Sprott says silver will keep outshining gold

By Euan Rocha and Pav Jordan



TORONTO | Tue Mar 8, 2011 3:53pm EST



TORONTO (Reuters) - Silver is likely to keep outperforming gold thanks to strong dollar flows, though both are still good investments compared with copper and other base metals, according to Eric Sprott, the hedge-fund manager and Canadian investment guru.



"I watch where the money goes and the money's going into silver. There's as much money going into silver as into gold in dollar terms," said Sprott in an interview with Reuters.



Sprott, who heads Toronto-based hedge-fund Sprott Asset Management, said it is important to note that silver available to buy is relatively scarce in terms of value, and that bodes well for further gains.



"There is 75 times more dollars worth of gold to buy than silver, but the money's going in one to one," says Sprott, while speaking on the sidelines of an investor event held in conjunction with the annual PDAC mining convention in Toronto.



Silver stocks in COMEX warehouses are near their lowest since April 2006, when the metal traded at $5 an ounce. Demand for silver coins has also picked up, especially in the United States, where it was at record levels early this year.



"My biggest thing is silver -- I think silver is going to go up a lot here. Gold's right in there, but not as good as silver," said Sprott, following a presentation to hundreds of investors in a resplendent ballroom at Toronto's Royal York Hotel.



Gold and silver -- traditionally viewed as a safe store of value in turbulent times -- have soared on inflation concerns, political turmoil in the Middle East and North Africa, an uneven U.S. economic recovery and the European sovereign debt crisis.



Gold touched an all-time high of $1,444.40 on Monday, while silver hit a 31-year high of $36.70 an ounce, after rating agency Moody's downgraded Greece's debt and violence flared anew in Libya.



"I have a little website that sells gold and silver maple leafs, and we sell about four times more silver than gold in dollars (terms)," said Sprott, who had earlier in the day addressed a room full of miners and investors and others at the PDAC convention.



The PDAC event is the world's largest gathering of people tied to the mining industry, and this year's event is expected to attract more than 22,000. The mood among delegates is exuberant, thanks to record or near-record prices that both precious and base metals are commanding.



BASE METALS RISKY



While bullish on precious metals, Sprott is wary of base metals - copper, nickel and zinc - as their fortunes are too closely tied to the fate of the broader economy.



"I agree with the prices of precious metals. I'm not as much of a bull on base metals," said Sprott. "I still worry about the financial system, it's massively over-levered and will still come undone."

Sprott's views on base metals mirror those of another of Canada's most influential money managers, Donald Coxe, who expresses similar doubts about the strength of the economy due to surging food and fuel prices.

"I'm not as economically optimistic as the average guy, so I don't go to base metals," said Sprott, a gold bug, who has built a reputation for bucking market trends.



"We have oil and food prices rising like crazy ... It's almost hyper-inflationary," said Sprott, who advises investors to put money in "real things" where demand is virtually inelastic.



"I'm very optimistic about gold and silver," said Sprott. "And real things like potash, uranium, oil, stuff that is absolutely essential."

(Editing by Frank McGurty)

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What a gold:silver ratio below 40:1 tells you - mineweb

The last time the gold:silver ratio stood below this level was in February 1998 just after silver rallied 33% in 5 weeks, much is the same in the current situation but, investment demand is much higher.
Author: Rhona O'Connell

LONDON -

The last time the gold:silver ratio stood below 40:1 was in February 1998, just after silver had staged a 33% rally in five weeks, while gold had gained just 4% over the same period (which commenced at the start of the year). The contraction in the ratio over the period was from 48.4:1 to 38.1:1.

This time, some thirteen years on, the gold:silver price ratio is trading at between 39:1 and 40:1 and a similar contraction has taken exactly the same length of time. This time however, gold and silver are trading at over $1,440 and $36, while back in 1998 they were at $300 and just over $7.

So where are the similarities and the differences between then and now?

This time the silver price has bounded up as a result of a sustained belief (whether right or wrong) in gold's upside on the back of prevailing geopolitical and inflationary concerns. Both gold and silver are already in sustained bull markets, while in 1998 the change in ratio marked the start of a shift in sentiment, albeit one that was buffeted by subsequent external events.

Silver investment can often exceed that of gold for more than one reason: a) the history of silver's higher volatility over gold, prompting professional activity with a view to gearing up on returns; b) silver's lower unit price, which attracts some smaller-scale investors who want exposure to precious metals because of inflationary fears in particular and who don't necessarily have enough wealth to invest in the yellow metal to any meaningful level; c) in the United States in particular, silver has a long-standing investment tradition. This is because of the period when the dollar was on the gold standard and private individuals were prevented from holding gold, so they used silver as a substitute.

Twelve years ago; professional attitudes were probably the driver.

At the start of 1998, gold was starting to stage a recovery after a long period of uncertainty, characterised by intermittent announcements of large-scale central bank sales that unsettled market sentiment; this was augmented by increasingly heavy mine hedging and these two fundamental elements, combined with anti-inflationary fiscal policy, had kept gold prices under some pressure.

What was different about the start of 1998 was the putative formation of the European Monetary Union, which gave the markets a degree of comfort and reduced the expectation of official sector sales. (This, of course, was latterly to be stymied by the announcement in May 1999 by HM Treasury in the UK of the proposed disposal of up to 40% of UK gold holdings; sentiment then changed substantially as a result of the institution of the first Central Bank Gold Agreement in September 1999). Investors started to return to gold and silver was a natural beneficiary of the change in sentiment.

The differences between now and then. Nothing, in terms of industrial demand

Over those five weeks in early 1998 the net long speculative silver position on COMEX rose from 8,813t to 9,500t, a gain of almost 700 tonnes or 8%. This time around the shift has been from a net long of 6,710t to 8,780t, a gain of 2,070t or 31%. but from a much lower base.

Interestingly enough, silver fabrication demand in 1988 was just over 26,000t; in 2010 it was very close to the same level, suggesting that the market itself is not much deeper than it was in the late 1980s. In fact, on the basis of LBMA clearing figures, the December 2010 daily average clearing rate was just below 100M ounces, less than one-third of the clearing numbers for end-1997.

The structure of the demand side has changed with industrial demand fluctuating, but photography and jewellery+silverware falling substantially. Coin demand, by contrast, has been growing steadily.

