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.