How The Silver Shortage Will Unfold
gold-eagle.com
...The greatest demand for physical silver - a little over half of the total - is coming from China and India. In this article, I shall address what is going on in India; and, perhaps, someone else can write a complementary article on the silver market in China.
About two-thirds of total Indian silver demand comes from the rural area. In rural India, silver is almost the sole form of savings, since gold is now affordable to only a few. Let us assume, conservatively, that the average Indian farmer manages to save the rupee equivalent of $100 in a good harvest year. Yes, let's assume just $100. There are almost 250 million farmers in India. Supporting these farmers and their families are rural businesses that mostly take the form of mom-and-pop stores. Add all this up, and the total agrarian population is around 800 million. Let us assume that each one of these folks saves $100 a year, under favorable harvest conditions. There is a great distrust of banks among rural Indians; so let us assume that, at least, 300 million people, out of the total rural population of 800 million, will put their individual savings of $100 this year (India has had a good monsoon this year) into silver. (Gold, simply, has become unaffordable to the rural community, and is being purchased, in significant amounts, by the wealthy and upper middle classes). This gives us a total savings pool of $30 billion. At $30 per ounce, it is possible that the entire above-ground supply of silver could be gone this winter, courtesy of the Indian rural population, all by itself. If silver falls to $20 per ounce, the average Indian villager is going to scream with delight when he discovers how much more silver his rupees are going to buy. |