... but plenty in terms of investment

Sustained retail demand has helped the rise in silver's price in recent months, reflecting the continued awareness at the retail level of the "affordability" of silver by comparison with gold. This has been particularly marked in the Far East, where silver bars have scarce and commanding high premia, while India and the Middle East have also been strong buyers.

The ratio; a life of its own and an important indicator

As a result the ratio has to some extent taken on a life of its own and been traded as an outright entity in the bullion markets. Now at 13 year lows it is not in uncharted territory, but is certainly oversold.

While the markets remain bullish about the outlook for gold on the back of sustained inflationary and geopolitical fears, silver is likely to continue to attract attention. The outright price may make silver unattractive for fresh bull positions, but technically-driven and momentum trades may yet see prices higher if the political situation is not resolved with a minimum of further trauma. Silver has frequently been the leader among the two "precious metals" because of its lower unit price and higher volatility; the ratio can therefore be regarded as a similar leading indicator. In fact it is probably one of the most significant indicators in terms of precious metals market sentiment and, so, when it comes to looking for guidance, the chart should be watched closely for signs of reversal. Even stabilisation would be significant; a bounce might well trigger stops.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=122284&sn=Detail&pid=33

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The money's going into silver; gold good also, but wary on base metals - Sprott

Speaking at a PDAC reception, Eric Sprott expressed confidence in gold and in particular on silver, but is wary on base metals due to doubts on the broader economy.
Author: Euan Rocha and Pav Jordan

TORONTO (Reuters) -



Silver is likely to keep outperforming gold thanks to strong dollar flows, though both are still good investments compared with copper and other base metals, according to Eric Sprott, the hedge-fund manager and Canadian investment guru.

"I watch where the money goes and the money's going into silver. There's as much money going into silver as into gold in dollar terms," said Sprott in an interview with Reuters.

Sprott, who heads Toronto-based hedge-fund Sprott Asset Management, said it is important to note that silver available to buy is relatively scarce in terms of value, and that bodes well for further gains.

"There is 75 times more dollars worth of gold to buy than silver, but the money's going in one to one," says Sprott, while speaking on the sidelines of an investor event held in conjunction with the annual PDAC mining convention in Toronto.

Silver stocks in COMEX warehouses are near their lowest since April 2006, when the metal traded at $5 an ounce. Demand for silver coins has also picked up, especially in the United States, where it was at record levels early this year.

"My biggest thing is silver -- I think silver is going to go up a lot here. Gold's right in there, but not as good as silver," said Sprott, following a presentation to hundreds of investors in a resplendent ballroom at Toronto's Royal York Hotel.

Gold and silver -- traditionally viewed as a safe store of value in turbulent times -- have soared on inflation concerns, political turmoil in the Middle East and North Africa, an uneven U.S. economic recovery and the European sovereign debt crisis.

Gold touched an all-time high of $1,444.40 on Monday, while silver hit a 31-year high of $36.70 an ounce, after rating agency Moody's downgraded Greece's debt and violence flared anew in Libya.

"I have a little website that sells gold and silver maple leafs, and we sell about four times more silver than gold in dollars (terms)," said Sprott, who had earlier in the day addressed a room full of miners and investors and others at the PDAC convention.

The PDAC event is the world's largest gathering of people tied to the mining industry, and this year's event is expected to attract more than 22,000. The mood among delegates is exuberant, thanks to record or near-record prices that both precious and base metals are commanding.

BASE METALS RISKY

While bullish on precious metals, Sprott is wary of base metals - copper, nickel and zinc - as their fortunes are too closely tied to the fate of the broader economy.

"I agree with the prices of precious metals. I'm not as much of a bull on base metals," said Sprott. "I still worry about the financial system, it's massively over-levered and will still come undone."

Sprott's views on base metals mirror those of another of Canada's most influential money managers, Donald Coxe, who expresses similar doubts about the strength of the economy due to surging food and fuel prices.

"I'm not as economically optimistic as the average guy, so I don't go to base metals," said Sprott, a gold bug, who has built a reputation for bucking market trends.

"We have oil and food prices rising like crazy ... It's almost hyper-inflationary," said Sprott, who advises investors to put money in "real things" where demand is virtually inelastic.

"I'm very optimistic about gold and silver," said Sprott. "And real things like potash, uranium, oil, stuff that is absolutely essential."

(Editing by Frank McGurty)

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=122363&sn=Detail&pid=102055

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Metals-Energy Update: Silver soars to $35, gold rebounds, Oil spikes

Published on: March 06, 2011 at 17:25

By Devi Gopalakrishnan, Commodity Online Info Service
Gold prices boosted by safe haven appeal rebounded to $1428 levels but still short of the record 1440 set on March 2 while silver prices soared to $35 an ounce on mounting unrest in Libya. Middle East and North African tensions continue to impact commodities especially crude oil which has seen a surge of 6.7% in New York this week.

U.S. Commodity Futures Trading Commission (CFTC) informs that net long positions in U.S. gold futures contracts held by speculators rose nearly 10% last week as bullion prices rose by 2.5 percent.

Precious Metals
US Gold futures reorded 1.4% growth thanks to tension in Libya that gave a boost to safe haven appeal of gold. Bullion hit a record high of $1,440.10 an ounce on March 2, recording its fifth consecutive weekly gain on fears that Libya's rising unrest may spread across the Arab world.

Gold may gain in New York as turmoil in Libya and concern inflation will accelerate boost demand for an alternative investment.
Gold futures for April delivery rose $12.20, or 0.9 percent, to settle at $1,428.60 an ounce on the Comex in New York. The metal rose 1.4 percent this week.

Silver futures for May delivery jumped $1, or 2.9 percent, to $35.327. Earlier, the price reached $35.405, the highest since March 1980. In that year, the metal reached a record $50.35. This week, silver gained 7.3 percent, the sixth straight increase.

Palladium futures for June delivery fell $5, or 0.6 percent, to $809.80 an ounce on the New York Mercantile Exchange. The price, up 2.8 percent this week. Platinum futures for April delivery rose $4.90, or 0.3 percent, to $1,837.90 an ounce. The metal up 1.9 percent this week.

