Silver in the bullseyeDespite its underperformance last week, Jon Nadler, of our own Kitco.com, advises, “Keep an eye on silver because it is an industrial metal as opposed to anxiety barometer or monetary metal … It not only rises with gold in a big bull market, but usually outperforms it.”
Agreeing, Lawrence Roulston, editor of Resource Opportunities reminds us that silver has been in a deficit for more than 15 years, with “considerably more silver ... used in industrial applications than is mined.”
Roulston added that, “Government stocks of silver, which was once used as a currency reserve, are long gone [and] Privately-held stocks are now being depleted … At some time in the not too distant future, above-ground stocks will run out.”
When that happens, the result is completely predictable: “the speculators will pile on, driving the price through the roof, as happened in 1980, when silver passed $50 an ounce,” Roulston said.
Julian Phillips, of SilverForecaster.com, is also on the bandwagon, noting the effect of iShares silver ETF: “As an industrial metal, [silver] is consumed so the imposition of an ETF or two or three of them devours stockpiles.” In fact, iShares, which started with just 1.5 million ounces of silver on deposit, now has 136.5 million, tieing up nearly 15% of the world’s supply.
“The ideal situation [for an investor] is to own a silver exploration or development company that is adding value aside from moves in the metal price,” Roulston concluded. “A move in the silver price, when it finally comes, would be an added bonus.”