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“Few
investment opportunities arise in our lifetime like silver. The stage is set
for a silver price percentage gain of extraordinary magnitude! Forget the
popular refrain of “Got Gold?” and make some additions to your
portfolio to take advantage of the coming silver supernova!"
So said Donald
J. Poitras in an email he sent me after reading an updated version of a recent article by me about
the possible impact the historical gold:silver
ratio could have on the price of silver should gold go parabolic to various
levels. With Poitras’ permission I present
below, in a reformatted and edited version, his views on why he
believes there are other sound reasons why silver, in and of its self, can
expect to experience a “percentage
gain of extraordinary magnitude” in the years to come. As Poitras sees it:
These Facts About Silver Say It All
a) Diminishing Supply: Increasing Demand
- Only 600
million ounces of silver are mined yearly yet industrial demand, with new
uses being implemented every year, is currently over 900 million ounces per
year.
- Investment demand for physical silver has exploded with the advent of silver
ETFs and the increase in actual ownership of the physical metal by interested
parties worldwide. China, for example, is now encouraging its citizens to own
silver. Demand is such in the U.S. that he U.S. mint is rationing silver
coins.
- Total known world above-ground silver inventories have declined by more
than 98% in the past 75 years.
b) Massive Short Position Exists
- Silver
has a massive short position, probably greater than any commodity in history.
If one factors in short positions on COMEX and the leasing of silver by
bullion banks, banks and brokers selling silver certificates and other silver
instruments with no silver to back them then it is quite possible that hundreds
of millions – perhaps even billions – of ounces of silver are
sold on paper that do not physically exist.
c) Inground Silver Is Limited and Will Become
Much More Expensive to Mine
- The
average occurrence of silver in igneous rock (igneous rock composes ~92.5% of
the earth’s crust) is 0.07 PPM or 0.07grams of silver per metric ton of
igneous rock, which means that on average 444.3 metric tons of igneous rock
must be mined to obtain 1 troy oz of silver (1 metric ton/.07gram
Ag)*(31.1gram/1troy oz)!
- Because of the geological phenomenon of epithermal deposition, very little
silver remains underground.
- Only the recycling of silver-containing products, the mining of scarce
surface silver veins and the silver by-product of base metal mining can
provide fairly cheap silver.
- Silver is not found in placer deposits like gold but in veins and these
silver veins are formed as epithermal depositions or condensation near the
earth’s surface (like whipped cream on the surface of coffee). Simply
put, the richest silver deposits are nearest the surface of the earth, and
the deeper mines go, the less silver they tend to produce. Economically, the
deeper the mine, the more expensive the silver is to obtain.
The Result: The Price of Silver Can Only Increase – Dramatically!
- As
current silver is depleted from the abovementioned epithermal deposits and
mined deeper at much lower grades (approaching 0.07 grams per metric ton),
the costs of mining silver must skyrocket and consequently the price of
silver must explode.
The stage is set for a silver price percentage gain of extraordinary
magnitude! It is time to embrace the new refrain “Got silver?”
Lorimer Wilson
MunKnee.com
Lorimer Wilson is Editor of www.FinancialArticleSummariesToday.com (F.A.S.T.) and www.MunKnee.com (Money, Monnee,
Munknee!) and an economic analyst and financial
writer. He is also a frequent contributor to this site and can be reached at
editor@munknee.com.
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