How Much Silver is Left Out There?

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It is always so much fun to turn on the mainstream financial media. You listen to them one day and hear a given explanation for the price movements in silver and gold. The next day, they will be happy to offer you a completely different explanation. Sometimes their new take on things is the opposite of what they said the very day before!

How Much Silver is Left Out There?Silver managed to stay within a few pennies’ range from the beginning of the week to the end of spot markets that closed on Friday, May 10th. The white metal opened the spot markets at $23.94, having gapped down from the prior Friday’s close of $24.14. It finally closed at $23.90 by Friday afternoon.

Let us examine the latest comical lies of the mass media closely. This week they tried to sell you on the ideas that the global silver markets are massively oversupplied, that silver and gold are only benefitting from a dead cat bounce, and that equities and real estate will massively outperform the precious metals in the next few years.

Is the Global Silver Market Really Massively Oversupplied?

This week, financial media trotted out a brand new theory designed to kick silver to the curb. They were not merely content with the recent price plunge to as low as $22 and change per ounce. They wanted a better, more devious story to help knock the legs out from under the recent silver market comeback. To this effect, they created the idea that silver’s industrial demand is massively slowing down.

It was not just one minor analyst who came out with this withering salvo either. In a rare display of rival mainstream financial institution solidarity, all of the big guns were firing in unison this week. The American based Blackrock mega asset manager joined forces with other global heavyweights like Australia’s Macquarie Bank, Switzerland’s Credit Suisse, Great Britain’s HSBC, and France’s Society General. Together, they combined their considerable powers to spin the notion that silver’s industrial use has just taken a swan dive off of a high cliff.

Take a look at some of these assassinations of silver brought to you by the world’s biggest, wealthiest, brightest, and best known financial institutions. “The worldwide silver market is massively oversupplied by around 4,000 tons in 2013.” “Industrial demand that accounts for about half of silver usage has been severely dented by the slowdown of the solar panel industry. This represents fully ten percent of the worldwide silver demand,” said HSBC. “Investors have held on to silver as if they thought there would be limitless monetary expansion,” said Macquarie Bank. “Silver is resilient simply because it is lagging behind gold,” said BlackRock.

The award for best two pronged attack on both gold and silver together goes to the French at Society General. “Silver is plagued with over supply. The long term bear market that has begun in gold will sink silver prices too.” With only one little statement, the French investment bank managed to crucify both the major precious metals!

Now look more closely at a few of the grudging admissions (could it be secret, veiled admiration?) from the self proclaimed silver haters of the past week. “If monetary expansion does continue, it would benefit silver more as it would increase demand for the industrial applications for the white metal,” Macquarie Bank admitted.

“The somewhat negative exchange traded products data on silver still shows that investors are purchasing silver, and if this is true, it would just be a matter of time until the prices rise along with demand,” Credit Suisse wistfully opined in a research note. “Gold has received much better headlines these days and gained momentum that silver has yet to enjoy,” Black Rock let slip. The major analysts trip over themselves with their double speak in the same interviews and research notes!

What’s Rally Happening With Global Silver Supply, Prices, and Demand?

The silver to gold ratio has risen to a level of 61 ounces of silver per one ounce of gold. This abnormally high number has not been seen in nearly three years. The holdings of the Exchange Traded Products in silver are still in relatively good health with .7% of all ETP assets contained in silver. The sales of silver coins out of the U.S. mint just rose to their most impressive four month run in twenty-seven years at least.

As far as the argument about a declining number of industrial applications for silver today, this is utter nonsense as well. There are more than 10,000 individual industrial uses for silver. One of the most promising is in electric wiring.

Silver is hands’ down the world’s best electricity conductor. All of the national planners know that the U.S. is on the verge of needing to rebuild the entire national electric grid. Can you guess what metal has already been selected to be used in the wiring of the entire new electric grid?

If you just answered silver, then apparently you are smarter than five of the world’s best known investment banks!?

Have Gold and Silver Been the Unwitting Victims of a “Dead Cat Bounce?”

Even a dead cat bounces when you throw it off a tall building. So goes the Wall Street proverb that many of its analysts have been applying to the precious metals of late. This dramatic claim that silver and gold are merely reacting to a temporary oversold condition needs to be explored. While no one can tell you what the short term noise in silver and gold prices will amount to, we do know a few things with certainty.