In Indian market, MCX April Gold Futures opened the week at 20971 and rose 0.60% to 21098 after hitting a high of 21190 while June contract rose 0.29% to 21398 per 10 gms after hitting a high of 21470. MCX Silver March opened this week at Rs.50423 and ended higher by 0.98% to Rs 50740 after hitting a high of 52925.

Crude Oil
Crude oil surged this week on concern unrest in Libya will spread to other North African and Middle East energy exporters, curbing shipments. Oil prices may rise further next week as civil unrest in the region fuels concerns of prolonged supply disruption.

Crude oil for April delivery increased $2.51 to $104.42 a barrel on the New York Mercantile Exchange. The contract rose 6.7 percent this week.
Brent crude for April settlement rose $1.18, or 1 percent, to end the session at $115.97 a barrel on the London-based ICE Futures Europe exchange. The contract gained 3.4 percent this week, the sixth straight weekly increase.

Brent may advance past $119 a barrel as prices continually surge above ranges and moving averages, according to technical analysis by Glen Ward, head of retail derivatives at London Capital Group Holdings Plc. (LCG).

At MCX, Crude oil March contract rose from Rs.4485 to Rs.4731, up by 5.36% after hitting a high of 4739 whereas the April contract gained 4.84 per cent to Rs.4806 after hitting a high of 4813.

Base Metals
Copper prices at London Metal Exchange gained 1.5% this week as tensions mounted in Libya and Middle East causing fears that rising crude oil prices will stoke inflation and curb growth. At LME, three-month copper fell to $9,895 on Friday after a recent record high fo $10,190 per tonne.

Copper is well supported by global economic recovery signals and estimates of growing Chinese demand. Copper demand in China may grow by 7 percent this year on strong economic growth, according to Jiangxi Copper Co. Demand for copper is surging as the nation plans to build more homes, autos and appliances and upgrade power-grid networks. Copper touched a record $10,190 a ton last month after surging 30 percent in 2010 as the global economy recovered from the worst recession since World War II.

Futures on the Comex in New York gained as much as 0.5 percent to $4.5120 a pound, before trading at $4.5105. May- delivery copper on the Shanghai Futures Exchange rose 0.8 percent to end at 74,720 yuan ($11,378) a ton.

Lead in London gained 0.5 percent to $2,629.75 a ton, nickel rose 0.4 percent to $28,975 a ton and tin added 0.3 percent to $31,755 a ton. Aluminum was little changed at $2,615 a ton, and zinc was little changed at $2,511.25 a ton.75 levels, June contract prices rose marginally from Rs.452.50 per Kg to Rs.453.10 after hitting a high of 458.75.

Natural Gas
Natural gas for next-day delivery in New York declined to the lowest price in three months as scheduled gas shipment to the region’s residential users tumbled 17 percent.

Prices at the Transco-Z6 hub, which delivers gas to the New York City region, dropped 13 percent as gas delivery to households in New York state fell to 3.01 million dekatherms (about 2.93 billion cubic feet), down from yesterday’s 3.62, according to Bloomberg data.

Transco-Z6 prices declined to $4.3999 per million British thermal units on the Intercontinental Exchange, the lowest levels since Nov. 24. Gas at the Tetco-M3 hub, which also transports gas to the New York area, slid 3.2 percent to $3.9806.

Scheduled gas shipments for residential use in the U.S. declined 11 percent to 32.6 million dekatherms, the lowest level since Nov. 16, according to the Bloomberg data. Temperatures will be above normal in the U.S. East and Midwest through March 8, according to Commodity Weather Group LLC in Bethesda, Maryland.

In India at MCX, Natural gas March contract closed lower by 4.13 % to Rs.171.50, April contract prices declined from Rs.187.90 per Kg to Rs.177.50, down by 5.80 per cent.

Major Headlines
Commexes turnover has crossed Rs 100 trillion mark till Feb 15: FMC
The Forward Markets Commission (FMC) on Wednesday said the turnover at the commodity futures market crossed Rs 100 trillion-mark till February 15 of the current fiscal, buoyed by futures trading in bullion and energy items. The turnover stood at Rs 66.24 lakh crore in the same period last year.

Gold gains 1 percent, silver jumps on oil rally, Libya
Gold rose above $1,430 an ounce on Friday, while silver surged 3 percent to 31-year highs, as soaring oil prices fueled by widening clashes in Libya prompted investors to pile into safe havens.

Rapid growth of BRIC strengthened trade ties with low-income nations: IMF
The rapid economic growth of the BRIC — Brazil, Russia, India and China — has helped create the global commodity boom and strengthened its trade ties with low-income countries, the International Monetary Fund said.
Source: http://www.commodityonline.com/news/Metals-Energy-Update-Silver-soars-to-$35-gold-rebounds-Oil-spikes-36981-3-1.html

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As Silver Prices Rise, Silver Volatility will Grow - Silver Seek

It does not seem uncommon to log online or turn on a TV and see silver head higher. Save for a few weeks in January, the trend toward higher prices has been in effect since August, when most people were still thinking silver at $20 was overvalued. At $33, it’s still a bargain.

For a moment, it would be important to discuss market theory and market thinking. Realize that investors are subject to what the market believes their silver to be worth, and in many ways, the market can be unforgiving.

Even John Maynard Keynes understood that, “the markets can stay irrational longer than you can stay solvent,” a message to anyone that is playing in a game with six billion other people, many who may not ever value the same things you do to the same degree.

Volatility Ahead

If you haven’t realized by now, there is plenty of retail money making its way into the silver market. While this is not necessarily a bad thing, it is money that is made up mostly with inexperienced investors. There’s nothing wrong with inexperience, except that we have to play in the same market they do.

Keep in mind that as silver heads higher, percentage moves are sure to stay the same on a day to day basis—which for silver could mean 3-5% every day of the week—but prices moves are going to be far greater in terms of dollars. Those points are elementary and obvious, but realize that these changes in price will greatly affect the mindset of your average investor.

That is, $1.50 up days are going to appear on the charts as a record breakout—and to that same end, $1.50 down days are going to look like the trend has broken, and the world is ending. Both are insanely normal percentage movements for silver, but we’ve breached a new psychological level where investors must consider that they’re gaining or losing one dollar per ounce on a routine basis.

