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LETMYSILVERGO
27th February 2010, 12:03
http://moneymorning.com/2010/02/27/price-of-silver/



How China Will Drive Silver to $250

Silver is up over 44% in the last nine months. But thanks to a new campaign by the Chinese government, silver is about to take off higher. Much higher. Here's how to play silver for a "triple" this year...



Once upon a time, the Chinese government forbade ownership of all precious metals.

But now, the ban has been lifted. In fact, China just introduced silver bars for investment. And now, state-run China Central Television (CCTV) is running a campaign encouraging the population to invest in silver.

That means there are over a billion potential new silver investors hitting the market. This is especially significant when you consider the average savings rate in China is 30 to 40%.

But the flood of new Chinese silver investors isn't the only factor driving up silver prices. The increased use of silver in everything from solar cell technology to medicine is pushing up prices as well.

Read on to discover exactly why silver will make savvy investors rich in the year ahead... and find out the one stock to buy now to take your portfolio to new highs.

Chinese Demand for Silver
Take a second to think how much of an impact this will have on the silver market - the sheer amount of people, and at such a high rate of savings.

Then you factor in Chinese demand for things silver is need to make - cell phones, computer, batteries, silverware and jewelry. China's silver consumption already accounts for 70% of the global total of industrial use, and its middle class isn't even close to reaching its spending potential.

What's more, those aren't the only reasons analysts are predicting silver prices can reach as high as $100 this year and $250 by 2015.

This free report outlines all the reasons silver is going to continue its ride to another record. It also gives a handful of ways to invest in silver.

Demoting the Silver-Gold Adage
China's impact on the silver market isn't the only thing catching the attention of silver analysts. The silver-gold ratio tells a compelling story about the price of silver. Put simply, the ratio means how many ounces of silver it takes to buy one ounce of gold. Historically, that ratio has been about 15-to-1. Right now, that ratio is hovering around 59-to-1.

For silver to 'correct' by returning to its long term silver/gold ratio of about 15, gold at $1,000 means silver should be priced at $66 already.

You'd be hard pressed to find anyone who believes that 59-to-1 will hold up much longer because it basically means silver is cheap compared to gold, which opens the door for investors to come in at a good price, such as China. All of China.

More Pressure on Silver Prices
As the global economy expands its size and reach... as technology advances... and as more ways to buy silver becomes available... as silver supplies have dwindled... more factors began affecting the price of silver more exclusively - for better or worse. Some are:

* Silver's Industrial Uses: For decades, silver has been more than a collector's item. It has dozens of uses outside the storage vault. It's used to make currency, jewelry and silverware. Silver is used to produce highly reflective, architectural mirrors. It's heavily used in the medical field as an antimicrobial - a killer of some bacteria, algae, fungi and viruses. In the labs, silver is used in photographic films and as a catalyst in chemical reactions. And more applications are arriving soon, including using silver in photovoltaic cells in solar-power technology and in rechargeable silver-zinc batteries. In fact, silver's use for industry has gone from 35% of total annual production ten years ago to more than 50% today. One source claims that figure is actually 90%.
* Silver Supply/Demand: Supplies of available silver have dropped by 86% in the past two years. Commodities research firm CPM Group says the current amount of above ground refined silver has fallen from 2.2 billion ounces in 1990 to less than 1 billion today. At the same time that supply is falling, demand is rising... especially industrial demand. The pressure on silver prices will get even stronger as individual investment demand (including the whole Chinese market) goes up.
* Silver Market Size: Silver is a less-active and lower-volume market than gold, which means that purchases even by individual investors can make an impact on silver prices. Better said, 100 silvers buyers purchasing the same amount as 100 gold buyers will have a bigger impact on the market. Think how much prices can spike when millions of Chinese investors flood the market with silver purchases. Now, combine that with the global return of industrial silver demand.

Silver Price Projections
Money Morning's Martin Hutchinson believes silver and gold will continue climbing into 2011 and beyond. If enough investor momentum gains - and if China's push for individual silver investment intensifies - he believes silver could peak past $100 either this year or next.

But, that's just the beginning. Silver could top out at $250/oz. in the next five years as global mine production crawls in the face of increasing consumer and industrial demand. That's an increase of over 1,150%.

Bear in mind that silver prices have been moving faster than gold. So those who want to invest in silver better pull the trigger soon, or watch silver's price explode from the sideline

Sakata
27th February 2010, 12:14
I stopped reading half way through because it sounds like one of those pay-for-our-advice-and-get-rich-now articles.

DaleFromCalgary
27th February 2010, 12:35
"Silver could top out at $250/oz"

This is too silly even for Ted Butler.

Jake
27th February 2010, 13:25
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Ardent Listener
27th February 2010, 17:33
I recall when the "new" silver ETF was predicted to push silver over $50 again. But you know, just about the time that you think it couldn't happen .........it does.

Sakata
27th February 2010, 19:13
wait now.

if the FRN supply has doubled- then same supply = double = and factor in all the global derivatives in ad gold would be 65k an ounce.

That would make silver 1k or more give or take.

gotta polish the silver ware. lol

Problem is, that by the time it gets there the dollar will be worth so little that an ounce of silver we essentially be worth, well, maybe $16.50.

DaleFromCalgary
27th February 2010, 19:27
"That would make silver 1k or more give or take."

Bear in mind though, that if you order in a large deluxe pizza with extra topping, it will cost $950. This is why my exit strategy with silver is to trade the ratio for gold, not redeem it for fiat currency. Hopefully I will never need the gold and can pass it on to the kids, but if I do need it, then it will be my old-age pension plan.

Ardent Listener
27th February 2010, 19:30
Problem is, that by the time it gets there the dollar will be worth so little that an ounce of silver we essentially be worth, well, maybe $16.50.

