SILVER

[romans holiday]

Bought again today and will continue to average in on this dip. I will buy as much silver as I can over the summer and then stop purchasing metal and start re-buying US dollars [in the event an even bigger deleveraging dip comes further out].

 

I hope to accumulate more metal by making use of the ratio. imo this ratio will become more volatile and "frequent" as the market goes from inflation scare to deflation scare and back again ad nauseum.

 

When the music stops, I hope to be in gold.

[aliveandkicking]

Here’s couple of good posts from Icarus that are worth re-reading. It’s a shame he doesn’t post more often. Icarus is like the MSE cgnao from 2004 (I mean that as a compliment if you’re reading)

 

I confess to some ignorance of the properties of Silver regarding its metal working properties and i began to get enthusiastic for it in my reading.

 

But from the silver association that Icarus quoted i found:

 

http://www.silverusersassociation.org/silver/facts.shtml

 

More than 2/3 of the silver produced worldwide is a by product of lead, copper and zinc mining.

 

So i am not sure about the limitations to mining more silver that people are claiming here. Maybe one third of silver comes from unique deposits that are no longer viable in a few years but 2/3 just arrives anyway from the demand for the other 3 metals. Given the massive demand for these other metals you can imagine that there is relatively a massive amount of silver coming on line also due to that other metal production.

 

[ziknik]

I confess to some ignorance of the properties of Silver regarding its metal working properties and i began to get enthusiastic for it in my reading.

 

But from the silver association that Icarus quoted i found:

 

http://www.silverusersassociation.org/silver/facts.shtml

 

More than 2/3 of the silver produced worldwide is a by product of lead, copper and zinc mining.

 

So i am not sure about the limitations to mining more silver that people are claiming here. Maybe one third of silver comes from unique deposits that are no longer viable in a few years but 2/3 just arrives anyway from the demand for the other 3 metals. Given the massive demand for these other metals you can imagine that there is relatively a massive amount of silver coming on line also due to that other metal production.

 

Silver demand will grow with the demand for other metals. The price of silver was around 30% higher (in USD) before the crunch.

[electroweak]

I confess to some ignorance of the properties of Silver regarding its metal working properties and i began to get enthusiastic for it in my reading.

 

But from the silver association that Icarus quoted i found:

 

http://www.silverusersassociation.org/silver/facts.shtml

 

More than 2/3 of the silver produced worldwide is a by product of lead, copper and zinc mining.

This is in fact bullish for silver; listen to Jimmy Rogers on how supply destruction for these metals in a recession means silver mining is reduced.

[aliveandkicking]

This is in fact bullish for silver; listen to Jimmy Rogers on how supply destruction for these metals in a recession means silver mining is reduced.

 

If there is no demand for copper there will be no demand for silver either. Silver is an industrial and jewellers metal.

 

[electroweak]

If there is no demand for copper there will be no demand for silver either. Silver is an industrial and jewellers metal.

Maybe it's that a significant fraction of the warehoused silver in existence has already been sold (short); this is not the case for Copper and other ind. metals.

The COMEX net short silver position stood at over one year's production at some point recently.

 

When you consider it's industrial uses (e.g. medical etc) there are quite a few 'recession-proof' ones relative to the other metals.

 

 

 

[aliveandkicking]

This is in fact bullish for silver; listen to Jimmy Rogers on how supply destruction for these metals in a recession means silver mining is reduced.

 

If there is a relationship between stocks of copper and silver this seems relevant?

 

http://www.commodityonline.com/news/Chines...-18296-3-1.html

 

Clearly, with input costs declining and the copper price soaring, most copper miners can make a nice profit, and this has recently seen Glencore scrap plans to close its Mopani Copper Mines unit in Zambia and the imminent restart of First Quantum's Bwana Mkubwe processing plant in Zambia.

 

This can only be bad for a market that clearly needs to cut more production, because if it had not been for Chinese restocking, LME copper stocks could clearly be threatening all time highs.

