get sticky real quickly. Plus it would be an idea time to help move the US
Dollar further off its reserve status.
The reason I
chose August 2012:
Israel has
about 3 months before it has to get moving on its attack on Iran.
PS:
$3 trillion in
new money for Euro Bank bailouts will wash across the Atlantic to the perceived
safe harbor of the dollar, flushing up prices in the US.
ZIRP created
gross mis-allocation of assets chasing yields, safe or not. PM safety will be
quickly seen as a great place to be.
Inflation of
10% will become 15-20% and the US and Euro consumers will scream for a shield
against this inflation.
Where do they go?
Where
anyone trying to safeguard themselves goes: Physical precious metals
Gold is being
shipped east at discount prices. When the COMEX is marginalized by physical
demands, like the recent 3 million ounce order, gold prices will bounce and
silver prices will race upwards, hugging the backside of the Golden Jackass
(Thanks Dr Willie for your recent insight)
Like Brother
John said, if even 1 tenth of one percent of SWF goes to silver, 200% of the
world's annual supply of silver will be up for grabs immediately.
Got phyzz?
Posted by The Doc SOURCE