U.S has Lost Control of its Debt! Silver prices likely go up

[Dennis Ng]

make no mistake, the more money U.S. print (through borrowing), the higher the chance of prices of Gold and Silver to move higher. (And we are not talking about 10%, 20% higher, but probably 50% or more.

Worry about Europe Crisis? Do you know that U.S. federal deficit is 11% of GDP in year 2010, and worst than the average of 7.5% of the PIGS ? (Portugal, Ireland, Greece and Spain).

In 1971, Gold was pegged one ounce at US$35. When this was de-pegged by President Nixon, 1970s saw 10 years or rising inflation, with gold prices reaching Record High of US$850 by year 1980. Finally, when interest rates was raised high enough to combat inflation, Gold prices crashed and dropped to about US$300.....but even at US$300, how much higher was it compared to US$35? 757% Higher, so you think possibility of prices rising further by 50% or more is not possible?

Gold prices at US$850 in 1980, after factoring in inflation, would work out to be about US$2,350 in year 2010.

When we look at Silver, silver's historical high price was US$50 in 1980. Silver prices at US$50 in 1980, after factoring in inflation, would work out to be about US$138. So is Silver price at US$30 high or low?

Well, ask your friends, how many of them have money in Gold and Silver? Do you think more or fewer people will be buying Gold/Silver in the next few years? What do you think is likely to happen to prices then?

Cheers!

Dennis Ng

U.S. Has Lost Control of its DEBT!!!


http://www.youtube.com/watch?v=m0zjHN1G ... r_embedded

The USA has lost control of it's debts, with President Obama not cutting spending in any meaningful way, and the military spending and "TSA" spending - the biggest drain, continues upwards.

The question is, how much longer will China and net creditors continue to bankroll the wasteful spending, and if the USA will default on it's debts, further crippling it's economy.

You have to say, the USA has bought the predicament onto itself. They are one of a few countries that actually believe in the Keynesian Economics theory of pissing money up a wall in a recession, when you don't actually have any money. Printing money from thin air has made the situation FAR worse, and bailing out the corrupt and insolvent banks was a disaster - they should have been forced to collapse.

The UK got rid of one great fan of Keynesian economics, Gordon Brown, now the USA MUST get rid of Pres. Obama at the next election, or there will be no USA to speak of economically - no matter if they are seen still by suckers as a world reserve currency.

The reserve currency now will return to gold and silver, where it should have been in the first place. A currency back by something physical, not based on hot air and worthless promises of crooked governments and crooked bankers.

Recorded from Newsnight 07 January 2011.
And how do the people that bankroll America like China feel about having their investments devalued? Quantitative Easing will not get the US economy out of the hole they dug themselves in.

[tornado]

Hi Dennis

I just read the said article (10 Jan edition) which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

According to the article, there is in fact an oversupply of silver in the market. That the prices are rising in recent months is partly due to large players closing short positions. In fact, BT wrote that 'oversupply means that silver may prove to be fool's gold, not the poor man's alternative'. BT even went to the extent of stating that 'Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers'.

What is your take on this BT article vis-a-vis your upbeat opinion on Silver voiced during the recent mid-December seminar? I remembered you mentioned that silver prices in 1980 (historical high) was about US$50. After having adjusted for inflation, this price is translated to roughly US$150 in today's terms therefore you reckoned that the current prices are nowhere near the peak & it's still okay to buy silver at current prices. However, how do you reconcile your analysis with the oversupply situation if it really was true?

Cheers!

[Dennis Ng]

Hi Dennis

I just read the said article (10 Jan edition) which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

According to the article, there is in fact an oversupply of silver in the market. That the prices are rising in recent months is partly due to large players closing short positions. In fact, BT wrote that 'oversupply means that silver may prove to be fool's gold, not the poor man's alternative'. BT even went to the extent of stating that 'Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers'.

What is your take on this BT article vis-a-vis your upbeat opinion on Silver voiced during the recent mid-December seminar? I remembered you mentioned that silver prices in 1980 (historical high) was about US$50. After having adjusted for inflation, this price is translated to roughly US$150 in today's terms therefore you reckoned that the current prices are nowhere near the peak & it's still okay to buy silver at current prices. However, how do you reconcile your analysis with the oversupply situation if it really was true?

Cheers!