 

Copper Outlook

The copper price rally still has room to go higher, but the damage wrought now could dampen prices ahead, as surplus metal builds.

 

However, we doubt it will again challenge December lows of $2,820/t -- at least not in the near-term.

[ziknik]

If there is no demand for copper there will be no demand for silver either. Silver is an industrial and jewellers metal.

 

The investment demand is key right now. If it falls off the silver price will plummet.

 

Personally, I think the investment demand will rocket. Many on GEI have got in way ahead of other investors. Have a look at the numbers in Double-Agents post below.

 

interesting excerpt from the 2009 GFMS Silver Investment Report:

 

Silver Coins

 

A cursory glance at the global totals might suggest little change in world coin fabrication over the majority of the past two decades, save for 2008. In 1990, total coin output stood at 34.0 Moz (1,058 t) and world minting staged a near uninterrupted period of growth through to 2004, drifting lower over the following three years before sharply recovering in 2008. From a world production level of just 37.8 Moz (1,176 t) in 2007, initial estimates for 2008 show the global figure gaining by over 25 Moz to 63.0 Moz (1,959 t), predominately due to strains in the global financial system sparking a tremendous wave of investment.

 

One point worth making, is namely the division between bullion and commemorative silver products. Although a little under half of the global total is accounted for by bullion products it would be misleading to only focus on this segment as many so-called special issues, which might be labelled collector pieces are in fact purchased by investors. And, given that this study is concerned with global investment the following discussion looks at certain key coin products, some of which are not defined as bullion coins, but which nevertheless would be the focus of the investor community.

 

In Europe, the coin market has been dominated by the production of commemorative and collector coins, of which the largest producer has been Germany. Originally designated in 1987 as circulating or legal tender pieces, the coins were minted in silver with a purity of 625/1000. In spite of being circulating coins, each year the entire production consisted of limited issues to mark a given event, and so the number of pieces struck in any twelve month period could vary considerably. This characteristic meant that collectors, rather than investors, proved to be the main target market and so in 1998 the coins’ purity was raised to 925/1000, although investors have also participated in this market. In addition, there has been a broad trend over the past two decades towards raising the number of issues, which, by definition, has lifted Germany’s consumption of silver. For example, during the 1990s, the country’s outturn of coins averaged 4.7 Moz (146 t), compared with 8.2 Moz (254 t) per annum for the current decade to-date (2000-08).

 

Elsewhere in Europe, there has been a general drift towards lower coin production, Spain being the most notable example. Although the country leapt to prominence in 1994, when the 2,000 peseta legal tender sterling silver coin was launched (4.7 Moz, 146 t, were minted that year), it subsequently faded and in 2008, just 0.9 Moz (28 t) of silver was consumed. The notable exception has been Austria, which saw unprecedented demand in 2008, as fabrication of coins skyrocketed from a 2007 figure of 0.5 Moz (16.5 t) to 7.8 Moz (242 t) in 2008, in line with the overall rise in physical investment demand in Europe last year (a trend which particularly benefited the newly launched Austrian Philharmonic one ounce bullion coin).

In North America, the United States has enjoyed a pre-eminent role as the largest global coin fabricator. Stripping out commemorative, and other related pieces, the country would still retain its foremost position. For example, in 2008, output of one ounce Eagle bullion coins totaled 19.6 Moz (609 t), an all time high. Since its introduction in 1986, the US Mint has in total minted 178 Moz (5,526 t) of the Silver Eagle coins.

 

Turning to Canada, minting of the one ounce Maple Leaf bullion coin from 1988-2008 used around an estimated 31 Moz (964 t) of silver. Historically, the bulk of production has been exported to the United States and Europe (especially Germany). Demand for this one ounce coin has grown in recent years as investors have dramatically returned to the silver market. For instance, in 2007 some 3.8 Moz (over 118 t) of Maple Leaf coins were sold by the Royal Canadian Mint, while 2008 saw this figure more than double to an estimated 9.7 Moz (over 300 t).

