Supply and Demand states that Silver must rise in the long term?

You could also apply your scrap conclusion to steel, aluminum, copper and etc. In 2010 alone 100 million ounces wnet to striking bullion coins and another 178 million went to support investment, That is 1/3 of the years mining production basically stuffed into raw silver inventory. That is 60% of annual industrial use. We are not going to run out of silver anytime soon as this is the way it has always been with silver. The above gound inventory of silver just grows bigger every year and it is huge and large enough to support the world's industrial needs for generations to come. Really very little of annual silver production is consumed and lost to the ages. In most applications it is easily recoverable. The required supply of silver to meet demand will always be available - all that matters is finding the price that makes it available.

 

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I simply do not know the answer. Do we know for a fact that a polymer cannot be as or more efficient in that use as silver? Silver may be the most reflective METAL, but I do not know if its the most reflective SUNSTANCE in that application. Even if its not, do not dismiss "cheaper". "Cheaper" is what allowed Americans to all drive cars, since most of us could not afford custom fabricated Bugattis, cheaper allows us to own cell phones now that were once the status symbols of the 80's. In many ways, inventing something has not been what has helped the world, its inventing the way to make something cheaper, and therefor affordable to millions of new consumers, which is what truly advanced a field.

Btw, regarding on how "strong" coin holders are of silver, (a point frequently argued here to say that the huge booming "consumption" of silver is not inventory), I was at a coin show in Bloomington yesterday and saw a garbage can full of US and other mint packaging completely full. The people are buying these proof sets and pulling the coins out to melt. If proof sets and the like are getting melted, why are we so sure ASE and other bullion coins would be immune?

 

And I respect yours as well sir. I am glad we disagree, gives me impetus to think about why I feel the way I do, and believe it or not I do change my mind on things from time to time. Healthy, honest disagreements are the lifeblood of this forum.

 

It's a good question. I don't think the government cares about silver prices, which may be a minority view here. Lower prices will only lead to lower supplies and shortages [at least at the margin in the case of primary silver miners]. That isn't in the best interest of industry, and won't win any votes.

 

How about emerging markets? What about these 3rd world countries that are just now having their industrial revolutions? Are they suppose to use some other conductive metal in their TV's, Computer's, Medical Equiptment? How about the world population. Is it not increasing at an increasing rate? I can look at flow charts, statistics, and market trends all day long but what about China? They are currently building entire Cities in South America to support their own industrial base. I bet you that less than 1/3rd of Chinese farmers have migrated to the east coast. What about India? Slap another billion on that burger. What I'm seeing is an extremely high demand for industrial metals. Silver being the most conductive to electricity is one of them.

 

All good points, but again copper is an excellent conductor at 1/100th the price. In most applications concerning electricity there is absolutely no need to have to use silver. In fact, in very many applications aluminum can be substituted for copper, and has already. This is actually speeding up in some electrical applications.

I actually find your arguments supporting more "base" metals like copper, aluminum, and steel more so than silver. I also agree with that view, which is why I am invested in some large producers of base metals. But, think of this. With higher demand for copper, much more silver will be mined as a byproduct. This silver is essentially "free" to the copper producer, and will be sold at any price as long as its profitable to mine the copper. So, how will this affect the price of silver long term? If copper demand goes up considerably, I could see it actually curtailing silver pricing.

Gold is different, and is being pushed by India and China's cultural dispositions to them in my view.

 

There has been a manufacturing improvement that replaces silver paste in solar cells with electroplated copper similar to that used in semiconductor manufacturing. It wasn't done because silver costs more, because the amounts are miniscule in the first place, but because it makes the solar cell more efficient.

It should be noted that large scale solar power generation is most effectively performed by focusing light to a single point for the purpose of boiling water which is then used to turn a standard generator. Efficiencies are much higher.

 

I wish I could interview William McChesney Martin Jr. as well as his father.

 

Yes you are correct. I remember seeing a solar plant in southern France with this type of power generation.

My favorite type of solar power generation uses no photovoltaic or reflective metals at all. In Australia and Israel they have towers that are dark. They put seawater in the bottom and the heat inside the towers create a wind current that turns blades implanted into the tower to generate electricity. The only requirement is any type of water, (salt, brackish, etc will do).

