Silver Price Charts And Other Factors Say Now Is Time To Buy (Part 2)

For Part One, please go HERE.

“Las Lágrimas de la Luna” could well reach $500/oz in the next few years.  This expression is how ancient Incas of Peru referred to silver…”Tears From The Moon.”  Although silver production is globally widespread, tiny Peru is the world’s largest silver producer. However,  many mining companies contribute to world silver production.

Here are the World’s 20 Largest Silver Producing Companies   

Silver Reserves By Country

The world silver reserves are estimated to be around 530,000 tonnes. The countries with the largest silver reserves are Peru (120,000 tonnes), Poland (85,000), Chile (70,000) and Australia (69,000). Over the past ten years there was a steady increase in silver mine production. Even though mining companies were excavating more and more silver, the mine production could not meet the demand. Therefore, this gap has to be closed by reusing scrap silver. However, recycling silver is difficult for three reasons. First, the amount of silver used in some applications is very small. Second, other applications that contain silver such as solar panels have a long life cycle. Third, a great deal of silver in computers, cell phones and TVs is discarded

Silver Demand Characteristics

By geographical area, the United States is the largest consumer of silver. It is also the largest consumer of silver jewelry. Over the last couple of years demand to buy silver as jewelry has remained strong, as gold remained at high prices, leading consumers to substitute. The next largest silver consumers are China, Japan, India and Germany.

Silver Price History

Long-term silver price trend with charts

Silver is way below its nominal record price of $50 in 1980.  It is even further below the government inflation adjusted level of $135.  And if you use REAL inflation adjusted numbers, like Shadowstats, the REAL 1980 inflation adjusted price of silver would have to be $450!  Silver is a precious and depleting resource - and when you look at the price of housing, cars, education, food, energy, taxes, insurance back in the 1980′s, it is insane to think that silver is so cheap on any level.  Especially when the uses of silver have skyrocketed since the 1980’s.  It is now used in technology on a massive scale and is even now said to cure cancer.    (Source:  SilverShield)

$500 SILVER LOOMS

I am old enough to remember when silver was $1.39/oz (1940s to 1960s). And when the investing world ‘discovered’ the shiny white metal…it went parabolic from $1.39 to nearly $50 (intra-day).

From 1964 silver enjoyed a ballistic ride to Jan1980…..during that period silver soared nearly 3,500% (ie soared 36 times!)…a 34% CAGR.   Were we to see a déjà vu all over again (thank you Yogi Berra), the silver ‘phoenix’  will have topped $700/oz.  Skeptics might ask: IS THIS POSSIBLE?

I SAY YES for several reasons:

·         If it happened before it can occur again.

·         There was no Internet communication in the earlier period. TODAY’S Instant international  marketing makes global dissemination of ideas and information real-time communication. 

·         History is testament that in 1980 only 5% of global investors had any form of precious metals. Moreover, recently precious metal experts state only 1-2% of global investors own today any form of precious metals. And although I am not certain, I suspect the majority of current investors own GOLD RATHER THAN SILVER. This can all change via mass Internet marketing of silver with a view to educate and illuminate the ignorant billions of international investors.

·         President Obama’s grandiose socialist plan financed by a National Debt of $17 TRILLION…estimated to rise to $22 TRILLION by the time he leaves the white House, will force the Fed to sharply devalue the greenback in order not to default on the National Debt.

·         Pension Plans, Insurance & Bank Trust Depts. are slowly waking up to the heretofore spectacular investment performance of silver vis-à-vis fiat investments….ie Stock, Bonds and plain old Cash. I will elaborate in detail about this in Part 3 of this Silver Analysis.

·         And then there is the insatiable demand by China and India with nearly 2.5 Billion population.

Here are several facts why the white metal will again forge all-time record highs:

-        China’s and India’s insatiable demand for the white metal continues growing

-        Yearly Consumption/Production ratio demonstrates acute deficits

-        Unlike gold…silver is consumed by industrial and medical usage

-        Silver’s global mining production shows a pathetic 2.8% CAGR during the past 10 years

-        Investment demand for the white metal will go ballistic…once the present consolidation ends

-        Currency Devaluation Contagion will soon engulf the world, thus fuelling all precious metals higher

-      Sales of US Minted Silver coins are at all-time record highs…despite the recent correction in value

-        Mexico is currently considering making SILVER the national currency…rather than the fiat peso  

-        A growing number of states are seeking shiny new currencies made of silver and gold

-      Utah and Arizona state legislature recently recognized silver and gold as legal tender. Furthermore, other states considering legislation to make gold bullion and silver bullion legal currency are Montana, Colorado, Idaho, Indiana, New Hampshire, Georgia, Washington, Minnesota, Tennessee, and Virginia.

Based upon all the above criteria and rationale, I conservatively estimate silver might top $500/oz by the year 2020.

Part 3 of this series will be posted within a week.