Here are a few things to keep in mind while you contemplate your next move:
In order for silver to reach $50.00
in 1980 dollars adjusted for inflation, the price would have to rise to $136.47 (using the calculator at
www.bls.gov). John Williams at Shadowstats.com uses a formula that was used by the government up to 1980 and his calculation shows silver would need to be priced at nearly $400.00 to match the purchasing power of $50.00 in 1980.
According to the CPM Group (Commodity Experts), in 1950 the above ground stockpiles of silver totaled 10 billion ounces.
By 1980 the stockpiles had shrunk to 3.5 billion ounces.
Today the amount of silver in stockpiles around the globe has dwindled to about 300 million ounces.
97% of all the silver that was available in 1950 is gone. The majority of silver applications are in amounts too small to make recycling economic.
Barely 3% of that 1950 silver is all that is still available for use in the manufacturing of computers, cell phones, iPads, TVs, refrigerators, smart weaponry, satellites, medicinal applications, water filter systems, RFID chips and solar panels (the solar panel industry is a very big silver user – thousands of tonnes of silver).
Since 1980 the number of consumers for these products has increased by several BILLION people. Please let this sink in! Most of these people were born into the very countries that have an affinity for gold and silver – China and India.
The thriving economies of China and India are producing thousands of millionaires, even billionaires.
The mismanagement of economies by Keynesians (in 1971 President Nixon said: “We’re all Keynesians now”), guarantees that the monetary inflation that is now above 10% per year will continue to provide the liquidity for gold and silver prices to continue to rise.
Historically, once the leaders of a country decide to use the printing press to pay for the daily expenses of running a country, instead of relying strictly on taxes and user fees, the end has ALWAYS been the destruction of the monetary unit. There are no exceptions.
Silver in the ground is becoming scarce. The easy silver has already been found.
Gold and silver are becoming more expensive to dig up. It takes fuel to turn the drill bit, to build the mine and to run the mine. ‘Peak oil’ is here and cheap oil is history. Chris Martenson (Chrismartenson.com) is on record as predicting oil at $200 a barrel within the next few years. John Hoffmeister, the former CEO of Shell Oil has predicted oil at $150 a barrel by the end of 2012.
A few years ago some stupid people working for several large banks thought it might be a good idea to ‘sell silver short’. They did this at the commodity exchanges by selling contracts to deliver silver they did not own. For a while the game worked out well for them. Authorities at the Comex winked at the fact that these banks would drive the silver price down by selling large numbers of contracts at predetermined times and then buying the contracts back from hedge funds and small speculators who sold to cover margin calls. Although this practice is immoral at best and illegal at worst, it continues to this day. For a blatant example, think back to Sunday evening May 1. The problem these banks now face is that there is not nearly enough silver in the Comex approved warehouses to cover the several hundred million ounces that have been sold short. Every time someone buys a silver contract and takes delivery of the silver, it reduces the amount of silver that is left for future delivery.
During the 1970’s the Hunt Brothers came to the conclusion that many of you have arrived at: ‘silver is underpriced.’ They decided to use their resources to buy as much silver as possible. They bought futures contracts at the commodity exchange and took delivery of the silver. Some of the people who held short positions at the COMEX also sat on the board that made the rules. When the Hunts kept on buying silver, these people with their short positions were beginning to ‘feel some pain’. In January 1980 they changed the rules. Anyone who was short silver (these rascals) could operate on margin, but anyone who was long silver (like the Hunts), would have to come up with 100% margin. The result was instant multi-million dollar margin calls for the Hunt brothers. They had to sell some of their silver and the price began to drop.
I met
Nelson Bunker Hunt at a Jim Blanchard convention in New Orleans shortly afterward and asked him where he thought the gold to silver ratio would end up.
His answer was: ‘10 to 1.’
Today we look at a totally opposite situation to the one faced by the Hunts. Whereas in early 1980 the market was suddenly faced with a lot of silver coming into the market,
today we are faced with a shortage of silver to cover the millions of ounces that some devious bankers have sold short. This has never happened before and may never happen again.
Those of you who are mining executives with cash in the bank, why not hold silver or gold in storage instead of cash in the bank? Your shareholders will be impressed and you will improve your bottom line as the silver and gold you store, rises in value. Your bottom line will grow.
Those of you who are investing in silver and gold substitutes such as SLV and GLD might instead consider buying and storing physical metal, or buying shares in a ‘trust’ where the metal is audited and you are sure that you own a piece of the ‘real thing’.
Those of you who think your portfolio is too small to make a difference in the grand scheme of things should remember that every time you buy an ounce of silver, whether it is a bar or an Eagle or a Maple Leaf, and store it away, you are making sure that the world has a future source of silver and you are taking ounces away from the cabal that is trying to keep your investment from rising to its rightful value.