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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Dividen Bank Rakyat 15%

Source:http://utusan.com.my/utusan/info.asp?y=2011&dt=0225&pub=Utusan_Malaysia&sec=Ekonomi&pg=ek_01.htm
KUALA LUMPUR 24 Feb. - Buat tahun ke-12, Bank Kerjasama Rakyat Malaysia Bhd. (Bank Rakyat) mengumumkan pembayaran dividen sebanyak 15 peratus bagi tahun kewangan berakhir 31 Disember 2010.

Dividen itu membabitkan pembayaran sejumlah RM294.9 juta yang akan mula dibayar kepada anggotanya mulai esok.

Menteri Perdagangan Dalam Negari, Koperasi dan Kepenggunaan (KPDNKK), Datuk Seri Ismail Sabri Yaakob berkata, agihan dividen yang konsisten oleh bank itu hasil keuntungan sebelum cukai dan zakat Bank Rakyat sebanyak RM1.72 bilion.
Ia merupakan kenaikan sebanyak 10.8 peratus atau RM167.1 juta berbanding RM1.55 bilion pada 2009.

Pertambahan keuntungan itu dipacu oleh pertumbuhan pembiayaan terutama pembiayaan peribadi dan pendapatan berasaskan yuran serta kenaikan deposit.

''Bank Rakyat turut merekodkan keuntungan bersih sebanyak RM1.34 bilion berbanding RM1.13 bilion pada tahun sebelumnya,'' katanya pada sidang akhbar bagi pengumuman prestasi Bank Rakyat di sini hari ini.

Sementara itu, Pengarah Urusannya, Datuk Kamaruzaman Che Mat berkata, bank itu masih mengekalkan pemberian dividen sebanyak 15 peratus meskipun keuntungan meningkat.

''Kita akan membawa keuntungan yang diperoleh untuk menjana pendapatan pada masa depan,'' tambah beliau.

Kamaruzaman berkata, untuk tahun ini, bank itu mengunjurkan peningkatan pendapatan meningkat sebanyak 10 peratus, lebih rendah berbanding tahun-tahun sebelumnya.

Beliau menyifatkan pertumbuhan 10 peratus itu adalah kadar yang selesa bagi Bank Rakyat selepas mengalami pertumbuhan besar pada 2010.

''Unjuran yang dibuat itu adalah normal, tanpa ada sebarang ekstra dan kita jangkakan prestasi masih kekal kukuh sekiranya kadar faedah stabil,'' ujarnya.

Beliau berkata, pada tahun ini Bank Rakyat berhasrat untuk menambah lapan lagi cawangan sedia ada yang berjumlah 127 buah dengan membabitkan pelaburan sebanyak RM1 juta setiap sebuah.

Bank Rakyat juga merekodkan kenaikan pendapatan kasar sebanyak 24.3 peratus kepada RM4.70 bilion manakala pendapatan bersih selepas agihan keuntungan kepada pendeposit sebanyak RM3.05 bilion berbanding RM2.61 bilion tahun sebelumnya.

Pendapatan sumber pembiaya melonjak kepada RM4.04 bilion, yang mana 92 peratus atau RM3.71 bilion disumbangkan oleh perbankan pelanggan dan bakinya sejumlah RM323.9 juta melalui perbankan komersial.

Pendapatan berasaskan yuran juga bertambah sebanyak RM92.3 juta.

Jumlah aset meningkat sebanyak 22.3 peratus atau RM11.27 bilion kepada RM61.91 bilion berbanding RM50.64 bilion pada tempoh sebelumnya.

Jumlah deposit Bank Rakyat naik kepada RM52.49 bilion bagi tahun lalu dan kedudukan kecairan kekal kukuh pada kadar 27.3 peratus berbanding 25.2 pada 2009.

Dana pemegang saham Bank Rakyat juga meningkat kepada RM5.95 juta dengan bilangan anggota seramai 758,356 orang.
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Silver Shortage!?! - Cris Sheridan - Financial Sense

If you're familiar with this site, you'd know that we've been long time advocates of precious metals. However, when clients begin to call in asking to sell their conservative holdings in order to buy as much silver as they can get their hands on, one has to wonder why the sudden alarm? Well, recently, rumors have been afloat all over the internet about a potential silver shortage, especially in 100 oz bars. Often when such sensational news stories like this go viral it's good to do a little digging and see how much truth there is to it before going into panic mode, liquidating your entire portfolio, and buying your weight in silver bars.