Bullion Vault reported that the physical purchases of gold in April surged as private investors took advantage of the fire sale prices that followed the dramatic plunge. This online market for physical gold and silver represents over 47,000 unique investors who self direct their investments.

Their well known Gold Investor Index reached 58.6 for the month of April. (Any number that is higher than fifty means that there are more net buyers than sellers). This represents the highest level in more than sixteen months!

Their spokesman claimed that private investors have merely been waiting for the best price opportunity to acquire larger positions in the precious metals! The U.S. mint’s own sales’ records from last month support this argument. They sold over two tons of gold bullion coins in a single day!

Listen to Bullion Vault’s next statement very carefully. It explains much of what is going on in precious metals these days. It is not possible for the divergences between the self directed investors and the fast money speculators to be any more clear.

There is an ongoing disconnect between the retail private investors who can not acquire enough of the tangible gold and silver coins and bars for their own holdings and the slick, fast money funds that decided to sell out of their paper positions because they were not making enough money quickly enough.

In case the statistical evidence that concerns private investors is not enough to convince you, take a look at what the Chinese are doing (they are the real smart money, after all!) Keep in mind that this data is for the month of March, before the prices of gold and silver prices crashed.

Mainland China (not even including Hong Kong!) imported a staggering over 223.5 metric tons of gold!

The last time China got close to this amount was back in November, 2011. At that point, they imported a mere 102.6 metric tons of the yellow metal. Prices then were $1,922 an ounce… Does that sound to you like the Chinese feel that we are in the middle of a dead cat bounce in precious metals?

Will Equities and Real Estate Markets Really Outperform Precious Metals Long Term?

The best misdirection of the past week centered on the line that both equities and real estate are going to outperform precious metals over the near, medium, and even long term time frames. The so called smart money arrived at this conclusion by starting with the idea that the Dow is on its way to 20,000 in the coming year or several years!

Other analysts have been out pushing the concept that “real estate is back, baby!” They point to the double digits price increases in real estate nationally over the last year. This will only continue (and accelerate), they confidently trumpet. Some of these analysts even believe that real estate prices are going to grow at an exponential pace in the next year.

It sounds like a compelling argument at face value. The truth is that the Dow Jones has risen against all reasonable expectations and with no connection to economic reality whatsoever. Real Estate prices are also surprisingly higher.

Will it continue indefinitely though?

Consider the warning of well known independent analyst David Roche. He stated grimly that the bond markets are soon to crash as the world’s central banks cease their purchasing of debt. This will kick off a staggering financial crisis that will make the one from 2008 seem like proverbial child’s play.

He points out that when the debt burden of the world is re-priced according to market fundamentals, the real, ugly truth will be plain for all to see. This will happen once the yields of the world’s major sovereign bonds from Great Britain, The U.S., and Germany spike higher. This in turn will lead to a severe equities crash.

Roche is not alone in this assessment. Mark Faber of the Gloom, Boom, and Doom Report said recently that he expects things to get so bad for the rich people that their very lives are in danger. Nouriel Roubini, the major economist who correctly predicted the financial crisis back in 2006-2007, also projects a significant crash and burn in the U.S. stock markets.

Real estate’s long term prospects can also be questioned.

It is no longer headline news, but the foreclosure crisis is far from over! News flash – the foreclosure crisis has millions in its icy, death like grip still! It has been five years since the mortgage meltdown crushed the U.S. (and much of the global) economy. Yet, the truth is that 70,000 new foreclosure cases just entered the pipeline for April.

The Congressional Budget Office grimly tells you that as many as three million U.S. borrowers are so far behind in their housing payments that they are in danger of having the banks foreclose on their homes! Why do you not hear more about this in the mainstream financial media?

The whole exercise of pretending that the banks have changed their behavior to help homeowners is nothing more than a charade to convince you the working public that the foreclosure problem has been solved, according to Tampa foreclosure attorney Michael Wasylik.

Despite the handwriting on the wall for equities and real estate today, smart money would still have you believe that the prospects for silver and gold are dimming by the minute. They tell you that silver is simply over supplied now. They would have you believe that the industrial applications and growth for the white metal are declining by the day.

Here is the real truth for you in one succinct sentence, brought to you courtesy of Lear Silver. In only sixty years time, we have gone through 5,000 years worth of silver production. So how much silver is left out there anyway?

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