Jump to content

Recommended Posts

SILVER thread

 

SLV / Silver etf ... Two year chart : 5years : 6months : 10days : Latest

Jan. 2013:

slvo.gif

==============

 

(Original Comment : Aug. 2006):

First, the downside:

 

It's VERY volatile, (gold fell 1.8% this week, silver fell 4.8%), but if you hold physical without leverage that doesn't matter so much.

 

It's hard to store, but ... you can buy the ETF (SLV), and pay nothing, or use Goldmoney.com or have an unallocated account with Baird's (goldline.co.uk) and pay a bit. (2.5% for Goldline)

 

What I Like About It:

 

It's a double play: a monetary metal and an industrial metal. It will go up significantly if the commodities boom plays out. It will go up significantly if Fiat currencies, the dollar in particlar, come under pressure.

 

There is more upside potential than gold.

 

My own experience is that I bought a load of physical gold and silver earlier in the year. The silver has gone up by considerably more.

 

Looking at the wider picture, currently, the gold silver ratio is about 53:1 or more. In olden times 14 or 16 (depending on which history you read) silver coins were equivalent to a gold coin. So a ratio of, say, 15:1. If the gold price stays at 625 and we return to that historical ratio, silver should be $41.6 - nearly 4 times its price today. If gold goes to Sinclair's $1650, and the historical ratio returns to the mean, silver will be $110. About TEN times its price today. Gold will merely have trippled.

 

If gold goes to James Turk and Marc Faber's $5000, and we get that return to the mean, you're looking at $333 silver. A cool thirty bagger.

 

But there is more to it than that.

 

Because gold has comparitively little industrial use, it doesn't get consumed. The amount of gold in the world doesn't change that much year on year. It increases by the amount that gets mined every year, less the amount that gets lost.

 

Silver, on the other hand, gets consumed. It is widely used in minute amounts as a very efficient electrical conducter in mobile phones and computers, for example. But the amount is so miniscule as to make it not worth recovering when that phone or computer is no longer worth using. So gradually the amount of silver in the world is decreasing, by more than is being mined each year. Previously this didn't matter as the surplus of junk silver coins in the US compensated for the consumption, but that supply has now gone and the US government is now a net buyer.

 

You're looking at a very basic supply and demand situation which at any moment could cause a dramatic spike upwards in the silver price.

 

Silver gets used in such small amounts, yet so widely, that a spike up in the price wouldn't actually have that serious an effect on the books of that mobile phone or computer manufacturer - a similar phenomenon goes on with uranium.

 

Some silver bugs have argued that the diminishing supply of silver could even push the gold silver ratio to 1:1 . I think that's unlikely, but that would make silver a 60 bagger at these prices and god knows what if gold goes up too.

 

I will start buying significant amounts of silver with my STR fund, when I feel the August correction is at or reaching its low. I will buy it and hold it, tempting though it is to trade in and out.

 

I'm hoping for $25 silver by the spring.

Share this post


Link to post
Share on other sites

at the moment I am equally weighted in gold and silver, but if the ratio ever got to 15/1 I would switch over to gold. My view is that silver would be crushed in a serious deflation and even in a recession it would get pulled down as a commodity. What bothers me about silver is that a large % of silver demand is silverware/jewellary which is a flaky underpinning in a downturn. The Photo use bothers me as well as demand falls, processor stock will get released to the market.

That being said there is a potential for a silver spike and in a downturn supply could fall faster then supply as most silver is a byproduct of copper etc. A conservative PM allocation might be 10% silver and 90% gold.

Share this post


Link to post
Share on other sites

SILVER: Better than Ever, says Butler

==========

 

Better Than Ever / By: Theodore Butler / 15 August, 2006

 

Since I don’t like to beat around the bush, let me state that right now I think silver is a better investment than it has ever been. Yes, I know silver was much cheaper a short while ago. At that time I tried my very best to convince as many people as I could to buy it under $5. Many did and are glad they bought it.

 

But silver is no longer $4.50 an ounce. Now it’s $10.00, so how the heck could it be a better investment at a higher price. Am I just a perma-bull on silver at any price and condition?

. . .

...we have yet to witness the counter-balancing up move in silver that we will see when the manipulation is terminated. Since it has not been terminated, but will be, the bullish impact is still ahead of us.

