No Silver Lining Left for Users of the Metal

Silver investors are smiling about this year's rally in the price of the precious metal, now closing in on an all-time high. But silver's surge is hurting major users and even a few miners, including some blindsided by the relentless climb.
Nearly 75% of the world's silver supply is used to make film, jewelry, mirrors, batteries, solar panels and other products. While companies have scrambled to find cheaper substitutes, reduce their silver use or lock in hedges against future price increases, the moves aren't enough to offset the pain.

"We're raising prices, indexing contracts, hedging and moving as fast as we can with the part of the portfolio that's not silver dependent," Eastman Kodak Co. Chief Executive Antonio Perez told analysts in an earnings call Thursday. Rising commodity costs, especially for silver used in film manufacturing, helped drag Kodak to a first-quarter net loss of $246 million.
Every $1 increase in the per-ounce price of silver subtracts $10 million to $15 million from the Rochester, N.Y., company's bottom line. Kodak increased motion-picture-film prices in March and might have to do that again, Mr. Perez warned. The company also is trying to shrink its dependence on silver.
Silver closed Thursday at $47.52 a troy ounce, up $1.562, or 3.4%, and just short of the $48.70 record settlement reached in 1980. Adjusted for inflation, that record price would be equivalent to $139.88 today.

After skyrocketing 84% in 2010, silver prices have jumped another 54% so far this year. In comparison, gold is up 7.7%, hitting a new record of $1,530.80 an ounce on Thursday.
Much of the recent silver price jolt has been fueled by investors who are piling into exchange-traded funds and bullion as a way to hedge against inflation or currency declines.
But the latest surge overran expectations of some silver producers. As prices rose late last year, some miners stepped into the market to lock in profits.
U.S. Silver Corp., with several mines in Idaho, promised to sell 500,000 ounces at a fixed price of $27.50 an ounce—or 20% of its projected silver output in 2011. Executives figured that would leave the Toronto company with a hefty profit margin.
But when prices kept soaring, U.S. Silver had to post more collateral. "I wouldn't have expected it to be this high, and I don't have any better crystal ball than the next person," says U.S. Silver CEO Tom Parker. "You can always look into the past and say that's a dumb decision. But at the time, it seemed to be a prudent thing to do."

U.S. Silver has no plans to hedge any more of its silver production at the current price.
At DuPont Co., silver is the largest metal cost in the unit that makes silver paste, which is needed for plasma TVs and other electronic products. DuPont is working on technologies to reduce or replace silver when possible, says David Miller, the division's president. "We're looking for alternatives," he says.
DuPont passes along changes in silver prices at the time of delivery. So far, customers are putting up with the jumps and haven't delayed orders.
Solar-panel maker Suntech Power Holdings Co. is trying to rev up production of solar cells that use copper instead of silver. A thin layer of silver is coated on the surface of cells because of its ability to conduct electricity.
The Chinese company last year introduced its "Pluto cell," made from copper costing $4.25 a pound. But 90% of Suntech's solar cells still require the use of silver.
Rory Macpherson, Suntech director of investor relations, says the company is trying to cut expenses elsewhere in its supply chain but will have to absorb some of the rise in silver prices.
Danish jeweler Pandora AS, which operates in 60 countries, raised prices early in this year's first quarter in order to stick to its profit-margin target of 40% for 2011, says Mikkel Olesen, the company's CEO. Still, as silver keeps climbing, Pandora is considering another round of price increases in the third quarter.
Beautiful Silver Jewelry, an online jewelry retailer, now is selling more items made from stainless steel or rhodium-plated material, in addition to its inventory of sterling silver. "We didn't anticipate prices rising quite this far," says Jane Ingraham, the San Diego company's owner.
The big winners as silver defies gravity include precious-metal refineries, where people sell silverware, old jewelry and industrial products that contain silver.
"We and every other refinery are all inundated with silver scrap business," says Terry Hanlon, president of Dillon Gage Metals, which operates a refinery in Dallas. The amount of second-hand silver bought by the company is up by about 70% during the past six months. Dillon Gage recently bought two new furnaces to meet demand.
The influx of scrap silver and manufacturers' efforts to reduce reliance on silver eventually will restore gravity to the market, predicts Philip Klapwijk, executive chairman of GFMS Ltd., a London metals consulting firm.
"But I don't think things will change very quickly because of silver's unique characteristics," he says. GFMS expects industrial demand for silver to grow at a 6.5% annual rate through 2015, propelled by emerging markets and the technology sector.