I spoke to Kathryn Derbes, CEO of KDerbes Precious Metals LLC, and asked her whether this was just hype or an actual cause for alarm. According to her, there weren't any current shortages in the silver market to speak of except for secondary-market specialty bars, specifically Engelhards, that haven't been manufactured since the late 1980s. Unfortunately, this small overlooked detail may have been the only source of all the news that's currently going around.

Also, Kathy related that dealers who bought 100 oz silver bars near the peak earlier this year would naturally be stuck with high-priced inventories that they'd be reluctant to sell and take a loss on—holding out, of course, until prices rise back to where they could make a profit. Thus, the apperance of a shortage may just be due to the unwillingess of dealers to sell at currently supressed prices unless they can make up for it with higher premiums.

All in all, whether or not this is the beginning stage of an actual silver shortage or just the natural course of doing business, time will tell. Fortunately, if you'd like to hear more about the current state of the silver market and what's really going on, Kathy will also be speaking on Jim's show tomorrow for a special interview regarding this very topic.



Sourcehttp://www.financialsense.com/contributors/cris-sheridan/silver-shortage

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A Simple Shake Could Set Silver Free - Dr. Jeffrey Lewis - Silver Seek

There is no more silver! Really, there isn’t any left.

There is a danger lurking in the shadows of the COMEX silver market. Prices are (generally) rising, but the supply of silver is falling, and it’s falling quickly. Why, you ask? Unfortunately, there has been confusion in the paper and physical metals market…as if silver investors hadn’t already noticed.

Silent Market in Control

With the rise in silver prices came new speculative interest from bankers, average investors, and even the next-door neighbor. The problem is very simple: the supply of silver for the investing class is imaginary—a product of the banking system and fractional reserve silver.

In order to supply investment demand, investment banks (JP Morgan and others) have been selling off paper silver in droves, hedging their bets on the futures market, and hoping that no one ever bothers to take delivery. It has become evident, especially in this most recent move toward $30, that the price of silver and the supply of silver are no longer related.

What we have now is a market where the real, physical silver is flying out of the COMEX (since few seeking to buy real silver are interested in certificates or exchange-traded funds), and the tangible stocks are replaced with paper silver.

What happens when the market realizes that the well is tapped, there is no remaining silver, and that the positions most hold are diluted to a point that they hold only a small percentage of what they believe they hold?

Future Surge in Silver Prices

It has become commonplace for analysts, investors and others to forecast higher and higher silver prices. These analysts, investors, and analysts are 99% wrong.

Most of them are playing the fool’s game, buying and selling paper silver to accumulate paper. The remainder sees opportunity for silver that brings silver prices higher, and they’re wrong as well.

Silver prices are not technically rising, but they’re becoming realistic. The current pricing structure is dependent on a supply of silver that does not exist. When this realization comes to life, silver prices will rise, but in truth, prices have already exploded.

Those trading the COMEX are paying $25-30 for the CHANCE at taking delivery of an ounce. If we put the current, real supply of silver at 10% the open interest, then prices are already $250 per ounce.

How Disconnects Happen

In a previous article, we discussed the divergence and growing crevices in the silver market. Prices from the COMEX trickle to the NYSE where the SLV ETF is traded, which then trickles back to the futures market, and then to the average investor, who through his or her own market action, sends that information down to the retail coin shop. Thus, the physical markets on the local level are selling silver based on a price that flows from a crooked market. Is it any wonder demand is high, and supply (individual investors are the only ones who can actually prove ownership) is shrinking? I think not.



Source: http://news.silverseek.com/SilverSeek/1296169564.php

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Chinese Silver Buying Just Beginning - Dr. Jeffrey Lewis - Silver Seek

Just a few decades ago, China the Giant was barely a mortal. It produced most of what it consumed, and the corporate mega-producers installed during the darkest days of Asian freedom and democracy produced all the commodities the country might need within its own borders.