 

The world is a different place, price-wise, than what it was 5 or six years ago, When I started writing for IRI, silver was $4 to $5 an ounce. At that time, crude oil was under $30/barrel, on its way to a $16/barrel low. Gold was around $260 an ounce. In the base metals, copper was 80 cents a pound, zinc was 30 cents a pound and nickel was $2.50 a pound.

 

At their recent highs, measured from the low points, gold was almost 3 times higher and silver was almost 4 times higher. For crude oil and the base metals listed, the trough to peak advance was almost 5-fold. Most of the gains have come in the last year or two. So, in a very real sense, silver has only slightly outperformed gold over the past 5-6 years, and has slightly under-performed oil, copper, zinc and nickel. Silver has also outperformed aluminum and lead, the remaining major base metals. Silver does not look overvalued on a comparative basis.

. . .

The increase in oil and energy prices greatly increases the cost of mining, smelting and refining. This makes the finished product, real silver, all the more valuable. Minerals and metals are finite in nature and once they are gone, they are gone forever. Peak production concerns seem to be creeping into a broad range of commodities In other words, the "easy" oil, copper, zinc, etc. has already been found and exploited. New mineral discoveries are smaller and more expensive to develop and may not keep up with current production levels. Silver is no exception.

 

...we have a powerful new force in silver inventory accumulation – the silver ETF. For the very first time, institutional investors have been given access to silver. In the first two and a half months of its existence, the silver ETF has accumulated over 91 million ounces of silver. That’s 70% of the 130 million ounce total they filed for. This is a much greater demand than anyone had anticipated.

 

Not only does this show what institutional investors feel about the value of silver, it has effectively taken silver off the market at current prices. The silver in the ETF has shortened the time silver investors must wait until the manipulation is terminated and prices truly break free to the upside. Remember, the gains, to date, in silver have not overvalued silver compared to all other commodities, demand continues to grow, and production is constrained by increased costs and availability of big ore bodies. Meanwhile, inventories continue to decline.

 

Because silver has declined more from its price peak in relation to gold, I think a special opportunity is once again being presented to gold-only investors. If you own no silver, a switch of some of your gold to silver seems appropriate. Since I first suggested this switch (in 2000), silver has more than held it’s own, performance-wise. Since then we know we have more gold and less silver in the world.

 

We also know that in that time the dollar value of world gold inventories has grown by $1.5 trillion to $2.5 trillion, while silver inventories have increased in value by only a few billion dollars, to $10 billion. In dollar terms, there are still 250 times more gold than silver even though silver has performed better than gold over that time. Someday, a sufficient number of gold investors are likely to recognize this disparity and attempt to rebalance their holdings. This would have a profound impact on the price of silver. This is another reason why silver is a better buy than ever.

 

...MORE: http://news.silverseek.com/TedButler/1155668561.php

Share this post


Link to post
Share on other sites

I like silver too, despite getting creamed by the recent correction. I expected one - thought I'd average down to build a long term position - but hadn't banked on it falling 37% B) This is the downside of spreadbetting. I'll have made it all back and more by the time we're back up to $15 though. Well on the way already.

 

I like the fact that the central banks / PPT can't dump it on to the market (although they can probably sponsor silly games in the paper market).

 

I like the fact that the total size of the market is tiny. If a few big hedge funds decide to go in long and strong, they could pretty much run the price up to whatever they want I suspect. I watch the inventories quite closely - if they start to dwindle, I think it'll be a clear sign of a possible repeat of what we've seen with copper earlier this year and nickel at the moment. It could blast over $20 within weeks under the right circumstances.

 

Ted Butler is very persuasive, although I suspect it's really just speculation rather than particularly valuable insight.

 

At the moment my spreadbetting exposure is about 50/50 gold/silver. Silver currently outperforming gold and looks like it wants to go higher faster, but if the general market switches to bearish on the economy and stocks, gold could regain the initiative.

Share this post


Link to post
Share on other sites

I used to read Teds stuff all the time, and there were some good short term gains to had for the past couple of years as the tech funds would bid the price of silver up and then the commercials would heavily sell.

