Mark, et. al.
May I suggest that everyone examine a chart of silver price for the span 1965 - 1982. It will show you how patient you will have to be to catch the big wave.
Its deja vu all over again. The current expectations for silver are a mirror of the 1965 - 1982 period. In the '70s silver demand exceeded supply, the public and "smart money" were accumulating, there was an expectation that a silver shortage would arise when excess inventory was depleted. See how long it took for the silver bull market to emerge and how volatile price action was before the final blowoff. BTW the 1979-'80 spike was precipitated by the authorities raising margin requirements and triggering a short squeeze - by that time the authorities were all over the Hunts and Bache & Co., their principal broker, for violating reporting limits so the Hunts were not buying then. I know - I was the Bache & Co. mining & metals Securities Analyst!!
As to how big silver inventory is: there is vastly more silver scrap available than thought to make up for the primary production shortfall. CPM tried to balance production against reported consumption to calculate the excess production that went into inventory. Their failure was to not go back far enough to account for silverware made during the 1800s. Antique dealers amassed huge stores of silverware in the late '60s - early 70s - some of it fabricated in the 1800s. This will come into scrap supply as silver prices advance and will help moderate or, at times, reduce prices so long as smelter/refiners have capacity to refine such scrap. Hence, it may be impossible to accurately estimate when the real shortage hits the silver fabricators.
So why should you listen to me? I spent 30 years learning the Analyst craft well enough that the Wall Street Journal covered my work extensively and called me a "prominent Wall Street Analyst." Take it from a "guru" - most of the people writing about silver have very little understanding of a) commodities analysis, b) the silver scrap supply, c) price elasticity of supply from India, d) seasonal patterns, e) fundamentals of silver mining, f) scrap refinery capacity, g) production costs of incremental supply of primary silver, etc., etc.
Just want you good people to understand that the best way to make money in commodities is to be a patient (maybe 5 years) accumulator of "lead pipe cinch" stories like silver - not neophyte, short term oriented speculators led to slaughter by floor traders, smart money, etc. Don't be whip-sawed by stories of what WB is saying or doing. Trust only that "smart money" only look out for themselves and what they say (or leak) is only self serving. Silver doesn't need any revolutionary new usage to validate the bull story - these stories about superconducting, new batteries, etc. are just put out serve someone's immediate needs to buy/sell at a good price.
RH |