http://online.wsj.com/article/SB10001424052748703643104576291422938373638.html?mod=googlenews_wsj

Silver outshines gold, equity this decade -

Silver has proved all theories of stock market experts wrong in this decade. Stock analysts have always believed that equity market gives higher returns in the long term. But in 2000-2010, silver has outperformed all.
The $64-million question for investors now is: Where and when to put their money? Looking at the returns sought in different investment avenues in a decade, here is the answer. Experts suggest that for a few years, bullion will remain strong.Let us divide the investment avenues broadly into the two most common paths -- equity and bullion, which have been the top choices for all investors.
In the past decade back, it is interesting to note that silver has outperformed Sensex, Nifty and even gold. Silver has reached a peak of Rs45,000 per kg from the level of Rs7,800 on December 29, 2000. In the span of a decade, silver has given a whopping return of more than 450%. Though Sensex, Nifty and gold have shown equally good returns, their journey has been quite different from that of silver.

Comex Registered stock has fallen fom 41M Oz to 35M Oz

April

Comex Registered stock has fallen fom 41M Oz to 35M Oz since march

March :

The Silver rocket

Silver is blasting off. The word on the street is that the #1 bullion bankster is caught unable to deliver physical silver. They are offering something like 50%-80% above (ie. $50-$60/oz) the market price of US$35/oz instead of physical delivery. The sharks smell blood and will go for the kill. Cash offered in lieu of physical silver are being channeled back into the Comex silver market for the next month of bloodletting. I expect more hedge funds, trader raptors …. to join in the fun of killing this Illuminist bank. The price of silver will go to triple digit easily.
 
The Silver Rocket
By Silver Shield, on March 7th, 2011
I made the prediction that silver would hit $50 by the end of March. This prediction was based off of a possible CRIMEX default of physical silver in the delivery month of March. By all accounts we are already looking pretty good with a 4% jump on Friday to $35.67. There are rumors that silver is already $50 at the CRIMEX and that JP Morgue is paying 80% premiums not to take delivery in the crucial month of March. There are only 40 million ounces available for delivery and little under $1.5 billion would expose this greatest of frauds.

I believe that we just are in the early stages of a Mania Phase in Silver. So I put a chart together to put this silver market into perspective.

As always, I want to warn all of you “greedy, little bastards” to be very careful of this silver bull. This is a very volatile market and I know of many investors that got wiped out in 2008. There are big market makers that can turn the silver market on a dime. Remember, the market can stay irrational longer than you can remain solvent. If you need further analysis of silver fundamentals, I suggest you read the Silver Bullet and the Silver Shield.

ONLY BUY PHYSICAL SILVER BULLION IN YOUR POSSESSION. Do not buy anything else but real physical silver bullion. Not ETF’s, mining stocks, custodial accounts, precious metal IRAs or numismatic coins. If you need more information on how to buy physical silver read “I Get It Now.”

Every asset bubble starts with Smart Money finding ignored value. Smart Money takes early positions in the Stealth Phase. They do it quietly and without moving the market. Warren Buffet amassed 130 million ounces of silver in 1997 without really moving the market. Once they have strong positions staked out, they bring in their institutional buddies and this ushers in the Awareness Phase. The institutional investors bring real money to the table, your money. They bring private capital, pensions, 401ks and IRAs into the targeted market. This propels the market further with more money and legitimacy of institutional interest. The institutional investors make capital investments, new markets and strategies to propel the targeted market even further.