Does this greatly affect the futures of the metals markets? Probably not, but realize that we say “probably.” Of course, there’s no way to know, but there is plenty of room for additional volatility when investors from 2000 start realizing that the daily change in silver affects their gain or loss by 20%. Imagine being up 450% one day then 430% the next. That’s a wild ride!

Current Events and Markets

The current political climate around the world is sure to only compound the psychological market movers. Keep in mind that with each passing day, the world is overthrowing bad governments and hoping to replace them with good ones – all the while millions are starving, and central bankers continue to print, making the price of everything rise.

These are turbulent times, and turbulent markets should be anticipated. Continue on as if silver were $10 because when we look back years from now, $33 will look even cheaper.

Source: http://news.silverseek.com/SilverSeek/1299097045.php

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Gold and silver: The states' new currency?

States aren't allowed to coin money. They can issue gold and silver, though, and some are talking about actually doing it.


By Ralph Benko, Guest blogger / March 2, 2011

Why are so many state legislators beginning to call for issuance of a form of gold money? The Constitution prohibits states from coining money but allows them to make “gold and silver Coin a Tender in Payment of Debts.” By prohibiting everything except “gold and silver Coin” the Constitution clearly considers gold and silver coinage to be legitimate, no matter who issues it. States haven’t issued currency in any form for more than a hundred years. So why now? Disgust is probably the answer. Various state legislators are disgusted by the federal government’s promiscuous dollar-printing. Accordingly, legislators in a dozen states are contemplating legislation to issue gold or silver-based currencies, including Utah, South Carolina, Virginia and New Hampshire. The transcript of the debates in the original Constitutional Convention shows that the attitude of the Founders toward paper money was one of contempt. One delegate, Roger Sherman, called for the insertion of an absolute prohibition against states issuing their own paper money. Sherman’s argument prevailed, as the Founder’s decided that the states would not possess the power to “emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts” making these prohibitions absolute… As for the federal government, the earliest drafts of the Constitution included language permitting the federal government to issue unbacked paper money. But this language would not survive the final draft. Many of the Founders objected strongly to this power. The objections were summed up by delegate Oliver Ellsworth, who sought to “shut and bar the door against paper money.” “Paper money can in no case be necessary,” Ellsworth argued, “The power [to issue it] may do harm, never good.” Since most of the Founders agreed, the federal government was also denied the power to issue non-convertible paper money. The federal government mostly operated within these constraints – the main exception being the Civil War, when saving the Union took precedence over all other considerations. But for most of American history, dollars have been convertible into gold or silver. It is a 20th century innovation to have non-convertible currency. In 1932, FDR denied US citizens the right to convert their dollars into gold by US citizens. Then, in 1971, Richard Nixon denied foreign central banks the right to convert their dollars into gold. On August 15, 1971, Nixon declared: I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold… Now, what is this action – which is very technical – what does it mean for you? Let me lay to rest the bugaboo of what is called “devaluation.”

If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today. (Emphasis supplied.) President Nixon called the suspension “temporary,” but it has been anything but temporary…and the dollar has suffered as a result. The dollar today is worth less than a quarter was worth in 1971. And yet, Washington has been curiously unresponsive to the suffering brought by Nixon’s failed promise. Why? Because Washington, itself, has been a primary beneficiary of monetary depreciation. The federal government spent $15 billion from 1789-1900. Not $15 billion a year. $15 billion cumulatively. Uncle Sam will spend $10 billion per day in 2011. The federal government spends more every two days than it did altogether for more than America’s first century. Although these sums are not adjusted for inflation, they give a correct impression of the magnitude of the change from what our Founders set forth and our early statesmen delivered. How does Washington get its hands on so much money? Three ways. Taxation, borrowing and printing dollars. The third mechanism is usually the easiest road…at least for a while. Almost no one complains about printing dollars because almost no one feels the resulting consequences directly or immediately. The power to print money at whim is wrong. It is toxic to our personal and national wellbeing. And it is unconstitutional. No wonder that legislators in twelve states are considering issuing their own gold-based currencies. By doing so, these states are challenging the federal abuse of an unconstitutional power – challenging the issuance of unhinged paper money.

Federal officials should take these state initiatives as a cue. Federal officials have sworn to preserve, protect and defend the Constitution of the United States. Let them take their oath seriously and restore the convertibility of dollars to gold.

Source: http://www.csmonitor.com/Business/The-Daily-Reckoning/2011/0302/Gold-and-silver-The-states-new-currency

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INVESTING IN SILVER INSTEAD OF TOILET PAPER CURRENCIES - Richard Daughty

I was intrigued by an essay titled “What You Need to Know About Buying Silver Today”‘ which came as the result of Jeff Clark, of Big Gold, being interviewed by The Daily Crux.

Of course, Mr. Clark knows all the reasons to buy silver, and deftly ticks them off, one after another, as I would do if they ever asked me, instead of everyone always rudely shouting at me, “Hey! You can’t come in here!” and “Don’t eat that!” and, “Stop yelling at me to buy gold, silver and oil stocks as protection against the suicidal lunacy of the Federal Reserve creating so much money!”

Mr. Clark never actually gets to the point of hysterical raving that people should buy, buy, buy silver, silver, silver, and calling people idiots – idiots! – if they are not buying silver, which is convenient for me because that is exactly what I do. Idiot! You’re an idiot if you are not buying silver! See?

Anyway, The Daily Crux asks the Big Question On Everyone’s Lips (BQOEL), which is, “Just how high do you think silver could go?”

I was hoping that he would, as I would, immediately launch into “attack mode” and say, “What kind of stupid question is that to ask? The whole thing depends on the purchasing power of the dollar, which is literally headed towards zero because of the constant, massive, unbelievable over-creation of dollars by the evil Federal Reserve, which would mean that the price of an ounce of silver would be, literally, infinity dollars! That’s how high silver will go, you moron, as will the prices of everything go to infinity, when the dollar has zero purchasing power left, and is, finally, like all fiat currencies, worth Exactly Freaking Zero (EFZ)!”

I could mention Zimbabwe because Zimbabwe is a very recent example, of the thousands and thousands of fiat currencies through history that have gone to zero value because of over-creation, of a currency that went to zero value because of its over-creation.