 

The reasons you cite no doubt played a part in moving the price of silver from $5 to $30 over the past dozen years or so. It will no doubt continue to provide a tailwind absent a global economic crash. But at some price, silver substitutes will be used even if their performance is slightly inferior -- or people will do without.

 

The correletion between oil and PM's is about the same as that of Corn, plywood, pork bellies, etc. Traders move money from one commodity to another with an investment strategy. This can cause wide fluctuations in underfunded markets like PMs.

The Chinese opened private ownership of PMs a couple of years ago. As the Chinese, who like everyone else (perhaps moreso) have a basic distrust of currency and government are buying and holding the metal as individuals. Coupled with India, whose people have a love of the stuff, a HUGE market is created. Add international buying power through the internet and the whole picture is changed somewhat. The government or banking investor will still exercise a major influence, but not as much as they once did. There are a billion people who can now legally own some gold or silver as a form of insurance that couldn;t before. And owning PMs is insurance. That's all it is. Protecting what you have against future economic changes. If people in China have increase in buying power, they will buy more metal.

That's how I see that aspect. Now there is a PM bubble. Modern mining techniques can get the metal out more cheaply than ever before (factoring inflation). If silver fell to $15, the mines would still operate at a profit and would keep mining. Will the bubble pop ? Sure. When ? Who knows. But if you buy and sell following the trends with some luck in the timing, you will profit either way............hopefully. At least that's what PM dealers try to do.
IMHO

gary

 

http://www.bochk.com/web/common/multi_section.xml?section=investment&level_2=precious_metals&fldr_id=251

The truth is somewhat different than the implied ( by many bullion sources) that Chinese citizens can buy and hold gold freely. When you read the 3rd bullet on the above URL, you will see that the Chinese citizen gets "Paper gold" like buying "GLD" , and it specifies that no physical metal will be given. The Bank of China will possess the gold metal. Smart really, get the citizens to use their money to buy physical metal for their country, which will give them paper assets when they want to settle.

The "cute" kicker is when it says that is so the citizen doesn't have to worry or be troubled with a metal transaction

Also this in the URL

 

Central banks don't hold corn, plywood, pork bellies as a legal monetary asset guaranteeing their base money supplies. They hold gold and USD for this purpose and with oil, which is only bought and sold in USD, is a requirement for an economy as a country either sells it or buys it. There are easy substitutes for the other items you mention.

We just had a bankster hit on PMs that knocked the wind out silver in 1.5 hours. Yet if this was just a suppy & demand issues like corn and pork bellies, then you would never see such price action. I'm always wonder how these sorts of sharp corrections and reversals are accounted when the theory is put forth that PMs trade just like any other commodity.

 

Pork bellies aren't volatile? Not commenting on the rest of the post, (agreeing or disagreeing), its just I have seen just as much volatility in many agricultural products as shows up in PM's. I don't think PM is unique in that regard.

Btw, just curious. Why is is regarded as a "bankster hit" and not "buyers overbought, and the market corrected"? Why is every downturn always correlated to a nefarious activity?

 

I know you didn't ask me, but When Ron Paul held up the silver coin to Bernanke last week silver immediately plummeted 10%. Sure that's not a very good reason, albeit interesting nonetheless. The real reason is because in that drop there were 225 million oz of paper silver sold on the COMEX, yet they only have 30 million oz in their vault. That is what we call naked shorting.

 

And how many contract on margin were bought? How many contracts were "bought" with money the buyers didn't own? Evidently if they were sold someone bought them. Do you really believe the buyers could ever use that much silver?

Did the 225 million ounces of new paper correlate with any paper retirement? Was it an abnormal amount?

I don't know the answer, just asking.

 

This was just discussed in the negative lease topic. It's been discussed many times on this forum where you have participated. No need to repeat it here. If you simply choose not to believe it, you should just state this and move on.

I will contend that a perishable commodity, where someone always takes delivery, unless they are destroying train loads of corn & wheat, finds its value. This is unlike silver & gold, that sit in a vault, where the physical supply changes little, and thus isn't forced into a delivery situation by its physical nature.

 

That was an older thread. I had no way of knowing which "bankster hit" you were referring to, as there always seem to be so many being carried on..........

 

"Free market on the way up, the man on the way down."

Reverse the phrase if you're short.

 

Did you know that the state of Maryland has a "Doomsday Budget?" Not sure if I should feel comforted or worried?