-- Posted 23 August, 2010 | | Discuss This Article - Comments:
(The Silver Market is tiny, tiny, tiny !)
Silver Stock Report
Please bear with me while I repeat myself about how tiny the silver market is. Let's start with the facts.
World annual silver mining adds about 600 million ounces of new silver, that includes all silver as byproduct supply from copper, gold, lead, zinc and other mines. Recycling contributes about 150 million oz. That's total supply.
That is balanced on the demand side by industrial demand, jewelry demand, photography demand, and investor demand.
Industrial demand is about 45%, jewelry is about 25%, photography is down to about 15%, and investors demand about 15%.
Investor demand is about 100 million oz. per year, which, at $18/oz., is about $1.8 billion dollars.
You can verify those stats at http://www.silverinstitute.org/ or several other outfits that send out silver surveys.
M3, a measure of money in US banks, is about $14 trillion, but several trillion is stored with the Fed, and not counted as M3, and the Federal Budget deficit exceeds $1.5 trillion of new money, so the total is now about $18,000 billion.
So only $1, out of every $10,000, is being spent on silver as an investment each year.
That means that less than 1% of 1% of money in US banks is being spent on silver as an investment each year.
In other words, by the time that 1% of money in US banks recognizes inflation as a problem, and tries to buy silver to protect itself from monetary destruction, silver demand by investors will be 100 times higher than it is today.
What will that look like, when $180 billion, instead of the current $1.8 billion, tries to buy silver in one year? And what will that do to the silver price?
Well, with total supply only about a combined 750 million ounces, we can do some quick math. It will obviously be a raging bull market compared to today, with far more buyers than sellers.
$180 billion (or $180,000 million) divided by 750 million = $240/oz.
That price assumption would assume that investors would be buying about 7.5 times as much silver as today. And it would require that consumption by industry, jewelry, and photography be satisfied only by investor sales.
Often people are confused by such statistics. They try to put their heads around it. They ask things like:
"If silver's such a great deal, how come nobody is buying it?" They just answered their own question, if they think twice about it. Silver is such a great deal because nobody's buying it! If everybody were buying it, silver would no longer be such a great deal. Or, in fact, if only 1% of people were buying silver, the silver price would likely be more than 10 times higher than it is today.
Or, they will state, "Well, nobody I know is buying silver, I'll wait until a few of my friends buy silver, first." But that's a big mistake. Unless you know of the secret investment habbits of tens of thousands of people, that not even brokers would know. Because by the time one person in 100 is buying silver, then the silver price will be several hundred dollars per ounce!
You could say, the price is too low, because nobody is buying. Or, you could say that since nobody is buying, it creates a price that is too low. Which is the cause, which is the effect? It does not matter, they correlate.
The silver story is simple. No nation on earth is using silver as a circulating medium of exchange. That creates a reduced form of monetary demand. It does NOT mean that silver is no longer money, since money is at least three things; a medium of exchange, a unit of account, and a store of value. So if anyone is buying silver as a store of value, then those people are using silver as money. Investors who are buying about 100 million oz. of silver per year are showing that they value silver as money, because they perceive silver to be a great store of value.
The best news about silver in the last few years is that the US Mint is minting about 40 million oz. of silver Eagles per year now, up from 28 million oz. in 2009, and up from an average of about 10 million oz.
We estimate that silver eagles are less than half of the silver purchased for investment at www.jhmint.com
If that is a national trend, then the USA could be responsible for nearly all of the 100 million oz. of silver purchased for investment each year, worldwide.
This is great news, since it suggests that US investors who are buying precious metals, are very educated about silver.
Sometimes I wonder where they learned about silver, but a lot of my customers have found out about my Silver Stock Report online.
This should be no surprise. My report goes out to 80,000 emails. If money were people, and if only 1 person in 10,000 is buying silver, then you'd expect there to be only 31,000 silver buyers in a nation of 310 million.
But this also suggests that as the bull market in precious metals hits the USA, that silver purchases will continue about equal pace with purchases of gold!
This trend of the people of the USA so heavily buying silver will dramatically increase the silver price more than the gold price, given that the world produces about $80 billion of gold per year, but only about $10 billion of silver.
It is also important to note that paper silver exceeds $200 billion. If only a small fraction of people who own silver on paper, or on deposit with lying brokerages (and they all lie), would convert that silver on deposit into silver in their hands, then the silver price will indeed explode.
I refer you to statistics as reported in my complaint to the US department of Justice:
Advertisement: If there are any lawyers reading me who would like to re-write my DOJ complaint in a more official legal complaint, please propose to me your fee for doing so, and I will consider your offer.
THE SILVER CIRCLE MOVIE
It is important to note, in light of the tiny silver market, the overwhelming need for public education, or propaganda, about silver and money, such as a movie! There is a great movie in the works that will be about silver as money, called "The Silver Circle Movie", that will take very little to finance. I've read the script, it's very good, a nice and suspenseful Hollywood thriller, where the hero has to learn about the importance of silver, and the evil of the Federal Reserve, in order to solve a crime. The producers are seeking to raise about $6000 more to hire actors, which will be painted over with computer animation. Please help out the cause. I can't do this alone. Here's their online pitch, it's very funny:
Bullion Specials at JH MINT:
As indicated at the JH MINT price board, we have over 50 of the 100 oz. silver bars that are now only 6.2% over spot.
We also can source a 1 kilo gold bar, that's 31.1 oz. of gold, at 4% over spot!
I strongly advise you to take posession of real gold and silver, at anywhere near today's price, while you still can. The fundamentals indicate rising prices for decades to come.
JH MINT Price Board:
In case you miss an email, check the archives (scroll down) at www.silverstockreport.com
For the Biblical case for the benefits of using honest money, see www.bibleprophesy.org
-- Posted 23 August, 2010 | | Discuss This Article - Comments:
Last Three Articles by Jason Hommel, Silver Stock Report