As a case in point, and in a particularly pointed-yet-distasteful way as befits the whole subject of currency destruction, massive inflation, bankruptcy and ruination, I remember a photo of a sign posted in a Zimbabwe toilet, advising users as to what could be properly be used as toilet paper in this particular crapper.

It read, “No cardboard. No cloth. No Zim notes.” How disgusting! Money that is not even usable as toilet paper!

So, the question for today’s Mogambo Pop Quiz (MPQ) is, “What is the price of an ounce of silver, priced in Zimbabwe dollars?”

Well, since the Zimbabwe dollar is not officially worth zero, the MPQ is an easy one: The price, in Zim notes, is, literally, infinity!

This means that one ounce of silver – one lousy ounce of silver! – now costs more than all the Zimbabwe dollars ever printed! Ever!

And, more horrifically and closer to home, since the American dollar is on the same sorry path, the fate of the US dollar will be that of the Zimbabwe dollar, making silver a screaming bargain, and if you are not buying it, then you are an idiot!

At this point, I would usually degenerate into a Patented Mogambo Brand (PMB) of raw, in-your-face aggression on how the American dollar is a Big Piece Of Crap (BPOC) because of the Federal Reserve creating so staggeringly many of them, or a rant about how we Americans are a big bunch of idiots, or how the ultimate price of one ounce of silver is, like Zimbabwe, more than all the American dollars ever printed, making silver, at less than $35 an ounce, such a screaming bargain that to not buy silver is to proclaim yourself an idiot.

Mr. Clark, sensing my underlying motive, appeals to our greed! “Good choice!” I say!

He says, “Many people don’t realize this, but silver rose 3,646% in the 1970s, from its November ’71 low to its January 1980 high. If you were to apply the same percentage rise to our current bull market, silver would climb another 500% from here, and the price would hit $160 an ounce.” Wow!

Of course, all of these fabulous gains in silver presume a dollar with a relatively consistent buying power, which ain’t going to happen, and instead the dollar will continue to fall in purchasing power and thus everything will become more and more expensive, all the time more and more expensive, all because the despicable Federal Reserve is continuing to create So Freaking Much Money (SFMM).

But you won’t care! Your buying gold, silver and oil stocks all along the way, as the evil Federal Reserve kept creating so much money, will have made you rich, rich, rich! And so what is a horror of life-or-death misery for others is of no consequence to you, and you just say to yourself, “Whee! That investing stuff was easy!”
Source: http://news.silverseek.com/SilverSeek/1299373321.php

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Physical Silver Shortage - Really? - Financial Sense - Alex Stanczyk

North American Viewpoint is Limited

Editor's note: This article was originally sent via Dave Morgan, author of the Silver Investor newsletter, who will also be on Jim's Financial Sense Newshour, Friday 11th, 2011.

The story about Silver being physically unavailable is reaching thunderous levels of rhetoric. Numerous analysts and commentators are crying, "There is no more physical Silver!!" Be careful about allowing your emotions to get the better of you in terms of your investment decisions. It has always been greed and fear that drives people to buy and sell anything. When there is much greed, it is likely that a particular investment may be due for a pullback. I am not suggesting that Silver is not a good investment. The long term fundamental facts of the Silver market are undeniable. I am saying that those who are invested in physical Silver (including me) will tend to want to believe the story that there is no physical Silver available for investment, because it means my investment will go well, and I was a smart investor after all.

The thing to keep in mind is that these views are usually expressed by analysts and commentators in North America and are often based on limited information from a regional perspective versus a global one. The supply demand equation in Silver is in fact a global one, so to assume that North American supply and demand equals global supply and demand may be a big mistake. Can you find a single analyst from Europe saying there is no physical Silver available? Do you see Chinese investors complaining that they can't get any Silver? China's imports of Silver have skyrocketed year over year without a single peep about difficulty getting it. Please bear in mind that being loud does not equal being correct.

The North American viewpoint is frequently accompanied by statistics drawn from COMEX and COMEX physical inventories. These stats are often used as the foundation of the viewpoint and proof that there is no physical Silver available to satisfy investor demand. The problem with taking this perspective is that COMEX settlements in physical Silver are a small fraction of the total global trade in physical Silver. Therefore, it's not a good indicator of global availability of physical Silver, because there isn't really incentive to maintain large stocks of physical for COMEX delivery. COMEX clearly states that settlement of futures can be done in cash versus the underlying physical asset. Do you really think COMEX is concerned about a physical default? According to their very own rules, they cannot default since they can settle in cash. This is the fact of the matter regardless of the importance that some analysts place on physical COMEX inventory. In the London Gold Pool of the mid 60s, the demand for physical settlement grew so intense that planeloads of Gold were being airlifted to London to satisfy demand. The London market actually closed for several weeks at one point because the demand could not be met, yet Gold still traded in Switzerland during this time. This reflects the fact that anything will continue to trade if there is demand regardless if the trading is occurring on the "loudest" market. To assume that COMEX will ever be a true indicator of the actual physical trade in Silver may be a big mistake.

Much of the commentary I read continually points to sourcing through bullion banks and 'tightness' when doing so. I am surprised that no one has caught onto the point that the bullion banks have a good deal of potentially conflicting interest here. They participate in the paper markets to a great degree and are in some cases the largest short sellers in paper while at the same time custodians of metal for some of the reported largest physical holders. One thing that has always caught my attention is that I have yet to see a single firm that goes directly to the largest refineries in the world complaining about ability to access physical Silver. Yes, the bullion banks go directly to the refineries, but is it possible they stand to gain on the market activity associated with possible delays and claims that they can't get metal? If the Royal Canadian Mint says their bullion banks are having a hard time sourcing metal, is it possible those bullion banks have an interest in having a hard time sourcing metal? Does it count if the retail outlets who source their small bars and rounds are all complaining about lack of product if it's due to fabrication limits in the North American market? Do the fabricators in North America also go through these same bullion banks? In a recent interview with David Franklin regarding Sprott's new physical Silver trust, he mentioned that a good portion of the Silver they had delivered came from overseas. Is this a coincidence, or does the tightness being reported have to do with regional availability or an incentive to profit by someone in the supply chain doing the delivering?

