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Infographic: Supply And Demand For Silver

Topics [ silver investing Silver Price silver market ]

RESEARCH & ANALYSIS

Visual Capitalist has published Part 2 from its Silver Series of infographics. (Click here for Part 1). The latest instalment examines supply and demand, suggesting that even though there are more than 10,000 modern industrial uses for the metal, investment represents one of the fastest growing segments of silver demand.

Take a look:




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Then, As Now, Silver's Course Dangerous To Predict

Topics [ silver investing silver prices silver market ]

ALL ABOUT SILVER

Looking for something different to read during my midday break today, I visited The Perth Mint’s library and came across “Messrs. Mocatta and Goldsmid’s Circular on the Movements of Gold and Silver during 1913”, an Appendix to the British Royal Mint’s 1913 Annual Report.

Silver investors will find this circular of 100 years ago of interest as Messrs. Mocatta and Goldsmid spend three of their four page report on the silver market.

January saw the highest silver price for the year of 29 & 3/8 pennies. From that point the price fell to 26 & 1/16 on 25 March on account of “the market becoming very despondent with regard to the China loan negotiations” as well as “the Balkan war and other causes were keeping money very dear and helping to deter buyers” but the market recovered in April when the Chinese loan was signed. A century later it is the Chinese with excess foreign reserves to lend.

May was steady, “but the heavy stock of silver in London, which then amounted to nearly 4,000,000l., was discouraging to buyers” (Note, l. means pounds). Then, as now, India and a promising monsoon were important drivers of the market. However, while “the prospects of bumper crops were most favourable, the Indian Government seemed very reluctant to commence purchasing”.

One thing that has not changed in 100 years is stealthy central bank transactions, with Messrs. Mocatta and Goldsmid noting that India’s purchases were “unsuspected by the market for some time and it was not till the huge stock of 4,200,000l. which had been accumulated in London was reduced by three shipments of 1,000,000l. each in three consecutive weeks that it was realised to what extent the Government had bought.”

In November “rumours of financial trouble in Bombay and many failures in the Mill Share market, caused great uneasiness as to the financial standing of the Bull speculators, who had for so long been operating in silver on such an enormous scale.” The price recovered on the formation of a syndicate to “take over all the ready silver and the contracts for forward delivery” which “caused the Bears, whose commitments for December and January were exceptionally large, to partially cover”.

I’m sure today’s silver investors would love to have enormous “Bull speculators” and “syndicates” panicking “the Bears” into covering, with the circular noting that "... huge bull account, which has been such a menace to the market for many years, has now passed into very strong hands..."

Messrs. Mocatta and Goldsmid continue on to report on production problems in Mexico and the appearance of backwardation in silver in September.

They conclude their silver market summary with some sage and timeless advice from 100 years ago: “It is always difficult, if not dangerous, to express any opinion as to the probable course of silver, and owing to the recent startling developments it is particularly difficult to do so for the coming year…”

Little did they know that less than seven months later, on 28 July 1914, the world would be at war and financial markets truly would be “startled”.

Download the full Messrs. Mocatta and Goldsmid’s Circular here (pdf 310kb).



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Factors Aligned Against Gold

Topics [ gold market gold prices silver prices silver market ]

WHAT OTHERS ARE THINKING

The European Central Bank disappointed investors Thursday after president Mario Draghi said it was ready to take action on the debt crisis but failed to offer any immediate action. Stock markets and precious metal prices all dropped on the news.

Summing up the negative factors ranged against precious metals, Kitco analyst John Nadler cited the Fed and ECB announcements in combination with the imminent summer holiday season in the Northern Hemisphere.

Peter Schiiff, CEO of Euro Pacific Capital wrote “many investors believe the yellow metal has topped out and are selling into every rally.” Faced with market pessimism and “tides of propaganda saying that gold has no value or is the refuge of doomsayers”, the renowned gold bull is stocking to his guns: “At the end of the day the gold price is not a mystery – it's a proxy for dollar weakness.”

Full story: Resource Investor

Elliott Wave market analyst Avi Gilburt admitted he’s surprised that precious metals failed to rally as predicted some months ago. Sentiment regarding silver is beyond bearish, he wrote. “These levels have not been seen in decades, and it tells us that silver is ripe for a reversal, but still may need one more washout drop to trigger the reversal.”

