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Gold/Mining/Energy : Silver prices -- Ignore unavailable to you. Want to Upgrade?

To: ForYourEyesOnly who wrote (1389)	11/15/1998 11:46:00 AM
From: Alan Whirlwind	Read Replies (1) \| Respond to of 8010

THC, Thanks for posting this most intriguing article. I have several responses to it. "How could I reasonably substantiate my statement that silver will be locked in a deficit supply/demand position for 50 years? A permanent shortage...where do I get off calling for a shortage situation in silver to last for the rest of our time on this earth?" I must say the silver situation reminds me very much of Green Bay Packer tickets in the late seventies and most of the eighties. They just weren't winning and you could pick up scalped tickets easily. The waiting list for season tickets was dropping every year and it wasn't very long at one point. Let's face it, the Packers were in the dog house. But you know something, it was the very time to get on that waiting list for season Packer tickets. Of course, the thinking back then was, "Well if a guy got them, would he actually want to see these pathetic losers in person every other week?" Now those tickets would get you a high premium. There is a permanent shortage of Green Bay Packer tickets. "Half a century ago, at the end of World War II, total known stocks of silver amounted to ten billion ounces...today, known stocks of silver have shrunk over 95%, to maybe a half a billion ounces...that massive inventory buildup took the world thousands of years to accumulate because there was no industrial demand to that point..." Here Butler makes a point that even I haven't considered--our industrial miracle of the past decades has been helped by huge inventories of silver built up over a long period of time during which there was little industrial use for silver and the many practical uses such as silverware left it largely recyclable. "You can't judge the moment of truth of inventory depletion in normal economic analysis terms because the main supply at the margin comes from an uneconomic source - the fraudulent central bank leasing of silver. Tell me when the leasing ends (as it most certainly will), and you will probably see a double or triple on silver that day." I doubt silver will double or triple in one day. First there will be a RUMOR the leasing will end, denial, downplaying, etc. The price could go up a buck or two in a day perhaps. Then when the announcement comes a lot will be worked into the price. Another buck or so up that week. "Say you are Eastman Kodak and the price goes to $15 quickly. Since there are no substitutes, is there any price at which you will deliberately shut down your company instead of passing on costs, albeit reluctantly?" I don't really know how these big boys operate, but I believe Kodak will buy out a small mine or two or maybe even a takover of SSC. Why not--all the silver produced goes to your film company and they little guys who've speculated on some of these plays and have been hammered will gladly get a double or triple for their money when the offer comes. Barring that, you'll see Kodak make an unprecedented move of gobbling up several years of physical in one fell swoop just ahead of the real blowout. That move would itself push prices up significantly. "Even in trying to stick to one point, the industrial fundamental situation in silver, any objective analysis would be woefully incomplete if it did not mention the short position and the leasing scam. As I have attempted to point out in prior articles, silver has the largest listed and OTC short position the world has ever seen, well over a billion ounces. This position is well in excess of either annual world production or known inventories." If this turns out to be true, we will indeed have a double or triple in silver in one day when the smartest elements of the bunch cover their asses ahead of the pack and the thing steamrolls out of control. "Aside from the obvious danger to the shorts, I think it is the paper longs that are in real jeopardy from the huge short position." I don't agree with this. Most of the paper longs will get out at $15 or $20 silver. The people who get in at $20 silver are nuts. Better to buy physical at any price. You don't have to take delivery, merely relinquish your contract with your brokerage. I used to own some silver long through Shearson Lehman. They don't actually own silver for you. All you have is a piece of paper stating that the brokerage will buy you the silver or give you the market dollar amount per ounce out there when you cash in the contract. The money is put into stocks and other investment vehicles and the brokerage is making a bundle off of your silver money while you make nothing waiting for the big move. "Now that I think of it, holding physical silver offshore would be the most prudent step a prudent investor could take to further prevent emergency confiscation of physical stocks." Butler has a good point. If silver becomes that scarce, it may well be confiscated by the government for national security reasons and could you blame them? A single torpedo uses a couple hundred ounces or more of silver. Mines will be nationalized by the government. It would be prudent for the small investor to watch events carefully and get out of a good deal of paper on the first big run up. Sell your silver bars and bullion coins before your junk silver. No matter how rare silver becomes, thay will not confiscate US or Canadian siver coins--they're real money and will remain so. --Alan