RR on sliverRick Rule - Physical Supply Shortages in Silver, October 22 2010
Withgold and silver correcting, King World News interviewed one of thegreat minds in the resource world, Rick Rule. Rick is one of the mostlevel-headed individuals in the business, so what he said about silverwas shocking,
“We are seeing huge inflows into physical silver, and that may create a shortfall of available physical silver.” He also mentioned,
“Silver strip and silver coin demand continues very, very strong as well.”
Rick Rule continues:
“I just think it wasoverbought, the trade was getting very crowded. There were a lot ofmomentum players and they are not investors. So they jumped ship at thefirst sign of weakness.
They were attracted to thestrength in gold, and as soon as the tape turned weak they were gone. Iwould expect further weakness in both gold and silver. I’m still veryconstructive longer-term on both, but the silver market may not declinelike the gold market.
You hear from dealers aboutdelays in shipping product. I would assume given the extraordinaryamount of coins being minted and the demand, that we may be close torunning into physical supply shortages as a consequence of extraordinarydemand for minted products.”
When asked about the mining shares specifically Rick commented,“I think you are going to see in the next two years a lot of takeovers,despite the current weakness in gold bullion and gold equities. Majorsare now enjoying excellent cash flows and are having difficultyreplacing ounces produced.”
That is what we are lookingat going forward, tremendous consolidation in the mining sector PAC-MANstyle. We can also count on longer-term strength in gold and inparticular silver, with potential shortages developing in silver.