Full story: The Street



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Silver Seasonality

Topics [ sell silver silver investing silver market buy silver ]

REASEARCH AND ANALYSIS

Is there a good month of the year to sell silver and an equally favourable month in which to buyback? In this paper I investigate the seasonality of silver and deliver a warning to those tempted to rely on the next seasonal chart they come across.


Download The Perth Mint Treasury paper Silver Seasonality (pdf 348kb)



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Silver’s Average Annual Price For 2011 A Record High

Topics [ silver investing silver silver market ]

RESEARCH & ANALYSIS

The Silver Institute has released this cheering analysis of the silver market.

"The average annual silver price for 2011 of $35.12 per ounce set a record for the white metal, a staggering 74% gain over the 2010 average annual price of $20.19 per ounce.
“Silver’s strong price performance last year owed much to the strength in investment demand, as well as growth in industrial demand, much of which is relatively price insensitive in the short-term,” stated Michael DiRienzo, Executive Director of the Silver Institute.

Silver outperformed all precious metals in terms of increases of average annual prices:  Palladium posted a 39% gain in 2011, while gold was up 28% and platinum rose 7% last year over 2010’s figures.

To underscore silver’s price strength in 2011, in a report released in November 2011, entitled “The Silver Investment Market – An Update” [download pdf] produced by Thomson Reuters GFMS for the Silver Institute, the authors forecasted that world silver investment would reach $10 billion in 2011, comfortably exceeding the previous record of $6 billion set in 2010."

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Sydney Gold Symposium Roundup

Topics [ gold investing silver investing gold market gold prices silver prices silver market ]

WHAT OTHERS ARE THINKING

Kris Sayce from Money Morning Australia was at this week’s Sydney Gold Symposium. No prizes, he says, for guessing the views on gold and silver. “The message was buy both. And buy them now.” And that, he admits, made him a little uneasy.

Here are Kris' highlights from the conference - and a word of warning:-

Monday’s keynote speaker was Egon von Greyerz. Here are a few choice quotes:

“There are three types of money. There is money which is worthless (Zimbabwe), there is money that will become worthless (US dollar), and there is real money (gold).”

“100,000 people earning average $40,000 have to work for 350 years to produce as much income as Ben Bernanke can print $1.4 trillion in a fraction of a second.”

What’s the difference? The first is mostly productive work… The latter is a man pressing a button!

“Nixon should have been impeached for going off the gold standard, not Watergate… or shot even! It was the worst criminal act I’ve ever seen.”

The afternoon session saw our old pal, Dan Denning take the stage:

“The gold standard should be the friend of the working man…

“You cannot have true liberty without gold as real money.”

And on the sham of central banks having an inflation target, Dan pointed out an inflation target of 3% means the central bank is authorising the steady erosion of personal wealth… by 3% each year.

But “under a gold standard [the people] cannot be robbed by the central bank in that way.”

The second day was a ripper too. But as we were chairing, we did not have the chance to take as many notes as we would have liked. Richard Karn’s talk on specialty metals was the best of the crop.

His best slide compared nations’ money supply growth and reported inflation rates. Turns out Australia’s money supply is growing faster than the U.S. Yet officially our inflation is under control!

But getting back to our point from the start of this letter, some parts of the Gold Symposium made us feel a bit uneasy.

We know it was a gold conference. And we knew everyone would be bullish on the yellow metal. But still, we had hoped for some counter arguments. Or at the very least for one of the speakers to say, “Of course, if I’m wrong, this will happen…”

The closest any of the speakers came to this was (we think) John Embry of Sprott Asset Management. To paraphrase, he said: “Be careful what you wish for. If there is hyperinflation it will be terrible for everyone.”

It’s an argument we’ve made here many times. We know the gold bugs won’t like us saying it. But the best outcome for gold investors is probably for the world’s economies to experience more of the same… bailouts and central bank money printing.

That will be bad news for those who don’t own gold as they’ll remain unaware of the silent destruction of their wealth. But for gold and silver investors it could (or should) see precious metals crank higher over time.”

Originally entitled ‘The Working Man’s (and Woman’s) Best Friend’, this article can be read in full at Money Morning Australia.

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