Hi tornado,

I can't read the article you provided link. Most probably the article is extracted somewhere, probably from Wall Street Journal.

And below is a response to an article writing there is an over-supply of Silver.

Wall Street Journal Aids Silver Price Suppression
by Jason Hommel - Silverstockreport
Published : December 31st, 2010


I'm called upon by my regular readers to refute, rebut, and rebuke this bad article on silver from the Wall Street Journal.


Price of Silver Soaring
Investor-Fueled 74% Gains Dwarf Gold; Race to Open Mines
By CAROLYN CUI And ROBERT GUY MATTHEWS
DECEMBER 26, 2010

Regarding (RE) the WSJ comment: "unexpected surge in investor demand."

Really? Unexpected, you say? But precious metals bulls have been predicting explosions in the price for ten years based on irrefutable fundamentals and unsustainable market manipulation!

How can investor demand be unexpected when the price of precious metals has been going up continuously for ten years now since the year 2000? Don't investors like to buy things that are rising in price? Don't investors also try to predict things that will rise in price, and buy them before they really rise? Does the WSJ know anything at all about investing?



Unexpected? Really? When the numbers of silver Eagle 1 oz. coins produced by the US Mint has been increasing steadily for the past 3-4 years, up from 10 million oz. to nearly 40 million oz. this year? How can a single year's investor demand be unexpected, when its increase is already a steady trend?



Regarding the WSJ comment: "Prices are rising despite oversupply."



What oversupply? What do you even mean by oversupply?



Here is the dictionary definition of oversupply:
http://www.thefreedictionary.com/oversupply
"A supply in excess of what is appropriate or required."



Ah, the WSJ is no longer reporting fact, but throwing out opinion now.



There is no oversupply, and can never be any oversupply of things such as gold and silver, since they have the least diminishing marginal utility of all things on earth, since they are money. Nobody ever complained that they had too much money.

But what does the WSJ mean by oversupply?

The supply & demand numbers produced by such surveys as http://www.silverinstitute.org/ who the WSJ quotes as a source, have "sum up" categories called "Implied Net Disinvestment" and "Implied Net Investment".



http://www.silverinstitute.org/supply_demand.php



When investors are buying, this is often called a surplus, or as the WSJ says, an "oversupply", and when investors are selling, that is called a deficit.



So, apparently, the WSJ is saying that when investors are buying silver that's "oversupply". And thus, when they describe that action as an "oversupply", they are really saying that silver purchases by investors are "inappropriate". Thus, they reveal their bias, with one word.



RE: "Many analysts expected those factors would keep a lid on prices in 2010."



But most silver analysts are employed by LBMA bullion banks who have a vested interest in manipulating silver prices downward, since silver is the Achilles heel, or arch enemy, of the banking system. Thus, "mainstream" silver analysts have never gotten a single year's prediction correct in the last ten years of the bull market in silver and gold. They always "predict" prices for next year that are within about 5% of current prices, and never any higher. Meanwhile, silver prices have risen from $4.15/oz. in 2003 to $30.60 now in 2010, which is a cumulative return of 637%, which, over 7 years, is an average annual gain of 33%. They never come close to predicting such gains.



Check my math, here:
http://www.smartmoney.com/compoundcalc/



Have any of the mainstream analysts predicted a silver price gain of 33%, for the following year, or even close, in the last 7 years? Never. Thus, they are worse than useless, they are purposefully deceiving, or willfully ignorant, as is this WSJ article. That should be no surprise, and neither should silver's price rise.



RE: "What they didn't expect was an overwhelming flow of money into the market from investors eager to ride a commodities rally."



Overwhelming flow of money into silver? Really? Let's see, there is $14,000 billion to $18,000 billion of paper dollars in the US banking system, which does not count dollars in overseas banks, and the rest of the world is printing up paper money like crazy for competitive devaluations. Meanwhile, the US government has an annual deficit of $1500 billion or more, depending on how you count, if you count off budget items, it could be as high as $3000 billion depending on who you read. Meanwhile, a tiny $3 billion pours into silver, which is a paltry 2% of 1% of the money in the US banking system, and a mere 10% of 1% (or 1/1000th) of new US money creation.



I wouldn't call that an overwhelming flow of money into silver. I'd say that's only a tiny trickle, wouldn't you say?