This idea that there is no physical Silver for investment is actually similar in character to the argument that we cannot have a Gold standard because there is not enough Gold. To be frank, that is ridiculous. The view I take is that of course there is enough Gold. The problem is that most people cannot wrap their mind around what price per ounce Gold would have to be to achieve an actual Gold backing, because that price per ounce is so much higher than it is right now (think on the order of $6000+ per ounce if you are talking American Dollars). Point being, if you wanted to buy 5 million ounces of Silver from me at $40 per ounce, do not think for a moment that it could not be sourced in the wink of an eye (or at least within a reasonable time frame if the eye-winking doesn’t actually conjure up the 5 million ounces).

Perhaps someday we will indeed reach the point where there is no more physical Silver for investment because of such amazing demand over supply and the fact that as we use Silver in industrial applications, it is used up and not economical to recover. That day however, is not today.

Source: http://www.financialsense.com/contributors/alex-stanczyk

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The Bubble With A Silver Lining - Ryan Jordan

FINANCIAL SENSE

With silver up roughly 100% in six months, many professional traders may find themselves wondering when to short the white metal. After all, nothing shoots straight up forever, right? Even as a silver fan, I get a little nervous looking at the price action, and wonder the same thing: is silver due for a major pullback? When this seasonal period of strength is over, might silver do what it did in 2008 or 2006 and make a very sharp 30% or 50% drop?

I ask myself this question, always respecting the need to play devil’s advocate with my own mind. But, then I ask myself other questions. Such as: have any of the structural problems facing the developed world’s economies been solved? My answer is no. Has the average person put even 5% of their money in physical silver? No. Are savers being compensated for inflation risks, or is the Fed raising rates? Both no. From these answers, it is safe to say that the silver bull is far from over. The silver price rise (at least so far) is not about industrial demand. It is about people making a start toward redefining the nature of money, wealth, and savings. This redefinition- believe it or not- has only just begun.
What Part of “Its Over” Don’t You Understand?

Much has changed in the world since 2008, the last time there was a serious pullback in silver. For one, savers have been stiffed with zero percent interest rates on their savings for over 2 years even as those same savers watch the price of many other items move up close to something like 10% a year (gas, health care, & education costs, to name three). Government paper or even equities are not the best inflation hedge. Two, many are coming to realize that we are not experiencing a “typical” recovery because we may have finally reached debt saturation in the developed world. We are not going back to the old normal. Three, since 2008 new holding companies in silver have appeared which give everyone with an online brokerage account unprecedented access to the white metal. Fourth, increasing evidence out of China shows that after having dumped millions of ounces onto the world market for years, the Chinese are changing course and buying silver hand over fist. (This development alone deserves an entire book, by the way.)

Finally, I am struck by how much online discussion there is about naked short selling or other kinds of paper shenanigans at bullion banks. There are now several lawsuits over the pricing of silver, for example. At least at the margins, people are questioning accepted price discovery mechanisms in silver and taking delivery. Many other people understand that floating exchange rates are not synonymous with a free market in gold and silver- an important point. Just as with any number of efforts to cap precious metals prices over the last several centuries (the most recent one being the London Gold Pool- which was overrun first in 1968, replaced with a two tier system, and finally ended in 1971) current attempts to cap the price of gold and silver will end in failure. Put another way, many banks or warehouses in the precious metals industry are susceptible to bank runs- which is how I view the end of the London Gold Pool and official convertibility in the early ‘70s. Understandably, bankers who defend or attempt to maintain certain price capping arrangements will do everything in their power to ignore the problem, or to pretend that what is happening isn’t real. Small, retail investors should not be fooled, however, and should continue to take delivery of metal. I might add that bank runs are not the end of the world. Painful, yes, and we all have some tough reality ahead of us. But apocalyptic? Well, only if you are a banker.
Silver and Deflation: Not What You Think

Which brings me to another difference between early 2008 and today: the number of online discussions focusing on economic collapse, on “the end of civilization,” or other fears of a dystopian future. This is an example of Bob Prechter’s “social mood” turning dark as we enter the great downsizing of the West. I am not so sure that the world is going to end in December of 2012, or that all of the nightmare scenarios presented online will come to pass. However, it is worth pointing out that if our global economy moves in reverse, back to the less-levered environment of even fifty years ago, let alone one-hundred years ago, then the exchange value of gold and silver will skyrocket (likely right along with other, select tangible assets). In the nineteenth century, for example, a gold coin could buy a few acres worth of land. It was not that long ago (early 20th century) that the value of the world’s silver coin would have equaled at least 10% of the global monetary base. In today’s terms, that would put the value of silver at between 500 and 1,000 dollars an ounce, since most people estimate the global monetary base to be in excess of 10 trillion dollars. Even if other assets deflate, you will probably find physical silver increasing its relative purchasing power for other assets- regardless of the currency in use.

I am sure that many, many people will find themselves unprepared for some of the difficulties ahead. I am also positive that many Americans will continue to experience conversion moments where they view their once unrealistic expectations regarding economic growth as incorrect. Americans will embrace some variant of austerity in their own lives, and they will reject aspects of the leveraged casino, infinite-credit-economy that we all have lived with for the past several decades. This rejection of debt could not be more bullish for precious metals- which are money after all, not mere commodities. And in the next liquidity squeeze- sometimes referred to as deflation- the monetary metals will not go down. I hope people were paying attention to the price action of gold and silver last spring during the “fat finger” event- both metals finally achieved the safe haven status denied them in the fall of 2008. The fact that gold and silver have risen so far so fast in this “recovery” is likely setting the stage for an even larger, more dramatic move, when we find ourselves racing down the other side of Bubble Mountain.
Silver, Inc.

Many silver commentators have correctly pointed out that silver could behave like a hot internet stock in the next few years, putting its amazing price performance in the last bull market (1940-1980) to shame. That would be quite something if true, since silver went up 100 times in the mid-20th century. And yet the claim that silver might be able to move up 10 times from here (without the world ending) certainly seems possible given the wide ranging access investors have to silver through brokerage accounts. In addition to the fact that large parts of the world (like Russia and China) can now take part in the silver bull- unlike thirty years- it is also far easier for Americans and Europeans to invest in silver today than three decades ago. In the 1970s in the U.S., for example, investing in silver involved the relatively cumbersome process of tracking down silver certificates, or buying coins or bullion. Not so today. Now, all you need is an internet connection and you can buy silver online- either with holding companies like Sprott Physical Silver Trust, or with entities like GoldMoney.com. Although there is no substitute for physical silver for all sorts of reasons, these types of holding companies are taking silver off exchanges. They are not paper silver. The increase in this kind of exposure to silver for average investors means that a price rise in the market cap of Silver, Inc. could easily move from the roughly 35 billion dollars today toward the 200-500 billion market capitalization of an Apple, Google, or Exxon Mobile.

