If you want another reason to sell your own grandmother to get money to buy silver, and lots of it, then listen to what David Bond, associate editor at Free Market News, says. China, he says, has admitted that they have literally run out of silver, and now they need to buy it! A country so big that it has almost five times as many people as ours needs to buy silver, because we, a country that has five times fewer people in it, have used all the silver to get to where we are! I mean, the potential demand for silver staggers the imagination!
DJ MARKET TALK: Short Covering, Fund Buying Lift Comex Gold 1346 GMT [Dow Jones] - Fund buying and short covering have helped Comex gold and silver climb sharply, says a trader. Some buy stops were hit in Dec gold around the $471 area. Dec gold is up $7.30 to $474.30 and Dec silver is up 13.2 cents to $7.84. "We saw a lot of short covering above the $470 level and above yesterday's high of $470.80," says the trader. There appeared to be limited selling as the market was rising, he adds. (ALS)
Silver and gold are having a good start this morning with gold up $4.10 at $475.10 and silver up .07 at $7.87. Gold is now up $8.00 for the week and silver up .24 for the week.
The following is an excerpt from an article by David Morgan.
So by now you know most of the risks and would like our opinion of the best Silver Miner in the World. It is simply Mr. Warren Buffet may prove to be the best silver miner of all time!
Why would we consider Buffett to be the best in the world?
1. No environmental impact statement was required for this mine. 2. No 43-101 statement was necessary 3. All geological data becomes unnecessary 4. Low overhead—very few employees 5. Political problems reduced substantially 6. Fix costs known—price of silver at time of purchase 7. Variable costs (known?) –storage costs
Additionally, Buffett has a profit, yes profit, even adjusted for inflation Buffett has a profit in silver, this is not the case for almost the entire silver mining industry. Some will argue this is not a miner at all, and of course that point is obvious, what is not so obvious is how smart it is to let others mine silver at a loss, and then pick up the end fungible product at a cost lower than theirs.
Ted Butler did a nice article on the Buffett purchase of silver. What is so fascinating is that Buffett mined silver right off the exchange at a cost below what most miners are able to do. In fact as of last year not one primary silver miner showed a profit for the entire year. A few quarters of profit yes but on an annual basis no! This will change for fiscal year 2005 in our view and one of these companies has been in our speculative list for some time now. Please bear in mind we are speaking of total costs, not cash costs which miners are so fond of speaking about which neglect the actual costs associated with the mining of ore.
Grass Valley, CA (silverstockreport.com) -- The Silver Users Association (SUA), a group devoted to the conflicting goals of keeping silver prices low and keeping silver available for users, stunned the silver investing community last month by repeating the claims made by silver investors and analysts that the silver market is very tight and that any significant investor demand will create a shortage of silver.
The SUA made the bullish case for silver when asking the Securities and Exchange Commission (SEC) to deny Barclay's petition for a Silver Exchange Traded Fund (ETF). Barclay's Silver ETF will require Barclays Global Investors to buy up to 130 million ounces of silver prior to the approval of a silver ETF, in anticipation of investor demand for the silver ETF. But the COMEX division of NYMEX only has 117 million oz. of silver in all wearhouse stock categories combined. Furthermore, COMEX market participants, through approximately 140,000 silver futures contracts at 5000 ounces each, already have claims of up to 700 million ounces of silver--silver that may not exist.
The SUA's position: "The Silver Users Association opposes the creation of a silver ETF because of the concerns that doing so will require the holding of physical silver be held in allocated accounts, thus removing large amounts of silver from the market. By doing so, the ETF will cause a shortage of silver in the marketplace."
The SUA is literally asking the SEC to limit investors' ability to buy silver through an ETF. A silver ETF, which would wearhouse silver for investors, and be easier for investors to buy and sell, makes more sense for silver than gold, because of silver's weight. At $6.80/oz., every $1,000,000 of silver weighs about 10,000 pounds. But there are already limits on silver purchases. At the COMEX, there is a position limit of 1500 contracts per person or entity per month (which is a limit of 7.5 million oz. of silver), and total silver deliveries to all market participants may be limited to 1.5 million ounces in any given delivery month.