RE: "This is a story almost entirely about investment," says Stephen Briggs, senior metals strategist at BNP Paribas.



Well, the silver story, in the future, will be almost entirely about investment, but today, investors are still buying only a tiny fraction of new silver mine supply, with the rest being consumed by industrial applications of all sorts, from fabrication, to photography, to jewelry, silverware, and coins and medals.



From the silverinstitute.org:



2009 mine production: 709.6 million oz.
2009 Implied Net Investment: 136.9 million oz. (oversupply, or investor buying)



But let's pause here, and examine the numbers more closely.



Sprott wrote an excellent silver report that reveals that ETF silver demand is not counted in the "demand" numbers for silver!!!
http://www.industrymailout.com/Industry ... z%3D3f9465



Fraudulent supply/demand numbers, omitting investor demand, or calling it a "surplus", is part of the manipulation of silver prices.



But this implies a few other things, too.



Either the exchange traded funds are not actually going out into the market to buy silver which means they are mostly all fraudulent, or, their net purchases are more than offset by investors or refiners dumping 1000 oz. silver bars (the only acceptable form of ETF silver) to dealers who sell it directly to LBMA banks. We've never had to dump any silver bars in the last 2 years of our precious metals business.



RE: Investors from the U.S. to China turned to "hard" assets such as copper and other commodities in part as a hedge against inflation worries.



No, copper has never been a key inflation hedge. Gold and silver are. In fact, recent reports show that JP Morgan has been buying all the world's warehouse copper, up to 90% of it. So, JP Morgan owns the copper, not investors, so this statement is just a bald faced lie.



RE: Exchange-traded funds backed with silver have enabled investors to invest in a market that traditionally was harder to participate in.



I don't know what's so hard about buying $15,000 worth of silver at $30/oz. It's only 500 troy ounces, which only weighs 35 pounds, and comes in a box the size of 9 inches by 9 inches by 3 inches high. Even 60 year old ladies carry such boxes out of our store all the time. That's one of the world's easiest commodities to buy. Contrast with WSJ's beloved copper, at $4.40/pound, which means $15,000 of it would weigh a staggering 3409 pounds! That's why copper is not remotely a viable inflation hedge, and has never been used as commodity money, but only as token money. Even 1 troy oz. of copper, at $4.40/oz. divided by 14.8 troy oz/pound is only worth 29 cents per troy oz., but would cost you about $4 each for minting costs and distribution, and perhaps $5-10 each for widespread marketing via MLM plans.



RE: In recent months, concerns about inflation, the European debt crisis and the U.S. Federal Reserve's recent moves to boost the economy have driven investors to hard assets, also benefiting silver prices.



Really? I agree. But then, why was silver's move so "unexpected" as the WSJ first wrote, to most analysts? Shouldn't this have been easily foreseen?



RE: The craze has reached the coin market.



Craze? Craze you say? What do you mean, craze?



http://www.thefreedictionary.com/craze
1. A short-lived popular fashion; a fad.
2. A fine crack in a surface or glaze.



Ah, only two definitions for the noun form. Clearly, they don't mean the second. Ah, they imply silver demand by investors is not only inappropriate, but will be short lived, and that it's now popular.



Wait, when only 1/1000th of new money is moving into silver, why and how is that popular? When only 2% of 1% of actual money in the banks, or, less than $2 out of every $10,000 sitting in banks is being invested into silver, how can that be accurately described as popular? No, silver is very unpopular now, still.



Let's be honest. If even 1% of paper money in US only banks, were to be invested into silver, it would be 50 times greater than the investment demand today, which would be as much as $180 billion dollars, moving into the silver market that only produces 700 million new oz. by the mines each year. $180 billion divided by 700 million implies no silver buying from anywhere else in the entire world, and no silver buying from any kind of industrial application, which implies a lowest possible price of $257/oz., at this "1% demand" level, which would still be, long, long before silver ever gets to be "popular".



That's a shamefully inaccurate description, calling silver coin buying a "craze", which also implies things such as:



verb: 1. To cause to become mentally deranged or obsessed; make insane.
verb, intr. 1. To become mentally deranged or obsessed; go insane.



The reason why that word "craze" is particularly objectionable to me is that silver buyers are returning to rational thought. People who think used, dirty, printed paper is valuable are the ones who have lost their minds.