 

Finally, turning to Mexico, as noted earlier, the country’s coin production is principally accounted for by circulating coins. Specifically, from 1992-94 Mexico’s Casa de Moneda produced around 39 Moz (1,206 t) of 10, 20 and 50 peso coins that were mainly hoarded by the local population. The peak year of output, 1993, saw minting of such coins reach 17.1 Moz (532 t). After a hiatus, a new series of circulating coins was produced from 2004 to 2006, although minting was on a smaller scale. These coins have also tended to be hoarded by the general public rather than used in everyday commerce. Finally, it is worth noting that not only does Mexico have an active ongoing commemorative coin program but also since 1949 has produced a bullion coin, the Libertad, which is mainly sold to local investors. At its height in the 1980s and early 1990s minting of this coin absorbed between 0.5 to 2.5 million ounces per annum. It is significant that demand in 2008 jumped back to above the 1.4 Moz (43.5 t) level on the back of a surge in investment.

 

[romans holiday]

I'd add that the fundamentals are secondary to investor perceptions.

[wren]

So i am not sure about the limitations to mining more silver that people are claiming here. Maybe one third of silver comes from unique deposits that are no longer viable in a few years but 2/3 just arrives anyway from the demand for the other 3 metals. Given the massive demand for these other metals you can imagine that there is relatively a massive amount of silver coming on line also due to that other metal production.

It's true that today about 2/3 of silver production is a by-product of the mining of base metals. However, the distribution is not an even 2/3 across all sites. The base metals are themselves present in limited quantities and subject to depletion although expected to "run out" later.

 

As others mentioned, the fact that much silver production is a secondary by-product tends to support its price during economic recession as the demand for base metals is reduced so less silver is produced.

 

The estimated number of years silver would last "at present rates of consumption" is, I believe, based on total known deposits in the earth's crust. By-product or not, the numbers are the numbers.

[Pixel8r]

Maybe it's that a significant fraction of the warehoused silver in existence has already been sold (short); this is not the case for Copper and other ind. metals.

The COMEX net short silver position stood at over one year's production at some point recently.

 

When you consider it's industrial uses (e.g. medical etc) there are quite a few 'recession-proof' ones relative to the other metals.

Think you will find that it is a lot more than a significant fraction, have previously read that they are short more than 25% of a years production, but am currently unable to find the current level. The two large shorts are held by JP Morgan Chase and HSBC which represent over 96% of all commercial silver short positions.

 

Two U.S. banks dominate COMEX silver short sales

 

According to the Commodities Futures Trading Commission (CFTC) Bank Participation in Futures and Options Report, as of Tuesday, April 7, with silver trading at $12.27, two large U.S. banks held zero contracts long and 28,492 contracts short silver on the COMEX, division of NYMEX in New York. Obviously that is a net short position for the two banks of 28,492 contracts. A holder of a short position profits if prices fall.

 

As mentioned just above, all COMEX commercial traders as a group – all of them – held a collective net short position of 29,581 contracts. So, the two U.S. banks’ net short position represents fully 96% of all the commercial net short positioning for silver on the COMEX.

 

Regardless of whether or not the net short positioning of the U.S. banks represents “legitimate hedging” of corresponding long positions in other markets, as some analysts and the CFTC have argued, it is abundantly clear that these two banks dominate the COMEX silver market from a short point of view. A position capturing 96% of all the action on one side of a market as small as the COMEX silver market is, by definition, an extremely concentrated position.

 

The fact that the banks held only short positions and no long positions at all argues against the position being the collective action of multiple clients of the banks. The one-way trade on the COMEX also suggests that the banks have a considerable vested interest in silver trading in one direction – down.

 

Notice, however, that the last time that the two U.S. banks held so much of the net short positioning was in December 2008, with silver then trading at $9.57 the ounce. The banks then held 98.6% of all the commercial net short positioning on the COMEX. Silver went on to test as much as 50% higher to the $14.60s since then.