In that article I don't like his logic about silver being rarer then gold, in my mind one can't compare the store of a consumption metal to the store of a hoarded metal.

Realisically silver will never be a money metal again, even if it increased by 10 times, it would still be too heavy to skip town with ;-)

Share this post


Link to post
Share on other sites

Like gold, it would be great if this would come back down to the 200dma some time soon, thus marking a clear entry point:sc1ko3.png]silver[/url]

sc2sj0.png

Share this post


Link to post
Share on other sites

What's Next for Silver?

 

by Doug Casey

August 21, 2006

 

A lot has happened since publishing "Silver on Sale," in the June 2004 editionof our International Speculator. As predicted in that article, the price of silver has risen strongly, more doubling from $6.09 to the current $12.18, with a peak of as high as $15 in May. The performance of silver has outshone even gold: silver was up almost 31% in 2005, compared to gold's gain of almost 18%. Now some investors are asking: "Was that it?" And if we aren't near the top for silver, then how high will it go?

 

To answer those questions, let's revisit the fundamentals, look at what specifically is driving the market today and then make some predictions.

 

Silver -- The Fundamentals

 

There are important differences between silver and gold. The demand for gold is almost entirely a demand for holding the stuff for financial purposes (protection and profit) and for uses, such as jewelry. Very little gold is actually consumed. In this respect gold is the polar opposite of a base metal, such as iron, that people buy exclusively for purposes that use it up. Silver has a foot in both worlds; some is bought for uses that will consume it; other ounces are held for financial protection or profit.

 

Most of the gold ever mined (including the metal in Baal, Cleopatra's necklace and what Alexander looted from the ancient cities of West Asia) remains above ground in various easy-to-melt forms. The reasons for gold's physical persistence are chemical -- it is nearly inert, so it doesn't corrode -- and economic; because of its great value, very little gets lost or discarded as waste. Annual mine production is small compared to the existing stockpiles -- on the same order as the small amount of gold that is lost or consumed each year. So the size of the existing stockpile doesn't change much. Fluctuations in the price of gold come almost exclusively from fluctuations in the demand to hold the stuff.

 

Ounces of silver, on the other hand, come and go -- not as quickly as tons of iron but as inevitably. Silver, unlike gold, is chemically active. When silver is used, much of it gets used up -- consumed beyond practical recovery. And because silver is so much less rare than gold, less effort goes into salvaging and protecting it. Annual mine production and consumption are large compared to existing stockpiles, so fluctuations in price come from changes in both those factors and also from changes in the demand to hold silver for financial purposes.

 

Silver Today

 

The uses for silver in modern industry are growing. It is the best conductor of both heat and electricity, the most reflective, and (after gold) the second-most ductile and malleable element. It is used in photography and for many electrical applications, particularly in conductors, switches, contacts and fuses. Silver alloys are used in batteries as cathodes. As a bactericide, silver is used in water purification and air-handling systems -- we recently came across an ad for a silver-lined washing machine that claims to need no detergent to produce clean laundry.

 

The uses for silver are so numerous that, despite the dwindling role in photography, you can expect demand to remain strong as long as industrial economies remain strong. And they have been so for some time now -- with China and India leading the charge.

 

But since the Hunt brothers' ill-fated attempt to corner the silver market back in 1980, there has been little investment demand for silver from the public in developed countries. This has clearly and unequivocally changed, as evidenced by the new silver exchange-traded fund (ETF) from Barclays.

 

Supply Side

 

Most silver mines are really lead-zinc-silver mines or copper-silver mines or gold-silver mines, from which silver is a byproduct. In fact, 70% to 80% of all silver comes as a byproduct of copper, lead and zinc mining. Because the byproduct element is so large in the supply of new silver, production doesn't respond much to price. This puts the few mines that do produce primarily silver in an extremely risky position. Over the last two decades, with silver being dug out by copper, lead and zinc miners regardless of how low the price went, most pure silver mines consistently lost money, and none were especially profitable. For more than 20 years preceding 2003, no pure silver mining company generated free cash.

 

However, there are many known silver deposits and proven reserves poised for production as soon as silver crosses whatever price line makes them economically viable. Furthermore, low silver prices don't necessarily halt exploration: it's the prices of copper, lead and zinc that drive exploration.