RE: "Silver's reliance on investors to prop up the price could cause it to tumble suddenly."

"Silver's reliance on investors"? No, Investors rely on silver!



But seriously, I agree, silver's price is increasingly reliant upon investors who sell paper money for silver, and at some point that will ultimately halt completely. For example, after silver hits $1 million per ounce, the price could suddenly tumble to either $900,000 per oz., or it could simply stop trading in terms of paper money altogether, as paper money might just not buy anything at all at some point. It is far more true to say that paper money's value relies more on confidence than silver.



But really, the main point with silver is that today's value is certainly not dependent on investors, but rather, industrial demand, which is far larger, and more stable. As China alone continues to develop and surpass the total consumption level of Western nations, their population will consume silver as does the western world. That would be 6 tenths of an oz. of silver, per year, per person, because silver is an essential part of switches in electronic devices. If China consumed that much silver, times 1.3 billion people, that's 780 million ounces, which is more silver than is currently produced annually by all silver mines in the world. If the world is going to ever run out of things like cheap oil, or copper, it will certainly run out of cheap silver, first.



RE: "He forecasts an average price of $30.10 per troy ounce next year "



Yes, the analysts never predict a price 33% greater, which, as I calculated above, is the average annual gain in silver so far in this bull market. Next year's "average" is always today's price, and always paired with a warning about silver moving down. In less than two days, next year's average price was exceeded this year!



RE: "But he cautions, "The number is only going to be achievable as long as fresh money keeps moving in."



And why wouldn't it? We know that the USA alone will print from $3000 billion to $4000 billion next year. So why wouldn't at least $4.5 billion move into silver next year? Perhaps it's more likely that $400 billion will move into silver next year, and silver's price will be $1000/oz.? Well, maybe not, but a more conservative estimate might be about $10-20 billion, which could drive silver to $50-100/oz., as that's how this trend is developing.



RE: "Silver's all-time high was set in January 1980 at $48.70 an ounce, or $129.32 when adjusted for inflation."



Perhaps the worst lies of all. What do they mean by "inflation"? The CPI index that does not count food, fuel, housing, tuition, or medical expenses? What does CPI count these days? What's left? Imported clothing, goods made in China, and computers?



Instead, if we count inflation as the monetary base, as M3, which is no longer published, we might observe that M3 was $1.8 trillion in 1980, and nearly $18 trillion today, an increase of ten times as much, thus, the true inflation adjusted high is not $129.32/oz., but rather $500/oz.!!!



See, another part of the lie is the false specificity of that .32 at the end of their $129.32, to make it sound so official and supremely accurate, but it's not remotely accurate.



And neither is my estimate of $500/oz. That's a low ball figure. Is money M3? What is M3? M3 included short term bonds. Well most of the bond market is now all "short term" bonds, given that they stopped selling the 30 year bond, and given that interest rates are all so low, all bonds are priced at the near equivalent of actual dollars. And the bond market is far larger than the $18 trillion estimate of M3. The bond market could be $25 trillion to $35 trillion, who knows? Data on that is hard to find.



Much of the bond market is as fraudulent as the paper promises in the silver market. A lot of people don't buy bonds anymore, they just place bets on the direction of interest rates, by buying futures on bonds, or options on bonds, which is an even more fixed and rigged game than the silver price.



Which brings us to derivatives, the bets on bonds, called "interest rate derivatives", which are estimated to be as high as $400 trillion or more.



If that is money, then the inflation that has taken place since 1980 is just off the charts, and will ultimately drive silver prices to far higher than $500/oz.



RE: "This year investors are expected to pile a record $4.5 billion into the silver market, accounting for 24% of the world's total demand, says GFMS Ltd., a metals consulting firm in London. That's the highest level, in dollar terms, in decades. Silver's relatively small market size�$19 billion compared with $170 billion for gold�has also played a role in amplifying the impact of investors, according to GFMS."



Silver's price is moving so fast, it was up nearly $1/oz. in the few days since this WSJ article. Silver's market size, at 700 million oz., times $30/oz., is already $21 billion, not $19 billion, but this is a tiny quibble of a fact.



