Why silver is extremely bullish: Six factors
With Silver trading over 35% down from its May highs of near $50/oz, silver is looking extremely bullish for a number of reasons and many traders are expecting prices to double or even tripe over the next 6 months. Here are six factors would drive the price of silver higher.
--There are more (probably much more) than five Billion ounces of Gold bullion collecting dust in vaults around the world, and more is added to the vaults everyday because more is mined than is used as jewelry or industry or investment products.
--There is less (probably much less) than one Billion ounces of silver bullion available for consumption by industry, and that number is further depleted every day because less is mined than is either consumed by industry or is converted into more valuable investment products.
--Perhaps 70% of the silver currently being mined is a byproduct from base metals mining. As the world continues to fall into a deeper inflationary depression, the amount of base metals that will be mined will reduce as worldwide construction demand decreases with the slowing economy. That inevitable reduction in base metals mining will further exacerbate the supply deficit in silver relative to the demand.
--The industrial applications that consume silver cannot reasonably substitute other alternatives, so those industries must have silver to continue their business. The amount of silver used in each product is small, so the use of silver is price inelastic because industry will continue to consume silver even after the price increases substantially from current levels. The real wild card is that all industries have migrated to just in time purchases of the Silver that those industries must have. When news gets out that one industry is having trouble getting delivery on cheap bullion silver, there will be a stampede by all industries to lock in the physical they must have to continue production.
--The Banksters have been artificially depressing the price of silver for decades, and those criminals continue to squelch price rises in silver by selling huge quantities of paper that is not backed by anything. The investment world is beginning to realize that paper promises have little meaning, and that smart investors need to hold physical. As that migration to physical accelerates, the paper market will become much less relevant and the Banksters will be overrun with demands for physical. The explosion in the price of silver will be so strong that it will even be able to carry its little brother Gold to higher prices.
--One silver problem is that buyers get too much metal for their money. As silver rises, it will not take as much space in secure storage, and big money people will consider putting some of their wealth into silver. That buying by big money will drive the price of silver exponentially higher, as each increase in price makes silver that much easier to store. People who prefer to buy gold because silver is too heavy and bulky will be happy to hear that someday they will be able to get much less silver for their gold, because the price of silver will increase so much more rapidly.