 

So, with silver hitting record highs and base metals doing the same (increasing the flow of silver as a byproduct), hundreds of millions more ounces of silver will be heading for the market. According to the latest projections in the CPM Group's CPM Silver Yearbook 2006, there may even be a production-consumption surplus of 48.4 million ounces of silver in 2006, the first such surplus since 1989. However, those figures don't include investment demand. The production-consumption surplus means that inventory will increase, but that still doesn't tell us where the price is headed. If financial demand (to hold silver for protection or profit) increases faster than the accumulating physical inventory, the price will keep going up. But will it?

 

Demand

 

For one thing, consumption has been eating into above-ground stocks of silver at a phenomenal rate for decades, eroding total world bullion inventories from an estimated 2.1 billion ounces in 1990 to around 400 million ounces today -- a drop of 1.7 billion ounces. A large chunk of the drop, about 240 million ounces, came from government sales. But that source is almost gone, with governments holding only about 87 million ounces at the end of 2005.

 

For another, silver is like uranium as an industrial metal, in that it is hard to replace and it is used in such small relative quantities, that the price could double or triple without having a major impact on industrial usage. But the main reason, as mentioned above, silver is being rediscovered as an investment vehicle, most notably in Barclays' new silver ETF (SLV).

 

The advent of Barclays' silver ETF has been a big factor in the price of silver lately, if only through the expectations of speculators. The popularity of the streetTRACKS Gold Shares ETF (GLD), which has raised $8.13 billion since it began trading in November 2004, suggests that Barclays' silver ETF will pull a lot of silver off the market. As of this writing, August 7, 2006, it has already sucked up 92.4 million ounces of silver. There goes the supposed surplus.

 

And as silver gets back on trend, and gets noticed by an increasing number of investors, the ETFs will make it easier for those investors to participate. That is also true for certain institutions -- most of which are barred from owning physical metals - so they will, in essence, uncork a latent source of investment demand. And Barclays' silver ETF may be even more important than GLD. In Europe you have to pay a VAT (17.5% in the UK) on the purchase of silver bullion bars, as the metal is used in manufacturing. This is a blight on active trading -- a market niche the new ETF accommodates free of VAT.

 

Throw in well-deserved concerns about the U.S. dollar and about the at-least-it's-not-the-dollar euro, and increased financial demand will almost certainly outstrip any increase in global silver production for the next couple of years. And, of course, if there's a major economic crisis, the production-consumption surplus will be utterly swamped in the mad dash to get out of paper and into precious metals -- a transition the ETFs will facilitate greatly.

 

What About Scrap Silver?

 

There is another potential source of silver -- the tons of it that people hold in the form of old junk. If a high price for silver starts getting people excited, won't the masses send their broken candlesticks and seldom used spoons and trays to scrap dealers? Will that source of supply turn into a flood, as it did so dramatically during the 1980 price spike? At some price, yes - but probably not for a while.

 

Stable higher prices will encourage people to sell. But rising prices and the reasons for the growing financial demand will encourage people to put off selling even their unloved, broken candlesticks. Even as the incentive to melt down Grandma's tea set increases, the "silver is money" factor pushes the other way.

 

In 1974, silver was at $6.70, about twice today's price in constant dollars, but supply from all secondary sources was less than 170 million ounces. And in 1980, when silver reached its peak at $48.70 per ounce, secondary sources provided just 302 million ounces -- a big number, but nothing like 20 billion ounces. Furthermore, the great bull market in silver that ended in 1980 came after a hundred years in which the public accumulated relatively cheap silver. A lot of that was cleared out -- melted down -- in the early 1980s, and there hasn't been as much time to replace it. Not only that, we suspect that relatively few people have bought much made of pure silver since 1980; if you can't afford gold, why pay for solid silver when you can get something electroplated that looks just as good for a fraction of the cost?

 

Conclusions

 

Will silver hit its previous 1980 high? It was $48.70 then, but that's $120 in today's dollars -- almost 10 times the current price. Given that just below the surface, the threats to the U.S. economy are even greater today than in the late 1970s, we can easily envision silver closing in on its previous high and even going way beyond it.

