Silver To Fly To the Moon?

October 13, 2009 | By | Reply More

Much has been written about silver in the last few days that if only half factual should as good as guarantee that silver price will fly to the moon before very long.

We read, for example, that about five billion ounces of gold is present above ground in the world with a value today of circa five trillion US dollars whereas today there is only one billion ounces of silver left worth only circa seventeen billion US dollars.

Last year recorded investment demand apparently accounted for over 20% of total world mined and recycled production with doubtless quite a few more million ounces unrecorded.

Total worldwide silver production since 3000 B.C. has been approximately 40 billion ounces.

This then, we are told, equates to 15% of all the physical silver ever mined on the planet!

That is Six Billion Ounces of Silver

Lets pause here to reflect on the consequences so far if these are facts and not figments of the imagination.

Silver, unlike gold, has a multitude of uses in manufacturing, electronics, medicine, etc., as well as its centuries old use as a store of wealth second only to gold and in jewelry.

In fact the use of silver in industry and science seems to be growing as its unique properties are becoming more and more in demand in the ongoing growth of sophisticated applications.

With so much of the worlds limited availability of silver being taken up by investment demand, particularly those ETFs that are building up deposits of the physical metal in their worldwide vaults, there must soon come a time when not only will demand have outstripped supply, but that there will not be any supply available for industrial or any other use than to sit in depositories awaiting distribution rationed only by price.

Another source tells us that as much of the silver used in manufacturing is destroyed, unlike gold and PGMs which are, in the main, recoverable resulting in more silver being consumed than mined leading to that one billion ounces said to be remaining available today.

Top this off with the fact that there has been no significant increase over recent years in mining output paints a picture that no serious investor in precious metals can afford to ignore.

Another statistics that is important to note is that thirty-five years ago the price of gold was twenty three times that of silver. Today the price of gold has leapt to over sixty times that of silver!

Firstly we should inform our readers that we have every respect for the published sources that we have used in this article.

However we are sure that this must raise a number of questions in our readers mind and we would very much like to hear your observations. For instance 34 billion ounces of silver is an awful lot to disappear of the face of the earth even if it has taken 4000 years to occur.

Whatever reservations we may share concerning the data in this article, the fact remains that silver is a buy. Any serious precious metal investor that ignores the fundamentals will rue the day if steer clear.

Our preferred option as this scenario plays out is iShares Silver Trust (SLV:NYSE) the oldest and largest physical silver holding ETF and in which we are invested.

Although we do not hold a strong belief in technical analysis we are told that the SLV chart indicates a strong possibility of a break out occurring soon, could be just the icing on the cake!

Whatever your opinions do keep silver on your radar for the time being.

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