One such commodity was the one we all love: silver. In fact, China produced so much that it couldn’t use all of it, nor was it interested in holding onto the metal. The country was a net exporter until four years ago, when at the height of the most recent credit bubble, net imports materialized. Today, China consumes more silver than it ever has in history.

It’s not that China isn’t still producing silver—it is, but it’s consuming and hoarding more of it. Through 2010, net imports increased some 15%, while exports fell by nearly 60%. Such a fast swap from exporter to importer means additional strain on the silver markets. From 2009 to 2010, total net imports surged three hundred percent in just one year.

Demographic Complexity

Of the more than one billion people who live in China, most live at or near poverty, while only recently a select few have been moving to middle class. While the number of people advancing through society in raw percentage terms is declining, the number of people who are achieving greater purchasing power is exploding in nominal terms.

If, for example, only 5% of the Chinese population were to rise to the ranks of “middle class,” it would be the equivalent of one out of five Americans doing the same. Such an increase is mild, to say the least, but it commands even more from an already limited silver market. Imagine what happens when many millions or even billions of newly middle-class Chinese demand cell phones, personal computers or other electronic devices. Each contains silver, and each is a hot commodity in the developing world.

Rising Middle Classes

As has been covered previously, not all of the new demand is purely consumption. As gold continues its rise, silver is slowly becoming the new “poor man’s gold,” a trend that appears not only in the developing world, but in the developed world as well. In fact, it is becoming increasingly common for jewelry to contain diluted gold to reach consumer-level price points. What are jewelers using for such dilution? Silver.

Asian societies, governments, and populations have always had respect for gold and silver that is perhaps unmatched by any other geographic region. For centuries and for many millennia, gold and silver were used exclusively for trade, as a currency and store of value. Even through modern times, gold and silver are appreciated for their beauty and significance of wealth.

It would be wise to expect that any net increase in tangible wealth in the Asian markets will be met with nearly equal shifts in the consumption or savings of precious metals. Timing is of the essence here. With both India and China expected to achieve nearly double-digit growth rates, many millions more people are soon to join the growing class of silver stackers.



Source: http://news.silverseek.com/SilverSeek/1296784269.php

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The Rarest Earth - Theodore Butler - Silverseek

Those who keep up with business news will have no doubt read about the recent developments in the category of minerals known as rare earth elements (REE’s). These are minerals that are vital to modern industrial applications, ranging from lasers, batteries, alternative energy, and superconductors to all sorts of important high-tech applications. There are 17 minerals classified as REE’s with exotic names like scandium, yttrium, lanthanum, cerium, and praseodymium. Don’t worry, this is not a technical discussion and this will probably be the only time I write about rare earth elements.



Actually, these minerals are not all that rare, in the strictest sense of the word. Many are quite abundant in the earth’s crust. What makes them rare is that they are generally not concentrated in ore bodies offering economically feasible extraction. The first rare earth mineral was discovered around 1800, in a village in Sweden named Ytterby, and several REE’s are named after that village. Up until about 1950, most rare earth production came from India and Brazil. In the 50’s, South Africa was a big producer, then California took the lead from 1960 through the 1980’s. Then, China came to be the dominant producer by far, and currently produces 97% of world production.



Due to booming world demand, production has strained to keep pace. This was recently exacerbated by China’s new export restrictions, due to falling ore reserves and environmental concerns. This sent the price of rare earth elements soaring by hundreds of percent, prompting a world-wide effort to ramp up production. However, you just don’t flip a light switch and begin new mine production. It can take years to develop a mine and begin production. In the meantime, industrial consumers must compete for available supplies by bidding up the price. This is the essence of the law of supply and demand.



Since I’m not a REE expert why am I writing about them? The answer has to do with silver. Silver shares many characteristics with the rare earth elements and there is a lot to learn from them in our analysis of silver. In fact, the purpose of this article is to make the case that silver is the rarest of all the rare earth elements.