As far as the silver market being primed for a further pullback beyond today’s action (March 10), I have to remind you (once again) about the behavior of silver from 1977 to 1980. This was the last time the silver rocket made an appearance in the sky above Wall Street. During those three years, the price moved from about $4.50 to $49, with no pullbacks greater than 15-20%. And these pullbacks were extremely brief in duration. Of course for anyone who was only in diapers in the late 1970s (or not even born), you may want to think about the Nasdaq bubble between roughly 1995 and 2000. How easy would it have been to short that market, or to find pullbacks? Not very. While investing in silver is not for the feint of heart, and should not be attempted with leverage, if you have yet to buy any physical silver you may be getting a discount this week or next. I think this financial system has one great bubble left in it, a bubble with a silver lining.

Source: http://www.financialsense.com/contributors/ryan-jordan/the-bubble-with-a-silver-lining

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What's been driving the silver price?

Silver has been outperforming gold in recent months as fundamentals have been positive, not only from a monetary viewpoint but also from an industrial one.
Author: Julian Phillips

BENONI (Silverforecaster.com) -



The Silver Price is hitting new recent highs over $36.50 today in a more vigorous performance than even gold. Many in the developed world precious metal markets are amazed at the performance of silver and see this continuing, whereas others feel it is running away with itself. The "backwardation" in silver [when ‘spot' - or immediate delivery prices are higher than for future delivery] has stressed just how much immediate demand there is for silver and clearly a physical shortage of the metal has arisen.

There are two apparently conflicting pictures of the role of silver. The industrial side of silver demand, currently thriving and the investment side, which is also thriving and should continue to do so.

INDUSTRIAL FUNDAMENTALS EXCELLENT

Overall the fundamental outlook has favored large price rises in the metal. After the use of silver in photography was heavily lessened by the advent of digital photography, many thought that that was the end of silver, but its price continued to rise when gold rose and fall when gold fell. Then came many revolutionary uses for silver in the medical field and the electronics field where demand is growing rapidly. Today, industrial uses account for 44% of worldwide silver consumption.

Still, silver has largely continued to be mined as a by-product of base metal mining with little need for solely silver mining alone, until now. Today, we find that the number of silver mines is growing fast as the metal can cost only around $4 per ounce to produce. At a current price of $36 this makes it a dream metal to mine. But it will take some time for silver mining to catch up to growing demand, a few years at least. While there are huge supplies of silver still untouched [whereas replacing the gold mined is getting an increasingly more difficult task] we do see the flow of silver supplies growing fast in the future. Eventually this will slow the rise in the price of silver to the pace of gold price rises. And yes, we may see a rapidly growing supply of silver from scrap or re-cycling sources in time, which may slow down demand in addition to rising supplies. But again, this will take some years still after which we will see a change in silver's price patterns.

Meanwhile, demand growth from not only the developed world, but from the emerging world should continue to outweigh such new sources of supply. The last year has been an eye-opener in the silver market as we watched China turn from a net exporter of silver to a net importer. China had gross exports of 1,575 tonnes of silver last year, down 58% from a year earlier. China's gross imports of silver increased 15% to 5,159 tonnes in 2010. In 2005, China was a net exporter of nearly 3,000 tonnes of silver. Last year, in 2010, China was a net importer of more than 3,500 tonnes of silver. Incredibly, Chinese net imports of silver surged four fold in just one year from 2009 to 2010. We fully expect this growth of demand from that source to continue in 2011 and possible for the next decade.
Demand for silver in China has risen sharply in recent months and years. Growing middle classes and savers in China, India and other Asian countries have been turning to "poor man's gold" and using silver as a store of value. Gold has risen above its historical nominal high in local currency terms internationally and silver is seen by many as a cheaper alternative.

OFFICIAL SELLING

For decades we saw ‘Official selling' of silver as three governments sold off their stockpiles of silver [that had once been the coinage of the land]. The three countries were India, China and Russia. Today there is a negligible amount of silver sold by these three previously large suppliers. Such a withdrawal of large supply lines has ensured demand outweighs supply. There is little likelihood of these suppliers re-appearing.

INVESTMENT DEMAND

- With that in mind investment demand has come in as a new source of demand. The main vehicle through which silver is bought for investment in the developed world is the Silver Trust (NYSE: SLV) which now holds 10,794.79 tonnes [347,063,746.900] ounces currently.

- While COMEX is not a physical market for silver [only 5% of the deals done there involve the movement of actual silver], the gradual drain of COMEX silver inventories seen in recent months continues and COMEX silver inventories are at 4 year lows. Total dealer inventory is now 1,311.35 tonnes [42.16 million ounces] and total customer inventory is now at 1,887.40 tonnes [60.68 million ounces], giving a combined total of 3,198.97 tonnes [102.847 million ounces].

- To an Asian investor with a limited amount of savings, silver is proving a more than credible alternative to gold. The price of silver has, this century, followed that of gold. It falls further and rises higher than the gold price, but goes up when gold does and falls when gold does. We believe it will continue doing so for the foreseeable future.

SILVER AS A MONETARY ASSET

Silver has been money since man's history began. History shows that it has always been linked to gold as coinage. Until 1946 even in the U.K., silver was used as coinage. The use of silver as money has now been withdrawn globally. It was from the stockpiles of old coins that the bulk of "Official" silver sales have only just been completed. It may well be that the monetary authorities of the world have no intention of using silver as money in the future. That does not detract from silver being used as an ideal retainer of wealth. Silver and gold will always be universally accepted as ‘giving a sense of stability of the money system' [quote from Alan Greenspan this week]. That's why it is being accumulated as an investment now. A look at the darkening future of the current monetary system reinforces the thought that these two metals will protect one's wealth.

