I got a June 2010 brochure from silverinsidersreport.com that contained an
interesting fact about SLV, the exchange traded fund (ETF) for silver, which is
that Peter Keusgen, the writer, says that SLV is "the main alternate source of
storage" of silver and "which accounts for around 50% of world silver
inventory"! Wow!
Well, interestingly, he doesn't get into that whole controversy about whether
there is actually any silver in SLV, but he writes that SLV has "been raided
heavily over the past seven weeks," and indeed since February 26, "17.9 million
ounces - or 2,2557,000 ounces - have been withdrawn from the ETF by authorized
participants".
Naturally, being the typical clueless guy who can't remember facts, figures or
children's birthdays ("There's three of them, for
crying out loud! How can I possibly keep up with that many dates or names?"), I
don't really know how to evaluate this information, but it becomes a little
clearer when he goes on "to put it another way, 3% of the world's silver
inventory disappeared in just seven weeks!" Hmmm!
Immediately, I see that this is something that I can use to wave in the
sneering faces of those disbelieving people who scoff at my advice to buy
silver! I am almost drooling in anticipation of saying to them, with a nasty
sneer on my face and with a voice dripping with contempt, "Now, what were you
saying about me being an ugly little troll with crippling mental problems and
an apparent fetish for silver? Huh? What about now, ya moron?"
Other interesting facts are that by 2008 worldwide demand for silver was about
900 million ounces a year, having grown by an average of 19.5 million ounces a
year for the previous five years, while supply from mining and scrap was only
858.5 million ounces and growing at only 2.2% a year, meaning that supply was
being outstripped by over 40 million ounces per year the whole time!
If that is not enough of a supply/demand imbalance to make you jump to your
feet in eagerness to buy silver, longer-term it gets more interesting, because
"in 1900 there were 12 billion ounces of silver in the world. By 1990, that
figure had been reduced to around 2.2 billion ounces," and now "today, there
are fewer than 1 billion ounces in above-ground refined silver."
In short, all the silver that was mined and refined since 1900 was used to
create the gigantic electronic-based and electrical-powered economies of,
mainly, America and Europe, and now that the silver has been used and thus
disappeared, here comes China to need twice as much silver as was used by
America and Europe! Wowser wow wow!
My few remaining brain cells that are still in, at least, intermittent working
order are suddenly operating in hyper-speed, conjuring up wild plans to somehow
get some money, more money, lots of money, hopefully money acquired without
actually working, to buy silver, which is the most ludicrously undervalued
asset in the Whole Freaking World (WFW) and such a bargain at current prices
that it makes the decision to buy it so easy that one must exclaim, seemingly
involuntarily and with great relish, "Whee! This investing stuff is easy!"
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2010, The Daily Reckoning.)
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