Silver Prices Bypass Moon and Head for Sun
Amazing it is, how the silver supply can be so depleted yet the price remains so low. By most accounts, spot silver today is lower than what it costs most mines to produce. Some say manipulation. I say I hope that is true. Why? Because it cannot go on forever before the truth wins... and the truth always wins.
Take the Fed for example. Its job is to manipulate the economy. It does so primarily by controlling interest rates. Rising and falling rates dictate disposable income and it is disposable income that drives the economy. Too much disposable income and we get inflation. Not enough and we get recession.
No one disputes that it is the Fed's job to manipulate rates and in turn the overall condition of the economy. The question is, has it been successful? You be the judge. In 2008, after years of easy money policies, our entire financial system arrived at the brink of economic Armageddon. $7 trillion of wealth vanished overnight. Clearly the Fed failed at its job of manipulating rates and controlling the economy.
So badly did it fail, that rate manipulation is now just a broken tool. The truth has won. You can't borrow your way to prosperity. Sure, the Fed has other tools, other ways to manipulate the overall economy. With the rate manipulation tool broken the Fed has had to drag out an even bigger tool - money printing! Will it work?
As the Fed rolled out QE1 then QE2 and QE3, even the mainstream media was critical. They said the Fed was just kicking the can down the road. We heard it for years, then the cries subsided. No one wanted to hear it so no one wanted to keep saying it. That, however, does not mean the end of the road is not still approaching. Manipulation will fail again. You can't print your way to prosperity.
If the silver price were being manipulated lower, what could the reasons be behind such effort? One often discussed is that low prices cause the weak hands to fold and sell, making supply available to those who know better. One could also believe that price manipulation has dissuaded new investors from buying. That would also leave more supply for those who see low prices as an opportunity to own more... not sell. Remember no one buys low without the intent to one day sell high. If the price is being manipulated, so be it. Just as every effort to manipulate anything ultimately yields to the truth so it will be in the case of the silver price.
When it comes to silver, what is the truth? The story has not changed. For all intents and purposes the above ground supply is gone. The Technology revolution has used up nearly all that has been produced over the last 5000 years. All that remains is production and of that, the majority of silver now produced is bought up by industry. Technological breakthroughs have not stopped. In fact they are coming at us from all directions.
One of the latest comes from Apple. Solar cells as light sensors. Nearly every cell phone and modern computer utilizes ambient light sensors to automatically adjust the brightness of the screen. Apple intends to replace current light sensors with solar cells that can be embedded right into the screen. Current sensors reside in the bezel of various devices. It's a simple concept, embed the sensor into the screen and bezel space can be utilized to expand the size of the screen.
What does this all have to do with silver? Well, you can't make solar cells without silver and the point to drive home is that as technology continues to expand so will the need for silver. That is the truth. We are not using less silver as time goes on, we are using more and if the above ground supply is virtually gone, that makes every ounce of silver produced a most valuable commodity to possess.
This is why demand for physical silver is rising. Savvy investors see the future, know the truth and are responding to it. If you think you are going to get the truth watching or listening to domestic market reports - forget it! One peep about a silver shortage and the price would skyrocket. This would be counter-productive to industry and those trying to accumulate at these low prices. Step outside the U.S. though, and the story is different. In a recent Shanghai Metals Market report we learn just how short the silver supply may be. Last year the U.S. Mint sold more than 42 million ounces worth of silver coins. That was a record. This year the mint is on pace to break that record.
Interestingly, the mint only buys silver from domestic sources which means last year the mint bought and sold an amount of silver equivalent to more than one year's worth of domestic production. If the mint is on pace to sell more than 42 million ounces of silver this year, we could see another silver shortage announcement by the mint before year end.
If the silver price is indeed manipulated and if the supply data is accurate, a collision between theory and fact could be as explosive as the events of September 15, 2008 - the day Lehman Brothers declared bankruptcy. That was the day the truth came to light about the real state of our debt. I believe such a day is coming for silver. A day when the silver price bypasses the moon and heads for the sun.