The point is that $20 billion, or even $4.5 billion, in a world where $3000 billion of new money is being printed annually by the USA alone, and perhaps as high as $8000 billion worldwide, is really, really, really small, even if it's a record number. But the WSJ article never makes comparisons like this, it just warns that $4.5 billion is a lot, "the highest level in decades", and the word billion is a lot, in terms of real things, but it's not a lot in terms of dollars, which are not real things.



RE: "The strength in silver prices has prompted a flurry of development around the globe and pushed anticipated production in 2010 to 733.2 million ounces, up 3.3% from 2009 levels, and up 14% since 2006."



Ah, did you think they said that new silver mine supply will increase 3.3%? No, that's anticipated production. It may be less! They write as if this 3.3% increase is a lot and will act to reduce prices. However, new paper money in the USA alone is about 3 Trillion / 15 Trillion, or 20%! And world population growth is about 1.1%.



RE: "The market is set to see a surplus of 64.4 million ounces in 2010, says Barclays Capital, which could curb prices."



Wait, wait, wait. Silverinstitute.org says the 2009 "surplus" is 137 million oz. of implied net investment, while Barclays says the 2010 surplus will be 64.4 million oz.? Ok, if investors were buying 137 million oz. in 2009, and even more in 2010 to explain the current rise, how will 64.4 million be enough to satisfy them, without the price moving up?

Less silver certainly won't curb prices, unless, by using the word "curb" Barclays is implying a chart formation that looks like a straight line up before leveling off, somewhat like a curb on the side of a road. But Barclays is not implying that, for sure.



The article notes that a few silver mines will be increasing production. No mention is made of any mines that will be decreasing production, or closing altogether, which, of course, happens all the time in the mining business. Mines are depleting assets, and run dry.



That sums up what I needed to refute in the article.



The article makes no mention of any of the following of this year's major news items in silver:

THE YEAR IN REVIEW



1. No mention of the fact that JP Morgan was sued by at least 25 firms for manipulating the silver market. (A new lawsuit against JP Morgan on behalf of SLV investors was just filed, two days after the WSJ article). http://news.silverseek.com/SilverSeek/1293546686.php
2. No mention of the BIS reports showing that world banks have a net derivatives exposure of $137 billion of "over the counter" "other preciouse metals" liability, which is a short position, mostly in silver. Links:
http://www.bis.org/statistics/derstats.htm
http://www.bis.org/statistics/otcder/dt21c22a.pdf
3. No mention that the BIS changed their own reports, reducing the number for June, 2009, from $203 billion, down $100 billion, to $93 billion, after the US Justice department said it was investigating JP Morgan for silver manipulation.
4. No mention that JP Morgan admitted to being short silver, and wanted to placate internet criticism by attempting to cover their silver.
http://silverstockreport.com/2010/jp-mo ... short.html
5. No mention that the CFTC's Bart Chilton admitted that one large trader had 40% of the silver market at the COMEX.
6. No mention that the CFTC has been investigating silver manipulation for over two years.
7. No mention that the CFTC just delayed imposing position limits on silver.
http://silverstockreport.com/2010/cftc-delay.html
8. No mention of the recent rumor that JP Morgan has two of the CFTC commissioners on their payroll.
http://www.youtube.com/watch?v=uPg4qTNTP-E&sns=fb
9. No mention of Andrew McGuire's CFTC testimony of a prediction in advance of a JP Morgan silver manipulation.
10. No mention of Jeff Christion's CFTC admission that the LBMA is leveraged 100 to one with nearly zero actual physical metal backing up most "physical" accounts.
http://www.bullionbullscanada.com/index ... Itemid=131



MY PRICE PREDICTION FOR SILVER: At least a high of $40/oz. by next year, 33% higher than $30 this year.

If the past seven years is any guide, silver's price should continue at pace, if not outperform, the past seven year's average gains of 33% per year. Someday, silver could really blow up much faster than that. Frauds do collapse suddenly. The dollar is fraud. Fractional reserve banking is fraud. Fractional reserve banking in silver is fraud. Most of the financial world is fraud today. Silver is not a fraud and is the opposite of fraud. Silver is not a promise to pay, silver in your hand is evidence that you have been paid in full.

=====



But let's assume, for the benefit of the doubt, that Carolyn Cui is just a very bad researcher on silver, and was not intentionally omitting all the major news items on silver in the past year.