If we see a hyperinflation silver will gain in purchasing power well over where it is now. People will rush to it and away from a lot of other things they are into now. Of course this in just my opinion on the subject.

Sakata
27th February 2010, 19:37
If we see a hyperinflation silver will gain in purchasing power well over where it is now. People will rush to it and away from a lot of other things they are into now. Of course this in just my opinion on the subject.

You are probably correct, actually. My comment was kind of tongue in cheek. But the point I was trying to make is that silver at a $1000 would not be worth even a fraction of what that sounds like today.

Ardent Listener
27th February 2010, 19:46
You are probably correct, actually. My comment was kind of tongue in cheek. But the point I was trying to make is that silver at a $1000 would not be worth even a fraction of what that sounds like today.

Not unless those like Ted Butler are correct and that physical silver is really in a severe shortage.........more rare than gold. I can't say I buy into all of that, but there may be some truth to it. If so, $1,000 in that case wouldn't necessarily mean hyperinflation.

Sakata
27th February 2010, 19:56
Not unless those like Ted Butler are correct and that physical silver is really in a severe shortage.........more rare than gold. I can't say I buy into all of that, but there may be some truth to it. If so, $1,000 in that case wouldn't necessarily mean hyperinflation.

Much as I admire Ted Butler I cannot buy into that aspect of his thesis as thoroughly as he would like. I can certainly see greater industrial demand for silver in the future but I think he might have it inflated a bit. Plus, if the price increases that much above inflation then there will be a lot of incentive to reopen silver mines which have closed or great new ones, so the supply will be greater.

Ardent Listener
27th February 2010, 20:03
Much as I admire Ted Butler I cannot buy into that aspect of his thesis as thoroughly as he would like. I can certainly see greater industrial demand for silver in the future but I think he might have it inflated a bit. Plus, if the price increases that much above inflation then there will be a lot of incentive to reopen silver mines which have closed or great new ones, so the supply will be greater.

Yes, and how much more silver would come out of hoarding at even $100.00 per ounce? Also, I don't buy that there is that much silver lost in the garbage dumps around the world. But even if Ted were to be proven to be 25% correct we may all find ourselves in a nice situation some day.

Blades
28th February 2010, 00:46
What about Mike Maloney's take on the Silver situation? Seems to be pretty much the same opinion as Ted's and from reading Mike's book, he does seem to know what he is talking about.

AgShaman
28th February 2010, 01:03
Mike M....and his brethren bring interesting facts to light, but they fail to expound on a few points.

Like: the difference between protectionary and investment grade PM investing. Some people do not grasp the fact that it could very well play out like a game of musical chairs. If you've stacked for the rainy days and compounded to perhaps realize a gain....then you must keep in mind the need for a proper exit strategy. Great, your resting on your laurels, but what about researching places and options to unload some of your stack secretly to a business that won't rat you out to the "tax man". Is your work done?...or do the complacent people assume it's short battle and feel the need to pat themselves on the back in victory fashion before their plans have been fully designed for success.

Curiosity will not kill the C/kats of SS Nation!

jliu7988
28th February 2010, 06:54
Check this out $45.56 an oz !! Chinese silver

http://www.youtube.com/watch?v=1vJiz7Xcgm8

red snapper
28th February 2010, 07:07
Check this out $45.56 an oz !! Chinese silver

http://www.youtube.com/watch?v=1vJiz7Xcgm8

Why... pay... 3.... times... spot... price?

jliu7988
28th February 2010, 07:18
they got too much $ to waste :D

nobody would even try to sell that sh*t in Australia.. our most expensive silver are from the Perth Mint.

Sakata
28th February 2010, 07:18
Why... pay... 3.... times... spot... price?

Because ... China ... is ... not ... manipulated ... and ... so .... has ... to ... pay ... full ... value.

red snapper
28th February 2010, 07:24
Because ... China ... is ... not ... manipulated ... and ... so .... has ... to ... pay ... full ... value.

:)

Sheeeyyyattttt boy! You just raised the true value of our stashes! ;)

Sakata
28th February 2010, 07:28
:)

Sheeeyyyattttt boy! You just raised the true value of our stashes! ;)

Only if you tied yourself to spot and have had a sudden realization.

red snapper
28th February 2010, 07:29
Hey. I'm just an ignorant punter and use spot as a yardstick.

I do go by Buffet's point of view though, that I won't hold onto anything unless I'm prepared to hold onto it for at least ten years.

DaleFromCalgary
28th February 2010, 07:54
"then you must keep in mind the need for a proper exit strategy."

Too true, and a point which many silver bugs haven't thought through. You could cash in a 1-ounce silver coin for $1,000 and use it to pay for a deluxe pizza. Or, as I intend to do, trade the ratio into gold for my old-age pension.


"Plus, if the price increases that much above inflation then there will be a lot of incentive to reopen silver mines which have closed or great new ones, so the supply will be greater."

This will, however, be like Peak Oil, where a lot of conventional oil wells (including mine) operate today only because the price is high. If oil dropped back to $10/barrel and stayed there, my wells and the majority of wells in North America would shut down, because we need at least $25/barrel to operate. Gold mines need about $400/ounce to stay profitable because, like oil, there are no new Ghawars around. Silver mines cost big bucks to open up, and therefore would set a floor on the price. Most silver is a by-product of other mines, mostly copper and gold mines, but the same principle applies for base metals.


"Not unless those like Ted Butler are correct and that physical silver is really in a severe shortage.........more rare than gold."

I don't believe silver is in short supply because if it was even the cartel couldn't keep it below $50. If the demand picks up, then the price could rise, but the sheeple are not rushing to buy. We all know how difficult it is to convince family and friends to buy even a few coins. The general public will still continue to put their money into term deposits at 1% to 3%.