One of the common characteristics between silver and the rare earth elements is that many REE’s are mined in conjunction with other minerals, the same as silver with its by-product mining profile. Mining for both tends to concentrate on the easiest to exploit properties first. Consequently, the remaining properties tend to be lower-grade and more expensive and difficult to develop. Both silver and REE’s have seen the emergence of China as the chief producer of each. (In the case of silver, the production reliance includes the processing of scrap material not mined in that country.) Silver production from China is nowhere near 97% of world production, as it is in the rare earth elements, but it still is significant. Environmental issues and restrictions inhibit the production of both silver and the REE’s. And with both, higher prices don’t automatically guarantee immediate new production. For instance, last year on an 80% increase in silver price, the mine production of Peru (the world’s largest miner) declined 7% or 12 million ounces. That’s a million silver ounces less per month than from a year earlier. Recently, the price of REE’s skyrocketed, due to China’s sharply curtailed exports. Should any major silver producing country sharply restrict the export of silver, the price would soar.



In most industrial applications, there is a small, but necessary amount of silver and rare earths used which is resistant to substitution. The chemical properties of silver and rare earth elements are usually unique in the specialized industrial applications which mandate their use. Generally, the consumption of silver and rare earth elements is price-inelastic, meaning sharply increasing prices of each do little to discourage consumption, due to the lack of substitutes. As was seen recently in the rare earth elements, the industrial users panicked when the supply was curtailed. This will also happen in silver, as I have long predicted.



Where do I get off with the statement that silver is the rarest earth element of them all? This point is the easiest of all to make and should prompt you to rush out to buy silver immediately. What separates silver from the REE’s is the one stark factor which is unique to only silver. You can actually buy and hold silver in its purest elemental form, unlike other rare earth elements. Try calling some dealer to invest in pure yttrium, or promethium or gadolinium. And if by some miracle you can find someone to buy from, try to imagine how you could possibly sell or determine a fair price?



The thing that separates silver from all other REE’s is that you can invest in it directly. Sure, you can buy stocks in companies that mine silver or REE’s, but only silver has the dual role of basic investment asset and industrial material. That’s what makes silver the rarest of the rare. What separates silver from any other natural resource is thousands of years of primal attraction, held by man as a form of wealth, and simultaneously a vital and strategic industrial material necessary to modern life. It’s just not practical for the average investor to buy a pound of a rare earth, a barrel of oil, or a bushel of corn for investment purposes. I suppose a case can be made about investing in platinum or palladium, both important industrial metals, but there has never been any evidence of a world-wide rush to buy these metals as there has been in silver. Buying or selling an ounce or a pound of actual silver is as easy as falling off a log. The United States Mint sells Silver Eagles by the millions of ounces every month. And while many invest in gold, it doesn’t have that investment asset and industrial material dual role unique to silver. That’s what makes silver so rare.



The amazing thing is how few of the world’s potential investors appreciate the uniqueness of silver’s rare dual role. The ease of investing in silver is taken for granted by the world. Just a few decades ago, silver was in common coinage. This explains why people have difficulty comprehending how such a formerly abundant material could be considered rare today. How many people know that world silver stockpiles are down 90% since 1940? That’s precisely what creates the investment opportunity of a lifetime – seeing something before the crowd.



It seems preposterous that a material like silver, which the common man carried in his pocket for bus fare or a newspaper could somehow transform itself into a rare material about to enter into a profound shortage. That shortage is virtually guaranteed by silver’s unique dual role. The coming rush into silver by investors seeking profits and industrial users looking to stockpile a vital manufacturing component makes a shortage almost certain. There is no way production can ramp up nearly as quickly as the combined force of investment and user demand.



For all intents and purposes, silver has been the best investment over the past decade. Those investors who studied the facts objectively and bought silver, have reaped multiples of their original investment. Silver will likely be the best investment of the next decade as well. Those who study the facts and act on them by buying silver will be generously rewarded. There is no way anyone can turn the clock back to single digit silver. Those days are long gone. But in some ways, the more exciting time lies ahead.



Ten years ago, it was difficult to convince people to buy silver. The stock market was flying high and real estate was just entering a major bull market. Crude oil was sliding towards $20/barrel and most commodities were flat. Silver was under $5, gold under $300, and the term rare earth was mostly unknown. Anyone investing in natural resources needed to have their heads examined. Even though silver was in a deficit consumption pattern, there was little interest in buying it as an investment.



Today, things are different. Natural resources are more widely appreciated, in light of burgeoning world populations and the growth in living standards. Now it is a question of which natural resource will experience the next supply and demand crunch, rather than will there be any crunches.