 

The enormously concentrated short positioning of the two large U.S. banks may not be sinister at all. It may be the result of “legitimate hedging” as we have been led to believe. Indeed, we have seen the price of silver advance in the past while the banks held such overwhelmingly large, one-sided short positions that would obviously have benefited from lower silver prices – even recently. Yes, even though the bank’s net short positioning appears sinister, it could possibly be benign, but to many analysts it just plain smells of rotten eggs served with anchovies.

 

So long as the regulators at the CFTC and the SEC continue to allow the banks to accumulate overwhelmingly large one-sided positioning on the short side (and to go unexplained) it will remain grist for the mills of the conspiracy-minded among us. That is a shame, because otherwise bright and sensible investors may end up avoiding the silver game entirely on the basis of conspiracy-minded complaints, concluding that the silver game is “rigged,” or something along those lines.

 

Please don’t allow the “silver-market-is-rigged” argument any sway at all. Even if the market is manipulated downward over the short term, this report contends that no one can manipulate the price of any commodity permanently, period. No one has the power to consistently disrupt or usurp the laws of supply and demand for a globally-traded commodity over time. Over time silver will relentlessly seek its own supply/demand/liquidity equilibrium no matter if there really is manipulation or if there really isn’t.

 

If the coming supply squeeze for silver is as real as it currently appears to be, it just doesn’t matter if the silver market is currently being stepped on by a couple of arrogant bullion-trading banks. At worst manipulation, if there really is any, just means a near term delay in silver prices assuming reality price wise. At best a continuation of artificially low silver prices just adds to the bullish “fuel” silver will have as increased demand meets diminished supply and that issue makes it to the mainstream press.

 

Either way, with silver prices at historically low levels relative to gold, investors have a “golden opportunity” with silver as long as the gold:silver ratio remains above 70 and as long as investment demand continues to outstrip the current decline in industrial demand.

 

What we are witnessing now, I believe, is a condition where longer-term investors are assuming that investment demand will continue to rise even when industrial demand picks back up not all that far into the future. That’s a potent recipe for silver, especially since silver production is set to plunge in at least the coming two quarters by most all accounts.

[HPCsoYESTERDAY]

Think you will find that it is a lot more than a significant fraction, have previously read that they are short more than 25% of a years production, but am currently unable to find the current level. The two large shorts are held by JP Morgan Chase and HSBC which represent over 96% of all commercial silver short positions.

 

2 audio interviews giving either side of the argument:

 

Jeff Christian (CPM Group) discusses on FSN (amongst other things related to silver) the argument for the large hedged positions.

 

Ted Butler discusses with Eric King, the argument against

[notanewmember]

Perhaps JP Morgan and HSBC have tonnes of silver in heir vaults, and the short positions are just to hedge any falls.

 

Perhaps when they decide to end the short positions, silver will rise, and then they will offload the physical to the public.

[Pixel8r]

Perhaps JP Morgan and HSBC have tonnes of silver in heir vaults, and the short positions are just to hedge any falls.

 

Perhaps when they decide to end the short positions, silver will rise, and then they will offload the physical to the public.

Has anyone read anything about JP Morgan and HSBC having a large stock of silver in their vaults? I doubt they could keep it top secret.

 

Tracking the Re-Monetization of Silver

 

Silver has been thoroughly de-monetized. The best way to observe this phenomenon is by looking at the above ground stock of silver. Many words have been written on this subject over the last ten years by Ted Butler and others. Let me simply state that that there is very little above ground silver left in the world, perhaps less than 1% of what there used to be.

 

In order for anything to effectively act as money, there must be a stable supply. Today annual mine supply is about 900 million ounces and above ground silver supply is about 1/3 of that. This is not a stable situation, not the situation that existed 100 years ago when silver really was money. In order for a metal to function as money, the above ground supply should be equal to the mine supply for the last several decades at least! This is certainly the case with gold.

[warpig]

There seems to be lots of conflicting dates for these, it depends who you want to believe by the looks of it. Nevertheless, it's a good reason to hold silver IMO irrespective of it being considered a monetary metal.

