Is silver really that rare?

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Shelby-villian

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Just thinking about this one. If physical silver is so rare and the price so low (should be at 16:1 ratio to gold price), why doesn't a billionaire investor just start buying up supply especially in today's unpredictable times?

If the manipulation stories are correct, wouldn't even half a billion oz buy of physical silver totally cause the price to skyrocket? Wouldn't this be a sure fire can't miss investment opportunity? At worst, you converted your wealth into physical and at best, you will make ten times your money?

I read about the Hunt brothers attempt to corner the market. This would be different in that you are not trying to corner the market nor are you buying on margins.

The whole point of the post being, if silver really was being manipulated heavily, I can't see how someone would not be trying on the other end to make an astronomical fortune. My conclusion is the supply of silver (or the potential to increase production) is so great that it cannot be manipulated on the long side. I hope I'm wrong though.
 
Who is to say that billionaires aren't? I am pretty sure many have been putting gold as part of their portfolios for years.
 
I believe there are numerous high net worth individuals including Jim Rogers, Hugo Salinas Price, Kyle Bass, Eric Sprott, et. al. who are accumulating physical holdings. Sprott has repeatedly mentioned that it is difficult to buy physical silver in large quantities. They aren't trying to buy large quantities in coins or from retail dealers. They are trying to buy 100ozt bars in large quantities. This is one reason I've been trying to track the supply of 100ozt silver bars. I figure it might give some indication of the relative scarcity that Sprott alleges.
 
Interesting pt Shelby. I do remember watching some old vegas documentary how some old vegas mogul bought like $30mm in silver and stored it buried in the desert and that was like 30 yrs ago.

The main knock on silver I hear is its more expensive and bulky to store. So if you have substantial wealth its just cheaper to store gold.

But yeah I hear you. Interesting pt.
 
Actually, the story is that nearly all of the gold ever mined still exists in the form of bullion, coins or jewelry. Silver, on the other hand, is consumed, so there is significantly less of it around. silver is underpriced by several orders of magnitude relative to available supply. Very little exists in the form of bullion.
 
The reason the Hunt brothers attempt to corner the market on silver failed is because someone that makes the rules found out about it. Then that person/persons/organization made new rules that killed the Hunts on newly needed margin calls on their silver futures, that they were already leveraged on. Then, like a Chuck Norris round house kick to the family jewels... They could not meet the new margin call, and it took MULTIPLE banks to loan them the money needed to settle, once they put their entire estate up for collateral. That, is why the Hunt brothers failed to corner the market in silver. The game is rigged, and if you try and do something that TPTB don't like or aren't included in, then you will lose.
 
Adding to what PM Bug said about Sprott......Buying 1.5 billion for his PSLV ETF would certainly qualify for what you are talking about I would think.. I believe the talk was his last purchase of 580 million ( or so ) was one of the big factors in the spring push to 50 bucks. So imagine the price if he is able to actually raise that money and execute the buy.
 
If he were smart, he would buy quietly, and buy everywhere but the US markets. If it were my money, I would buy directly from multiple producers and do so in small blocks. There's no point in pushing up the price if you don't have to.
 
I know that I have posted this video else where on the forums but I think it will help explain some of the points on why silver is so rare.

 
That video is from 2010 and mentioned investment in GLD:SLV at 7:1. Sprott recently said:
There is a lot of speculation that we are seeing the beginning signs of supply stress on the COMEX.
 
SILVER is a funny critter that I just do not understand. If the fundamentals of silver were indeed so extreme (that is, silver being rarer than most people think), then I would have thought that those in the know would have started taking BIG amounts off the physical markets and that JPM (etc.) would have been blown away months ago...

*** My blog needs an article ¨The Case For Silver¨! ***

I am not expert enough to write that. And I am NOT trying to use such an article as a straw man to knock down and push gold. I WANT to know more about the case for silver (vs. other PMs). I have seen some comment6s at ZH that the gold to silver price could come down to a 1:1 ratio, the SAME price for silver as for gold. ANYONE here who wants to write a Guest Post on silver, fully attributed to the author, please PM me!
 
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Hey DoChen, if you get that article, would you mind sharing it with us over here as well?! I'm interested to see the case presented.....and although I'm a silver enthusiast, is any one making a case against it? A comparison of sorts?
 
Here is another graph of the gold/silver ratio, pointing out the periods where silver was viewed as money. Note the dashed line and comment at the end of the graph.

 
Occam's Razor: Which scenario is more probable?

Silver, a highly useful metal, a store for wealth and is much more rare then gold, is being manipulated by banks and the governments, keeping the price down, even in today's turbulent times, even when it is touted to be a great investment option, even after Sprott announces a $1.5B physical buy? That's a lot of assumptions.

OR

Silver even being a highly useful metal and a store for wealth, does not raise in price because demand does not outstrip supply (or potential for supply)?

Anyway, this is just food for thought because I consider myself highly rational and consider buying silver today a no brainer. But if I accept the premises of my rational decision, then I must also accept that the improbable, the overarching conspiracy theory is probable. And I, being rational, tend to reject the overarching conspiracy theories. Hope everyone understands my logical process.
 

Your first option means that silver eventually skyrockets, while with your second option silver merely holds its nominal value as a mere store of wealth as the currency continues to inflate. I'll more than accept the first scenario, of course, as I also think it is the most probable given the apparent fundamentals, but I am literally banking on the second scenario. That is what makes it a no-brainer for me.