In the last decade, silver rose due to the cumulative effect of a 60 year deficit and the start of net investment demand. This decade, it will be investment demand driving silver higher, along with the end of the short selling manipulation. This termination appears underway. Thanks to great price performance, more investors will be drawn to silver. Thanks to the Internet, a great manipulative force that restricted the price cannot last much longer. While it may be hard to achieve the 7-fold increase in price from the extreme lows of ten years ago, the gains will still be spectacular and should come quickly. At some point the buying momentum will overwhelm those shorts trying to hold back the tide. The big shorts look tired of the manipulation and appear ready to stand aside on the next big rally.



How many neighbors and friends and relatives and fellow citizens do you know that have made a serious investment in silver? I doubt you can discover one in a hundred, or one in a thousand. Despite the impressive price gains over the past 5 or 10 years, silver is still vastly under-owned and under-appreciated. The investment flows into silver, compared to any other investment class, have been tiny. However, the amount of real silver available for investment is so small that the small investment flows to date have been sufficient to power silver higher. As more investors become aware of the silver story, the money coming into silver will only increase, propelling the price to levels once thought impossible. Importantly, the money flowing into silver appears to be for physical buying and not margin. Bubbles only occur when people are so enamored of an investment that they recklessly borrow to buy as much as possible. We’re a very long way from that in silver. That’s yet to come.



There are now $2 trillion in assets in hedge funds (the pre-financial crisis levels). This is hot money that comes into any promising investment theme in a flash. It is big money, always on the prowl for a good investment idea. To my knowledge, there has been no rush yet into silver by the hedge fund sector. Remarkably, silver recorded an 80% gain last year and a 170% gain over the past two years with no visible participation from the biggest and hungriest investors of all. There is no doubt in my mind that before the silver price saga is finished, the hedge funds will have come into silver in a big way. If silver can climb 80% and 170% without them, what can it climb with them knocking down the doors to get in? The silver story is just getting out. Please take the time to study the facts and act before the big surge.



Source:http://news.silverseek.com/SilverSeek/1297276845.php

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Buying Silver While It’s Still Relatively Cheap - SilverSeek

Richard Daughty, The Mogambo Guru

James Cook of InvestmentRarities.com reminds us, in his “Market Update” newsletter, that the silver inventory held above ground totals 1.4 billion ounces, and that annual industrial use of silver is 900 million ounces, so that a year and half’s worth of silver exists, “although a third of it is destined for industrial consumption,” which has been increasing its use of silver by 18% in 2010.

And it surely will be used in industrial consumption, because as Mr. Cook says, “it’s hard to fathom all the bullish aspects credited to silver. You have a rare metal used in so many important industrial applications as to be termed miraculous,” so much so that “the billions of ounces mined over 2,000 years are gone forever.”

In fact, I am considering raising money to launch a Discovery Channel special, which will be a revealing new documentary that blows the lid off the explosive situation in silver, beginning with how things would have been worse a long time ago if the Neanderthals had invented electrical generation and a distribution network, both silver-consuming, 100,000 years ago.

And ditto those Renaissance hotshots who everybody thinks are so hot, but couldn’t even come up with a good cell-phone, or how Thomas Edison can invent a light bulb and the phonograph, but not take the logical next step of inventing the CD and CD player, which would have produced much better sound quality than those stupid, scratchy, tinny wax cylinders of his.

Now, as interesting as all this is, it is not enough to enthrall us because we have such short attention spans, but as soon as we say, “Bah! Show me how to make money on it!” and reach for the remote control with which to change channels, our ears prick up in sudden rapt attention when he says, “The disappearance of this hoard should have sent the price to much higher levels. It didn’t.”

This seemed so odd that Theodore Butler went to “track down the reason” and, as I understand it, discovered the gigantic short futures position in silver, and all of that slimy, illegal rigging of the silver futures markets, and by extension, all the rigged markets, and all of it made possible only because the foul Federal Reserve created the excess money to finance it all! Hahahaha!

Of course, rigged markets are nothing new, and again our interest wanes, and soon we are beginning to think of pizza, and our stomachs gurgle, “BurrRRRrrRRrrRRp!”