 

It’s the third one. Terbium and hafnium are first and second

 

 

 

Also see thread on the subject

http://www.greenenergyinvestors.com/index....ic=6744&hl=

[HPCsoYESTERDAY]

For those holding GBP there might not be too much downside risk starting to average in here even if we were to go to (IMHO) such insanely cheap prices as 10USD. My thinking is that a fall in the price of silver would be coincident with a rise in the strength of the USD.

 

This could see GBP dropping back down to 1.37USD.

Which would mean silver would be 10/1.37 = 7.30GBP/oz

 

So the downside risk from current levels (8.59GBP/oz) is only around 16%... in such volatile times and given what i believe to be the strong fundamentals for silver over the medium to long term this is not too bad.

 

 

Whilst I am a major long-term silver bull (more than any other pm), I have been giving some thought lately to the possibility of a repeat of last October. To that end I don't think that the silver price in $ will ever approach the lows seen last year. However, I will always keep some dry powder for any eventually (price). With regards to my own inventory, I am at a stage where I only buy on weakness now, so given that approach and my long-term belief that silver represents incredible value at present (real physical hold in your hand silver), if we go anywhere near to Octobers lows, I say bring it on!!!!!!!!

[BelfastBoy]

Which dealer is offering the best spreads at the moment? Is it better to buy coins or bars for investment purposes? Are coins going to be easier to sell at a later date?

[HPCsoYESTERDAY]

just to add...

 

if I ever get the time *probably not then!) I will examine the detail within the 2 gei ag threads to look at the premiums paid on physical coin during the slump last fall. the disconnect between comex ag and physical (excl. 1000oz and above) at the time was incredible!

[HPCsoYESTERDAY]

Which dealer is offering the best spreads at the moment? Is it better to buy coins or bars for investment purposes? Are coins going to be easier to sell at a later date?

 

David Morgan likes coins, i agree with this. he answers why better than i could here......

 

 

http://www.kereport.com/weekendshow/weeken...y1609-seg2.html

 

 

im pretty sure it was this interview, but will listen again now just to check

[HPCsoYESTERDAY]

yep part 2 about 4.40 in (not great detail though!)

 

I personally use kitco and cid / cid are selling eagles at the mo for just over £13 / if you buy 500 plus ask for a discount. I otherwise buy scrap at spot. Im holding off for a while now because I think a stronger dollar may provide better opportunities (but then i have a core pos.)

 

I like eagles at the mo because I think the demand in the US this year will be like the last i.e. they run out!

 

as stated previously a cheap comex price can be great for 1000oz bars, but not coins...........

[BelfastBoy]

I personally use kitco and cid / cid are selling eagles at the mo for just over £13 / if you buy 500 plus ask for a discount. I otherwise buy scrap at spot. Im holding off for a while now because I think a stronger dollar may provide better opportunities (but then i have a core pos.)

Not planning on buying that many. Already have silver in a GM account. Vat, spreads and bulk are putting me off silver coins. Will wait and see if a better buying opportunity presents itself as you think it may.

 

Thanks,

 

BB

[InSilverWeTrust]

http://seekingalpha.com/article/143934-his...cle_lb_articles

 

[warpig]

Excellent point.

 

Meanwhile, these same criminals are holding a short-position in the Comex market somewhere close to half of global inventories (based upon the Comex "Commitment of Traders" report). This raises the obvious question: what is backing this short position? Obviously (by definition), the Manipulators cannot hold more than 100% of all silver

 

http://seekingalpha.com/article/143934-his...cle_lb_articles

 

[InSilverWeTrust]

Yes...a very good article.

 

It's not going to last forever...every comex has it's day.

 

My silver is dancing in the moonlight tonight!

 

 

 

 

[aardvark]

damn those articles! - i've just bought some more silver.

 

i can't argue with those facts though - i can't see how silver could possibly be cheaper in the medium/long term future.