Is Silver about to make a Spectacular Comeback?

Rumour has it that Silver is on the comeback trail and about to awaken from the slumber it's had for most of the past two decades.

Could this be fact or fiction?

For some of the pro-silver market specialists, such an event is not only possible, it's an unstoppable certainty!

What makes them so confident when silver has floundered in the financial wilderness for so long?

Some reasons put forward by market commentators include:

 The accumulation of vast silver assets by prominent business tycoons.

 The buy-back of a huge silver hedge book.

 Official interference in the market that's about to end.

 Suggestions of market manipulation.

Serious stuff, but as the old saying goes, "there's no smoke without fire".

Records show that in the late 1970s, the silver price went from a low of 90.5 US cents per ounce to a high of over $50 in 1980. The price increase was in the region of 6000%.

At that time (1980) the available above ground stockpile of silver was close to 1.5 billion ounces. So the rising price back then could not be attributed to shortage of supply, the primary cause in most rising price situations.

Commentary over the past few months from various sources confirm that the available above ground stockpile at the beginning of 2003 was between 20 and 40 million ounces (m. oz). The assessment was that this stockpile would be entirely depleted by mid year, or sooner, taking into account current silver production and consumption levels.

The word "available" has great significance because some sources are known to report silver in the available category when in fact it is "unavailable for sale at any price".

Considering the known annual consumption figures as confirmed by several respected sources, now close to 1 billion ounces per annum, it would seem that 20-40 m. oz is just a drop in the ocean compared to annual demand.

Taking that a step further to include current production from mining and scrap recycling estimated at around 600 m. oz, the current supply situation could be in shortfall to the tune of around 400 m. oz in this calendar year.

Statistics are boring at any time, so we won't dwell on them here. But our research reveals there was a shortfall of 331 m. oz in 2001 and an average supply deficit of 122.42 m. oz in each of the past 12 years. Not insignificant amounts.

With the above ground stockpile now exhausted, where will the shortfall be filled from? How long can it be before the present suppliers, regardless of who they are, wake up to the fact that simply withholding supply would force the price up to previously unseen levels?

To illustrate the point, consider a recent event in the Platinum market where supplies were curtailed simply by a workers' strike in Russia causing the unit price to soar from US$325 to $700.

The supply / demand situation is just one issue that will contribute to the inevitable silver price explosion.

Franklin Sanders, a prominent figure in the industry reveals in his own recent publication, "The key to the silver price is monetary demand. Strong sustained silver moves occur when many people decide suddenly they want silver because it is money".

Sanders continues, "Today when stocks, currencies, bonds and other paper assets have begun to disappoint investors, investor attitudes are shifting. What begins as a trickle ends as a tidal wave when the panic breaks. When public revulsion at the US dollar begins, the tidal wave will become a tsunami. Silver, far more volatile than gold will benefit most".

With history revealing that silver has been used as money for most of the past 5-6000 years, except for the last 70 years, there's no reason why it can't be used again.

Pro silver advocates who frequent the Internet are predicting a silver price anywhere from a low of $100 per ounce to a high of $200.

With the current price under $5 an ounce, who amongst investors or in fact anyone looking for a means to improve their financial situation can afford NOT to explore this potentially explosive opportunity?

Good Luck,

John Coote
© Your Financial Prosperity Corp. All rights reserved.

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