How honest is she? Or the WSJ for that matter?



Here's a WSJ article on silver from May, 2008.



Fundamentals Begin to Weigh On Silver
New Mines' Output, Economic Weakness Could Crimp Prices
By CAROLYN CUI May, 2008.
http://online.wsj.com/article/SB121098087701600147.html



Ah, not very accurate, and not a very good warning. The WSJ should have warned that the dollar would fall, and that people could protect their purchasing power by buying silver. Did they? Sadly, no. They have never gotten it right on silver in this entire bull market, and are as woefully wrong today, as they were two years ago.



Excerpt: Barclays analyst Suki Cooper, who targets silver's average price at $15.20. "Silver's fundamentals look less compelling this year and are more likely to push prices lower," she wrote in a research note.



Laughable! Exactly as I predicted, these buffoons always predict "same as last year" prices, and are never bullish.



Excerpt: CPM Group, a New York-based commodities research firm, expects demand for silver to hold up this year, and its price to average $18.25.



=====



I've seen better reports on silver from CAROLYN CUI. I've even written to her a time or two. So I can conclude that she is not ignorant, but willfully ignorant, or being misleading on purpose. Perhaps if she does not "toe the line" she will be out of a job, but if your job involves lying, you should probably quit.



So, what should we conclude, and what should we do, in the order of most importance?



1. Buy silver. Buy real silver that you have carried, lifted, and stored in your own vault.
2. Do not trust the Wall Street Journal, or CAROLYN CUI or ROBERT GUY MATTHEWS ever again.
3. Cancel your subscriptions to the Wall Street Journal.
4. Write nasty letters to the WSJ's advertisers, and boycott them (just kidding, don't waste your time).
5. Subscribe to the free newsletter at the Silver Stock Report.
6. Share this report in your own blogs online, or on facebook.
7. Write your own refutations of future mainstream hit pieces on silver, exposing their intentional lies and misinformation, and lack of information.
8. Write to Write to Carolyn Cui at carolyn.cui@wsj.com and Robert Guy Matthews at robertguy.matthews@wsj.com and ask them for their honest answers and justifications to the accurate information presented here, just for the fun of watching them squirm.

[Dennis Ng]

(10 Jan edition) article entitled "Silver's golden run" which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

My comments:

demand for Gold and Silver are from 3 sources:
1. Industrial demand - used in manufacture of industrial goods such as electronics.
2. Jewellery Demand - used in jewellery
3. Investment Demand - by investors and speculators.

I'm not sure why this article only think that the Real Demand is industrial demand, and ignore the other 2 types of demand. And for the article to assume all investment demand comes from Speculators, again, that seems such a biased and extreme view.

For instance, I have money invested into Silver, but I do not speculate in Silver.

On investment demand, the FACT is if you ask anyone around you, 9 out of 10 persons do NOT have any money in silver. The question is what if more of them decide to have some money in Silver as an insurance against Economic Uncertainties and Inflation?

Guess what will happen to Investment Demand, and what is then likely to happen to prices?

I don't like articles that are Biased and not objective, and in my opinion, this article "Silver's golden run" is totally biased and does not consider the factors I mentioned above.

Once again, it goes to prove that we should not just blindly read/absorb information we get from newspapers/articles. We need to think for ourselves, and the more we increase our investment knowledge, the better the analysis and thinking we can have, on an independent basis.

Cheers!

Dennis Ng

(10 Jan edition) which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

Silver's golden run

By MARGARET DOYLE

IT MAY BE time to sell the family silver. The white metal's price has trebled in the past year, rising so sharply that London antique dealers are now buying Edwardian cutlery for scrap.

Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers.

Bulls point to the perils of paper money, and silver's cheapness relative to gold. But oversupply means that silver may prove to be fool's gold, not the poor man's alternative.

Silver is now trading at around US$30 an ounce - a level not seen since the Hunt brothers cornered the market 30 years ago. True, all metals are in demand. And silver enjoys industrial as well as precious characteristics. However, consumption has lagged supply by between 685 and 4,257 tonnes a year - almost 19 per cent of annual production - since 2007, according to RBS.

