Rumour has it that Silver is on comeback trail and about to awaken from slumber it's had for most of past two decades.Could this be fact or fiction?
For some of 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 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 market that's about to end.
Suggestions of market manipulation.
Serious stuff, but as old saying goes, "there's no smoke without fire".
Records show that in late 1970s, 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 region of 6000%.
At that time (1980) available above ground stockpile of silver was close to 1.5 billion ounces. So rising price back then could not be attributed to shortage of supply, primary cause in most rising price situations.
Commentary over past few months from various sources confirm that available above ground stockpile at 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 available category when in fact it is "unavailable for sale at any price".
Considering 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 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, current supply situation could be in shortfall to 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 past 12 years. Not insignificant amounts.