As always, these are my opinions and not necessarily shared by others. If you do agree I would be honored to have you follow me @DaveTheGoldDr.
Take the Fed for example. Its job is to manipulate the economy. It does so primarily by controlling interest rates. Rising and falling rates dictate disposable income and it is disposable income that drives the economy. Too much disposable income and we get inflation. Not enough and we get recession.
No one disputes that it is the Fed's job to manipulate rates and in turn the overall condition of the economy. The question is, has it been successful? You be the judge. In 2008, after years of easy money policies, our entire financial system arrived at the brink of economic Armageddon. $7 trillion of wealth vanished overnight. Clearly the Fed failed at its job of manipulating rates and controlling the economy.
So badly did it fail, that rate manipulation is now just a broken tool. The truth has won. You can't borrow your way to prosperity. Sure, the Fed has other tools, other ways to manipulate the overall economy. With the rate manipulation tool broken the Fed has had to drag out an even bigger tool - money printing! Will it work?
As the Fed rolled out QE1 then QE2 and QE3, even the mainstream media was critical. They said the Fed was just kicking the can down the road. We heard it for years, then the cries subsided. No one wanted to hear it so no one wanted to keep saying it. That, however, does not mean the end of the road is not still approaching. Manipulation will fail again. You can't print your way to prosperity.
If the silver price were being manipulated lower, what could the reasons be behind such effort? One often discussed is that low prices cause the weak hands to fold and sell, making supply available to those who know better. One could also believe that price manipulation has dissuaded new investors from buying. That would also leave more supply for those who see low prices as an opportunity to own more... not sell. Remember no one buys low without the intent to one day sell high. If the price is being manipulated, so be it. Just as every effort to manipulate anything ultimately yields to the truth so it will be in the case of the silver price.
When it comes to silver, what is the truth? The story has not changed. For all intents and purposes the above ground supply is gone. The Technology revolution has used up nearly all that has been produced over the last 5000 years. All that remains is production and of that, the majority of silver now produced is bought up by industry. Technological breakthroughs have not stopped. In fact they are coming at us from all directions.
One of the latest comes from Apple. Solar cells as light sensors. Nearly every cell phone and modern computer utilizes ambient light sensors to automatically adjust the brightness of the screen. Apple intends to replace current light sensors with solar cells that can be embedded right into the screen. Current sensors reside in the bezel of various devices. It's a simple concept, embed the sensor into the screen and bezel space can be utilized to expand the size of the screen.
What does this all have to do with silver? Well, you can't make solar cells without silver and the point to drive home is that as technology continues to expand so will the need for silver. That is the truth. We are not using less silver as time goes on, we are using more and if the above ground supply is virtually gone, that makes every ounce of silver produced a most valuable commodity to possess.
This is why demand for physical silver is rising. Savvy investors see the future, know the truth and are responding to it. If you think you are going to get the truth watching or listening to domestic market reports - forget it! One peep about a silver shortage and the price would skyrocket. This would be counter-productive to industry and those trying to accumulate at these low prices. Step outside the U.S. though, and the story is different. In a recent Shanghai Metals Market report we learn just how short the silver supply may be. Last year the U.S. Mint sold more than 42 million ounces worth of silver coins. That was a record. This year the mint is on pace to break that record.
Interestingly, the mint only buys silver from domestic sources which means last year the mint bought and sold an amount of silver equivalent to more than one year's worth of domestic production. If the mint is on pace to sell more than 42 million ounces of silver this year, we could see another silver shortage announcement by the mint before year end.
If the silver price is indeed manipulated and if the supply data is accurate, a collision between theory and fact could be as explosive as the events of September 15, 2008 - the day Lehman Brothers declared bankruptcy. That was the day the truth came to light about the real state of our debt. I believe such a day is coming for silver. A day when the silver price bypasses the moon and heads for the sun.
As always, these are my opinions and not necessarily shared by others. If you do agree I would be honored to have you follow me @DaveTheGoldDr.