Restocking during 2010 reduced the oversupply, but not by enough to explain higher prices. Demand has been sustained by investors, especially those buying through exchange-traded funds (ETFs). Physical stocks of silver held by ETFs more than quadrupled to almost 15,000 tonnes between January 2007 and the end of November 2010, RBS says. In other words, speculators now hold the equivalent of almost 70 per cent of 2009 production.

Retail interest is also evidenced by bumper sales of the American Silver Eagle - the US Mint sold 34 million of the coins in 2010, more than twice the annual average since its introduction in 1986.

Some of the price rise may be due to large players closing short positions. JPMorgan has been accused of conspiring to drive down silver prices. The Financial Times reported in December that the bank's positions would be 'materially smaller' in future. Silver holds a similar allure to gold - a fear that central bank money-printing is debasing currencies, and a desire to find a supposedly safe haven in an uncertain world.

It is true that the ratio of the price of an ounce of gold to an ounce of silver - currently hovering around 50 times - is much higher than in 1980, when it fell to 17. But the ratio has also been much higher: it was consistently above its current level for most of the period between the mid-1980s and the mid-1990s.

Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers.

[Chipmunk]

(10 Jan edition) article entitled "Silver's golden run" which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

My comments:

demand for Gold and Silver are from 3 sources:
1. Industrial demand - used in manufacture of industrial goods such as electronics.
2. Jewellery Demand - used in jewellery
3. Investment Demand - by investors and speculators.

I'm not sure why this article only think that the Real Demand is industrial demand, and ignore the other 2 types of demand. And for the article to assume all investment demand comes from Speculators, again, that seems such a biased and extreme view.

For instance, I have money invested into Silver, but I do not speculate in Silver.

On investment demand, the FACT is if you ask anyone around you, 9 out of 10 persons do NOT have any money in silver. The question is what if more of them decide to have some money in Silver as an insurance against Economic Uncertainties and Inflation?

Guess what will happen to Investment Demand, and what is then likely to happen to prices?

I don't like articles that are Biased and not objective, and in my opinion, this article "Silver's golden run" is totally biased and does not consider the factors I mentioned above.

Once again, it goes to prove that we should not just blindly read/absorb information we get from newspapers/articles. We need to think for ourselves, and the more we increase our investment knowledge, the better the analysis and thinking we can have, on an independent basis.

Cheers!

Dennis Ng

(10 Jan edition) which can be accessed at the following link: http://www.businesstimes.com.sg/sub/new ... 48,00.html?

Silver's golden run

By MARGARET DOYLE

IT MAY BE time to sell the family silver. The white metal's price has trebled in the past year, rising so sharply that London antique dealers are now buying Edwardian cutlery for scrap.

Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers.

Bulls point to the perils of paper money, and silver's cheapness relative to gold. But oversupply means that silver may prove to be fool's gold, not the poor man's alternative.

Silver is now trading at around US$30 an ounce - a level not seen since the Hunt brothers cornered the market 30 years ago. True, all metals are in demand. And silver enjoys industrial as well as precious characteristics. However, consumption has lagged supply by between 685 and 4,257 tonnes a year - almost 19 per cent of annual production - since 2007, according to RBS.

Restocking during 2010 reduced the oversupply, but not by enough to explain higher prices. Demand has been sustained by investors, especially those buying through exchange-traded funds (ETFs). Physical stocks of silver held by ETFs more than quadrupled to almost 15,000 tonnes between January 2007 and the end of November 2010, RBS says. In other words, speculators now hold the equivalent of almost 70 per cent of 2009 production.

Retail interest is also evidenced by bumper sales of the American Silver Eagle - the US Mint sold 34 million of the coins in 2010, more than twice the annual average since its introduction in 1986.

Some of the price rise may be due to large players closing short positions. JPMorgan has been accused of conspiring to drive down silver prices. The Financial Times reported in December that the bank's positions would be 'materially smaller' in future. Silver holds a similar allure to gold - a fear that central bank money-printing is debasing currencies, and a desire to find a supposedly safe haven in an uncertain world.

It is true that the ratio of the price of an ounce of gold to an ounce of silver - currently hovering around 50 times - is much higher than in 1980, when it fell to 17. But the ratio has also been much higher: it was consistently above its current level for most of the period between the mid-1980s and the mid-1990s.

Those who want to profit from the boom might be better advised to take Grandma's silver to the pawnbrokers.

Next Silver price explosion coming in 2011 ?

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