However, the fundamentals of manipulation may well be even simpler than most think, and even more in line with Occam's Razor. With an outright Ponzi scheme, like an inherently insolvent bank running on a Ponzi principle, you only need enough liquidity to maintain the illusion of solvency, so that nobody panics and dumps their paper.

A continuously mined supply of silver, especially if the price is allowed to go just high enough to make it profitable to mine, could make it the ultimate Ponzi scheme, given that there is always just enough silver produced to service the illusion of solvency and liquidity to all the paper derivatives. Thus, it may take a far more massive run on physical to cause an actual implosion, and crash all the inverted pyramids. That might well account for why Sprott is encouraging silver mines to reinvest 25% in their own physical, taking it out of circulation as well, so that it can't keep re-seeding the illusion.
 
Shelby-villian said:
And I, being rational, tend to reject the overarching conspiracy theories.
Click to expand...

Alas, but many of the conspiracy theories, even the larger overarching theories, have ceased being theories since they are supported by logical and rational facts.
 
I agree w/ Sprott, how does the world operate(did) under Capitalism?.
Supply & Demand.

What's to keep the Miners from having there silver ore, smelted into .999 bars,storing 50-75%.

Sell only enough into the market to meet minimal obligations, and pay expenses, op costs, dividends,and cost of marketing.
Hold the excess off the markets, and THEY basically are getting to set the prices. of course NOT in collusion)..LOL

Easily done, I would think.
 
Just as we were discussing the topic, ZH post's this masterpiece! Great timing I'd say!
 
I saw that article as well. ZH always seems to be just ahead of the curve on this stuff. I enjoy the site, even though it is a bit doom and gloomy. There are some great contributors there. I like Cognitive Dissonance for one. I could do without Bruce Krasting, but Reggie Middleton is fun to read, and of course William Banzai. His pictures always make me laugh.
 
I´ll let you guys know in a few days if I see any physical shortages of silver at the coin shop, LOL...

In my case, I only want Silver Eagles, nice and recognizable, and I don´t mind the little extra premium.

But, the bigger money will continue to go into gold.
 

Silver is plentiful enough to satisfy investors and industry for quite some time. http://usdebtclock.org/gold-precious-metals.html 17 billion ounces of silver are available. The market is too big to be cornered by a single large player. And storage is much more of an issue than for gold. I should know, i got a few bars of my own and it does make for a bit of a headache to store a large bulk. Maybe because I always prefer physical metal and not paper silver.
 
I think the story with Ag is really the trend - i.e. a few things happened in recent history which made it abundant and cheap (those centrifuges during the early nuclear age, accounting for an awful lot of it being concentrated into a few places very quickly, and then dropped back into the market very suddenly as supply), while suddenly acquiring new uses (electronic things, and exploding things absorbing quite a lot of it). Now we see a situation where it's coming pretty much directly from the ground instead of warehouses, the uses have not gone away (except perhaps the optical photography one, which is often cited as a 'bearish fact') and realizing this, investors also want it back as a value store.

So the trend suggests exciting times ahead. There do seem to be plenty of reasons that it might just go pop, but even assuming that doesn't happen - the slow creep of depletion is ongoing and relentless.
 
Exciting times are definitely ahead for the white metal. The massive debts, the QEs that happen in all G20 and the stimulus packages flying about everywhere are good news for gold and silver.
And the uses of silver are increasing especially for the new nano technologies, solar panels and new electronics, which more than make up for the decline in silver for photography.

If you go for the physical metal (whether gold, platinum or silver) and do it with a few years time horizon you cannot go wrong in an inflationary environment. Just make sure you dont get spooked by temporary corrections and dont expect to double your investments in a single year or two.

Long term, the precious metals would do well, maybe a 4-6 times price increase in the next 5 years. That beats equities and bonds by a country mile.

You may also try platinum now that it is bellow gold price. But longer term, nothing beats silver in % increases among precious metals. Gold is good, but silver is great.
 


There are two "funny" causes to silvers appearance.
The hands of manipulation.
The USD affliction.
To attribute those machinations to silver is diagnosing symptoms, not conundrum.

watch: @7:35 the pertinent information begins.

He who hesitates is lost.
 
drAGonfly47, if you would be interested in writing a "Guest Post" about silver at my blog (say, early January?), please let me know.
 
http://about.ag/HundredToOne.htm a nice discussion about paper gold/silver vs physical and the multiples at which paper metals trade.
Sometimes the paper metals multiples are exagerated. Ratios of 100 or 1000 to 1 may only be true for individual exchanges, but not for the overall market.
 
Silver will become extremely and artificially rare if the PTB keep pounding it down. I, for one, will never sell my shiny white until there is blood in the streets and they are begging for it on live TV.

Fuck 'em and feed 'em fish heads.
 
ancona said:
Silver will become extremely and artificially rare if the PTB keep pounding it down. I, for one, will never sell my shiny white until there is blood in the streets and they are begging for it on live TV.

Fuck 'em and feed 'em fish heads.
Click to expand...

when solar panels become mass produced (think in hundred of thousands of square miles here) silver above ground could drop to almost zero. then its time to convert physical silver to gold, cash, land or whatever fancies you then.

until then, i keep stacking it.
 
Silver is still vast

In the grand scheme of things, experts estimate about 1,742,424 TONS of silver have been mined comparing to the 166,500 TONS of gold. However technology is finding a lot more use for silver these days than gold. Maybe if we start producing gold motherboards instead of using copper or zinc!
 
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