This was unfortunate, because while we were distracted, we almost missed the whole point, which is making a lot of money without working. And on that subject, the aforementioned Theodore Butler writes that JP Morgan, apparently the biggest naked short-seller of silver futures and thus the biggest price suppressor, looks like it has decided to get out of the business of depressing the price of silver by creating and selling so much “paper silver” futures out of thin air, and has unexpectedly “covered roughly 4,000 contracts in the past month and 8,000 contracts in the last two months, the equivalent of 40 million ounces” of silver.

Familiar with the explosive results of suppressed prices that stop being suppressed, I am beside myself in Greedy Mogambo Glee (GMG) in anticipation of silver shooting to the moon, and I am humming the tune “We’re in the money! We’re in the money! We got a lot of what it takes to get along!”

Mr. Butler, who is much more professional than I, calmly and cautiously opines that “This holds profoundly bullish implications for the future of silver prices,” which may have something to do with the fact that covering a naked short position when the price of silver is rising means taking a loss, and, “In the history of the silver manipulation going back to 1983, never has the big concentrated silver short ever covered shorts on rising silver prices.”

I am always impressed with the use of the word “never,” probably because of that time when I was young and full of hormones, when I asked Debra Sue, the hottest girl in the tenth grade and who knew it, too, to go out with me, but she pretended not to hear me, but who told her friend Jessica, who told her friend Mary, who told her boyfriend Bob, who was my friend, who told me that Debra Sue said she would never – never! – go out with me because she thinks I am “icky.”

Sure enough, she never did go out with me! Or even acknowledge my existence, for that matter, except to once say to me, in the hallway outside of the chemistry lab, “Get out of my way, creep!”

That girls think I was creepy is not interesting, not surprising to anybody, but probably the most interesting fact about silver is that it is “used in tiny amounts in its multitude of applications. This makes much of its usage insensitive to price.”

If you are not sure what being “insensitive to price” means, imagine that you are the CEO of a company manufacturing Mogambo Hair-Growing Machines (MHGM) under license from Mogambo Interstellar Enterprises (MIE).

In the course of production, you use one ten-thousandth of a cent of silver per unit, meaning that you use 10 cents worth of silver a day to make a full day’s run of 100,000 units, most of which are defective because my design is bad and I insist that you use the cheapest and shoddiest of materials and labor so as to keep profit margins high enough to make the most money on the front-end before people find out what a worthless rip-off my stupid hair-growing machine really is, and people stop buying the damned things because word gets around that they don’t work.

In my defense, the business plan looked good on paper, but my lack of ethics as the price of greed is neither here nor there, and the point is that you are “insensitive to price” if the price of silver doubles to 20 cents a day. “Ho-hum,” you would say, unconcerned about such a trifle.

And you don’t care if the price triples to 30 cents a day, either, as would be evidenced by another bored “ho-hum” were you even told of this trifling news.

Ditto if the price quadruples to 40 cents a day, or quintuples to 50 cents a day.

And you don’t even care if the price of silver goes up by a thousand-fold to cost you $100 per day, even though there will plenty of people who will care if the price of silver is $29,000 an ounce!

And now with China, a third of the world’s population is going to want electrical and electronic things that all must have silver in them, insensitive to price as those things are, the upper end on the price of silver is so hard to imagine that I don’t even try, and I just buy it now while the price is still ludicrously low.

Whee! This investing stuff is easy!



Source:http://news.silverseek.com/SilverSeek/1297148400.php

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Silver to outperform gold in 2011 - Eric Sprott - PDF Print E-mail Mineweb

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
Author: Marc Davis
Posted: Tuesday , 08 Feb 2011

VANCOUVER B.C. (WWW.BNWNEWS.CA ) -

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.

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. Other similarly oriented funds under his stewardship have also been stellar performers in recent years.

He's now so bullish on silver that he launched the $575 million Sprott Physical Silver Trust in November of last year as he believes that: "Silver will be the investment of the decade."

"I think that silver could easily get to $50 this year," he tells BNWnews.ca.

This all bodes especially well for publicly traded companies that are already mining silver, he says. Likewise for ones that are developing primary silver deposits or gold deposits with plenty of silver as a byproduct.

"If the price of silver continues to go up, silver stocks are going to perform even better," Sprott adds.

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.



Source: http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=120073&sn=Detail&pid=102055

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