Back in May, 2004, the U.S. Commodity Futures Trading Commission (CFTC), which is supposed to oversee and prevent market manipulation and defaults, issued a 9-page report on silver that acknowledged many of the bullish fundamentals for silver, yet went on to say that a short side price manipulation could not exist because there is "unrestricted access to the market, [because] many knowledgeable and well-capitalized traders would readily buy any silver offered at artificially low prices." Michael Gorham, director of the CFTC, in the same report, then contradicted his earlier statement by acknowledging and defending the current position limits that prevent unrestricted access to the silver market. Michael Gorham then resigned from the CFTC about 3 weeks later.
I maintain that limits are evidence of shortages, manipulation, and price fixing that is too low. In free markets with free prices, there are no limits and no shortages, because in case of an impending shortage, supplies are rationed not by limits, but rather, by higher prices. Obviously, those who would advocate limits on purchases, would rather not see higher prices. Today, it appears as if the SUA is more concerned with keeping silver available to its members than keeping silver prices low, since they can no longer continue to do both. The SUA is risking endorsing the bullish story for silver, in an attempt to keep silver available to users, and away from highly capitalized investors who may want to buy silver through a silver ETF.
So, what exactly are the bullish fundamentals for silver? The current bullish supply and demand fundamentals as published (but not well publicized) by the silverinstitute.org and cpmgroup.com are that about 600 million ounces of silver are mined each year, while about 870 million ounces of silver are consumed by industry, jewelry, and photography. The difference is largely met by recycling, and investor selling. In 2004, investor selling ended as 40 million ounces of silver was purchased by investors throughout the year, which drove silver prices up from a low of $4.15 to a high of $8.40/oz.
Historically, the silver to gold ratio was that 15 ounces of silver would be worth 1 oz. of gold. Today, with silver at $7.76/oz. and gold at $472, it takes just over 60 oz. of silver to buy one ounce of gold, thus, silver is much cheaper than gold when compared to historic norms.
Have we hit "peak silver", like "peak oil"? Peak oil proponants maintain that there is about a 40-year supply of oil in reserves. However, according to Ted Butler, (butlerresearch.com), there are only about 16 years of silver in in-ground reserves, worldwide. The silver to oil ratio hit a high of over 1, as $50/oz. of silver could buy more than a barrel of oil at $43/barrel in 1980. Today, with oil prices hitting $70/barrel, silver prices are again at historic lows as compared to oil, as an ounce of silver recently was 1/10th the price of a barrel of oil.
How important is above ground supply? In the copper market, the world is down to a 2-day supply of inventory at the LME: 64,000 metric tonnes. And in copper, since demand is expected to continue to exceed supply over the next year, then copper prices are poised to move up substantially.
"Acquiring these assets makes a lot of sense due to the geographical synergies with Goldcorp's existing operations. It is accretive to earnings, cash flow, reserves, resources and production on a per share basis," said Ian Telfer, President & CEO of Goldcorp. "It enhances Goldcorp's growth profile and provides significant exploration upside while maintaining Goldcorp's status as the lowest cost major gold producer."
In order to fund this proposed acquisition, Goldcorp intends to use a portion of its current cash balance of over US$400 million, US$500 million from its existing revolving credit facilities, and new committed credit facilities of US$700 million.
Goldcorp is presently the world's lowest cost million ounce gold producer with mining operations in the Americas and Australia. As a result of this transaction, 2007 gold production is expected to double from current levels to 2.4 million ounces.
Goldcorp Agrees to Acquire Assets Increasing 2006 Annual Gold Production by 50% to Over Two Million Ounces Monday October 31, 7:30 am ET
VANCOUVER, British Columbia--(BUSINESS WIRE)--Oct. 31, 2005--Goldcorp Inc. ("Goldcorp") (TSX:G - News; NYSE:GG - News) is pleased to announce that it has entered into an agreement with Barrick Gold Corporation ("Barrick") (TSX:ABX - News; NYSE:ABX - News) to acquire certain mining assets and interests of Placer Dome Inc. ("Placer Dome") (TSXDG - News; NYSEDG - News), in the event that Barrick is successful in its bid to acquire Placer Dome. The consummation of this transaction would increase Goldcorp's annual gold production by approximately 50% to more than 2 million ounces at a total cash cost of less than US$150/oz. Proven and probable gold reserves would increase by 83%.
The NY metals market is at it again. When NY opened gold was up $1.50 and silver was up .06. After the NY market was opened for 30 minutes gold was down $2.20 and silver was down .04
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