 

When will this come to pass? No telling. But, periodic and inevitable corrections aside, it's going to happen, of that we are confident. And, more to the point of our service, when it does, the silver stocks we follow on behalf of our readers won't just go to the moon, they'll leave the solar system.

 

Doug Casey,

Casey Research, LLC.

Share this post


Link to post
Share on other sites

I was looking at the COT for silver and it looks bullish in my opinion, the commercial shorts were low compared to previous months which implies that they expect silver to go higher. Interesting to see what happens.

Share this post


Link to post
Share on other sites

Interesting article in Scientific American September 2006. A great Special Issue ' Energy's future beyond carbon'

It appears that normal superconductor cables (BSCO) are now being developed that will see a moving away from the use of silver. These new ribbon YBCO cables do not need to be sheathed inside silver. This has always been the main reason why i believed silver to be a great hold for the future but now I'm not too sure, Anyone else have any comments or knowledge of this ( I would type out the whole article but its a bit long)

This link gives a flavour though

 

http://physicsweb.org/articles/news/10/7/11/1

Share this post


Link to post
Share on other sites

I want to buy 100 silver 1oz coins. I've been quoted £9.63 for them when on kitcosilver.com it would only be £7.85! Pesky VAT!

 

How do get on the SLV ETF? I went to iShares.co.uk and couldn't find it!

Share this post


Link to post
Share on other sites

Try - http://www.thesilverxchange.com - for physical silver, as recommended by Mr Nice. They send it to you from the US and you can usually avoid VAT.

 

Also goldmoney.com , which I use.

 

Baird's have silver pools.

 

SLV is traded in dollars, s you need an account that trades American stocks.

Share this post


Link to post
Share on other sites
Try - http://www.thesilverxchange.com - for physical silver, as recommended by Mr Nice. They send it to you from the US and you can usually avoid VAT.

 

Also goldmoney.com , which I use.

 

Baird's have silver pools.

 

SLV is traded in dollars, s you need an account that trades American stocks.

 

These new London based ETC's will trade in pounds? One of them is silver.

 

http://www.thebulliondesk.com/ReportItem.a...Code=0830113743

Share this post


Link to post
Share on other sites

SLV can be bought on Squaregain - I also use goldmoney. Bought all physical last year from a coin dealer locally. Tried to buy physical from the US but most dealers wouldn't sell. Canada probably the best bet - I was quoted by a Canadian firm not including VAT. Unfortunately my laptop blew up recently so I haven't got the email but they should be easy to find. They would ship in 100 oz parcels - up to you to declare and pay VAT

 

You could also invest in silver stocks to gain exposure - I have SSRI, Minco, Ovoca (silver mine in Russia), just bought Arian for wifes pension. Check out www.silverstrategies.com for info on all the silver miners / explorers. I also hold gold - physical and GBS, Goldcorp, Mercator and ML Gold and General.

Share this post


Link to post
Share on other sites
A loss of almost a dollar in two days gives you an idea of the volatility of the thing.

 

Indeed, and given how strongly silver seems to be linked to stocks i would be amazed if silver didnt continue these falls this autumn and make a new low below the sub $10 June lows.

Share this post


Link to post
Share on other sites

Cyclical expect fred starkey is very keen on silver.

 

He sees a low around nov.4th-6th, and then a takeoff.

His target is $18 by the first quarter

 

= =

 

Silver Wheaton (SLW) charts well : see chart

 

looks like current $9.60/70 level is resistance.

might it fall back towards $8.00, going into starkey's early nov. low?

Share this post


Link to post
Share on other sites

"How accurate have his calls been?"

 

from my very limited experience: Mixed. He has made some good calls

 

Let's track this one, and see how he does

Share this post


Link to post
Share on other sites

Another silver bull Sean Broderick here: http://www.streetiq.com/dir/GOLDRADIO.shtml

 

Should also mention The Silver Summit, next week Nov 9. See you there: http://www.thesilversummit.co.uk/index.htm

 

Top Performing Stocks

 

Symbol % Change

FR.V 40.45

EPZ.V 40.00

SVL.V 27.54

MAG.V 27.27

IPT.V 21.00

GPR.V 20.24

ABI.V 19.23

SLW.TO 18.02

SVM.TO 16.14

MGN 14.29

Note: Based on daily close price

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×