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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: bond_bubble who wrote (59039)	4/22/2006 12:36:04 PM
From: regli	Read Replies (1) \| Respond to of 110194

“If reason is all you need, I can give you some for why silver price should not rise: 1) Today photography is moving digital. Heck even the movie industry is planning to move digital. Today, little less movies are produced... Are you aware that photography only makes up 8% of yearly silver usage as 85% of silver used in photography is recycled? Silver photography demand because of increased usage in other areas like X-Ray, high quality PC photography printing paper, etc. is only declining 5% a year. moneyweek.com ”… Photography only accounts for about 8% of total demand for silver, and while it is true that demand from this source is falling by about 5% a year, 85% of the metal used in it is recycled – so scrap supply from this source is falling almost as fast. Overall, the “net negative impact on demand is minimal. “ On the other side of the ledger there is the EU RoHS directive (Restriction of Hazardous Substances Directive) often referred to as the “lead free” directive which will take effect July 1 leading to much higher tin-silver usage in soldering. This will affect every manufacturer that wants to sell to the EU. en.wikipedia.org 2) Silver is more costly to store as value compared to gold (for a given storage space, you can put more gold)....” This point is obviously mute now with the advent of the silver ETF (SLV) in the States and with others planned in London and Switzerland. CEF (Central Fund of Canada) already provided a very good vehicle to own silver without the storage hassles. I have been a CEF investor for several years for just this reason. As it appears that the silver ETF will be approved, the following excerpts from a letter from the Silver User Association (SUA) to SEC asking them to deny the ETF should enlighten any investor why the price of silver has gone up so dramatically in the past few months. Note that members of the SUA include Bank of America, Eastman Kodak, Dow Chemical, Mitsui Global Precious Metals and Tiffany among many more. These companies are very familiar with the silver market and clearly don’t like high silver prices: ” The Silver Users Association is a non-profit organization that was established in 1947 to represent the interests of companies that make, sell and distribute products and services in which silver is an essential component. The Association’s members employ more than 200,000 workers and process 80% of all silver used in the United States. Members include representatives from photographic, electronic, silverware, mirror and jewelry industries, producers of semi-fabricated and industrial products, and trading and service organizations responding to member needs” ” It is SUA’s position that such an investment product could make silver illiquid* and could thereby have a negative impact on our U.S. manufacturing operations and U.S. manufacturing jobs. “* ” Probable increases in the price of silver, resulting from the forced decrease in supply, would result in higher prices for products containing silver. Such price pressure threatens to erode our products’ competitiveness, overall price points, and the manufacturing jobs that rely on the stability of silver products. If the silver ETF is approved, it will mean higher product costs and lost jobs in our industry. “ ”The approval of a silver ETF at this time is risky because of the impact it will have on those who rely on this commodity for the products they produce. Requiring the holding of large quantities of silver, which this proposed ETF does, will have a negative impact on those manufacturers and the people they employ. Approving a silver ETF at this time not only impacts the employees of these company’s, but also impacts the manufactures ability to obtain the physical silver necessary to maintain compliance with today’s production standards. “ As should be obvious from the above, the supply situation in silver is so tight that the people most familiar with the silver supply situation are extremely concerned about an investment vehicle coming to market that might affect the supply/demand situation. Seems like a pretty good reason for a silver price increase, doesn’t it? I should also mention that when CEF asked for delivery of just 6 million ounces from the COMEX in October 2004, according to several analysts, it took more than 6 months to complete this delivery again emphasizing a tight market. As to major investors in silver, three names come to mind and they are: Warren Buffet, George Soros and Bill Gates. Warren Buffet owns a huge stash of physical silver while others own major interests in silver producers. With silver in a supply deficit for more than 60 years (with the possible exception of 1980) and increased investment demand already in evidence, any analyst who doesn’t see a reason for silver’s ascend must be in denial or has not investigated silver fundamentals. It is as simple as that. I don’t know how high the price will go but it appears that the silver stockpiles that depressed the price are now exhausted and therefore a new price level needs to be established. Where it will be is anyone’s guess. My view is that it will be a lot higher than where it is today!