We don't believe that central banks will go back into the silver market again, because they will not see silver as they see gold, as the ultimate form of money. It will remain such in an individual's mind as well. We feel that its price will continue to confirm that. We emphasize that in the cases of both gold and silver, a monetary role for them is not required to maintain the current high prices. [If monetary authorities called the sky green, it won't go green - at the end of the day gold and silver will always act the same way as money]

SILVER MOVING WITH GOLD

The silver price continues to move with the price of gold, not because they have the same demand and supply fundamentals or there is the same quantity of the metal available, but because investors and users perceive that the silver and gold prices reflect the state of the current global monetary system. Such co-ordinated movements are saying that both metals are not being priced themselves. They are both pricing the monetary system and its prospects, as they have done for millennia. The huge growth of the investment side of the two metals is confirmatory evidence of this.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=122489&sn=Detail&pid=102055

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Silver's Amazing Price Rise

The Silver Price continues to hit new 3-decade highs. Why...?

The PRICE OF SILVER is hitting new 31-year highs at $36.55 today in a more vigorous performance than even gold, writes Julian Phillips at the Gold Forecaster.

Many professionals in the Western world's precious metal markets feel amazed at the performance of silver, but see it continuing, too. Whereas others feel the Silver Price is running away with itself.

The current "backwardation" in silver – where 'spot' or immediate delivery prices are higher than for future delivery – has stressed just how much immediate demand there is for physical Silver Bullion. Clearly a physical shortage of the metal has arisen. Why?

There are two apparently conflicting roles for silver today. The industrial side of silver demand, currently thriving, is different to Silver Investment demand, which is also thriving and should continue to do so.

Overall, the fundamental outlook has favored large price rises in the metal. After the use of silver in photography was heavily lessened by the advent of digital photography, many thought that that was the end of silver, but its price continued to rise when gold rose and fall when gold fell. Then came many revolutionary uses for silver in the medical field and the electronic field where demand is growing rapidly. Today, industrial uses account for 44% of worldwide silver consumption.

Still, it continues to be mined as a by-product of base metal mining with little need for solely silver mining alone, until now. Today, we find that the number of silver miners is growing fast as the metal costs only around $4 per ounce to produce. At a current price of $36 this makes it a dream metal to mine. But it will take some time for silver mining to catch up to growing demand, a few years at least. While there are huge supplies of silver still untouched (whereas replacing the gold mined is getting an increasingly more difficult task) we do see the flow of silver supplies growing fast in the future. Eventually this will slow the rise in the price of silver to the pace of Gold Price rises. And yes, we may see a rapidly growing supply of silver from scrap or re-cycling sources in time, which may slow down demand in addition to rising supplies. But again, this will take some years still after which we will see a change in silver's price patterns.

Meanwhile, demand growth from not only the developed world, but from the emerging world should continue to outweigh such new sources of supply. The last year has been an eye-opener in the silver market as we watched China turn from a net exporter of silver to a net importer. China had gross exports of 1,575 tonnes of silver last year, down 58% from a year earlier. China's gross imports of silver increased 15% to 5,159 tonnes in 2010. In 2005, China was a net exporter of nearly 3,000 tonnes of silver. Last year, in 2010, China was a net importer of more than 3,500 tonnes of silver. Incredibly, Chinese net imports of silver surged four fold in just one year from 2009 to 2010. We fully expect this growth of demand from that source to continue in 2011 and possible for the next decade.

Demand for silver in China has risen sharply in recent months and years. Growing middle classes and savers in China, India and other Asian countries have been turning to "poor man's gold" and using silver as a store of value. Gold has risen above its historical nominal high in local currency terms internationally and silver is seen by many as a cheaper alternative.

For decades we saw 'Official selling' of silver as three governments sold off their stockpiles of silver (that had once been the coinage of the land). The three countries were India, China and Russia. Today there is a negligible amount of silver sold by these three previously large suppliers. Such a withdrawal of large supply lines has ensured demand outweighs supply. There is little likelihood of these suppliers re-appearing.

With that in mind investment demand has come in as a new source of demand. The main vehicle through which silver is bought for investment in the developed world is the Silver SLV Trust, which now holds 10,794.79 tonnes of Silver Bullion in trust to back its shareholders stock. While New York's Comex derivatives market is not a physical market for silver (only 5% of the deals done there ever involve the movement of Silver Bars), the gradual drain of Comex silver inventories seen in recent months continues, leaving them at 4 year lows. Total dealer inventory is now 1,311.35 tonnes, and total customer inventory is now at 1,887.40 tonnes, giving a combined total of 3,198.97 tonnes.

To an Asian investor with a limited amount of savings, Silver Investment is proving a more than credible alternative to gold. The price of silver has, this century, followed that of gold. It falls further and rises higher than the Gold Price, but goes up when gold does and falls when gold does. We believe it will continue doing so for the foreseeable future.

Longer-term, silver has been money since man's history began. History shows that it has always been linked to gold as coinage. Until 1946 even in the UK, silver was used as coinage. The use of silver as money has now been withdrawn globally. It was from the stockpiles of old coins that the bulk of "Official" silver sales have only just been completed. It may well be that the monetary authorities of the world have no intention of using silver as money in the future. That does not detract from silver being used as an ideal retainer of wealth. Silver and gold will always be universally accepted as 'giving a sense of stability of the money system' (quote from Alan Greenspan this week). That's why it is being accumulated as an investment now. A look at the darkening future of the current monetary system reinforces the thought that these two metals will protect one's wealth.

We don't believe that central banks will go back into the silver market again, because they will not see silver as they see gold, as the ultimate form of money. It will remain such in an individual's mind as well. After all, silver is also US $5 Silver Certificate universally accepted as a lesser value money. We feel that its price will continue to confirm that. We emphasize that in the cases of both gold and silver, a monetary role for them is not required to maintain the current high prices. (If monetary authorities called the sky green, it won't go green – at the end of the day gold and silver will always act the same way as money.)

The Silver Price continues to move with the price of gold, not because they have the same demand and supply fundamentals or there is the same quantity of the metal available, but because investors and users perceive that the silver and Gold Prices reflect the state of the current global monetary system. Such coordinated movements are saying that both metals are not being priced themselves. They are both pricing the monetary system and its prospects, as they have done for millennia. The huge growth of the investment side of the two metals is confirmatory evidence of this.

Source: http://goldnews.bullionvault.com/silver_price_030920115

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