I mark the official beginning of the Awareness Phase April 28th, 2006 when the SLV ETF was launched. The ETF was the first major institutional foray into the silver market. This paper fiat Ponzi scheme was really a diversion to keep people out of real physical silver. They did this as demand for this nearly extinct precious metal increased. This, in hindsight, was the best thing to happen to the silver market, because it made people aware of this most precious commodity. When you are aware, you can prepare.

Most people do not remember before the huge collapse of the stock market in October of 2008, there was a “little” bank that blew up named Bear Stearns. The rumor was that Bear Stearns was shorting real silver on the CRIMEX while it rose from $14 to $21 in March of 2008. That marked an intermediate top in the silver market on St. Patrick’s Day 2008. It was coincidentally the day of the collapse of Bear Stearns. JP Morgue became custodian of all of those silver short positions. Now, only 4 banks “control” the silver market with their huge positions and seemingly unlimited funds to suppress silver. These big guys forced silver from $19 to $8 in four gut wrenching months in 2008. Anyone who was trading on margin or using leverage got destroyed. For me, I knew what was going on and increase my real silver holdings when it was on sale.

The Awareness Phase continued with the testimony of Andrew Maguire at the CFTC hearings about silver. Andrew Maguire was a former silver trader that turned whistle blower on the insider manipulation of the silver market. His very public and shocking testimony exposed how the big guys manipulate the silver market. The worst part is, that just like the Bernie Madoff case, the authorities ignored the warning signs. His most shocking claim was that there was 45 ounces traded for every 1 ounce of real physical bullion they have. Immediately after his surprise testimony he and his wife were involved in a very suspicious hit and run incident. All of Andrew Maguire’s scheduled interviews were canceled, except for one on King World News. After he gave that interview, KWN was hacked and the interview erased. Why are they trying to close the barn door after the horse has left the barn? The word is out there now and what was once conspiracy theory is now conspiracy FACT.

I believe that we have entered the Mania Phase that started on August 24th, 2010. That was one week before JP Morgue closed their Proprietary Commodities Trading Desk. It was the end of a 2-year consolidation after Bear Trap of 2008. This day also started a nearly vertical moon shot in silver. Since then, silver is up over 100% in 6 months. Now even CNBC, Wall St Journal, and the Financial Times are talking about silver. This will further feed into the frenzy as people suddenly “get it” and sell every paper asset they have to buy physical silver.

I would submit to you that unlike every other bubble in history, it really would be different this time. This will not end in a typical Blow Off Phase. I believe this will usher in a New Paradigm for the world. This will not only be because of the fundamentals of silver. It will be about the need for real money when the destruction of the fiat debt/money paradigm occurs. Everything will be valued in relation to silver, much in the same way everything is valued in relationship to the dollar. Silver will return to its righteous spot as precious metal and will be the basis for a new paradigm of freedom in the world.

AMERICAN EAGLE SILVER COIN SALES - 12 MONTHS ROLLING

A Presidential Bombshell

By: Theodore Butler

I’ve just learned something about silver that I was only vaguely familiar with previously, and I’d like to share it with you. It had a big impact on me. When I shared it with my friend and mentor, Izzy Friedman, the person who first got me interested in silver, he said it was something he never knew and he called it a bombshell. I can tell you that Izzy doesn’t use that term often. As always, I’ll let you decide for yourself.
One reason I was only vaguely familiar with the subject was because it dates back 44 years, to 1965. I was only 18 years old and had just graduated from high school. I was thinking about college, the Vietnam War, the rest of my life, cars and girls, though not necessarily in that order. I was definitely not thinking about silver. Izzy hadn’t even come to America yet and also thought nothing about silver. Most of you reading this may not have been born then, as the median age in this country is under 37. Even if you are 80 years-old today, you were only 36 in 1965. In a lot of ways, 44 years is a very long time ago.
In historical terms, of course, 44 years is almost a blink of the eye. It’s all about putting things in perspective. Just like time, who may say something, even if it’s the exact same thing being said as someone else, alters our perspective about the message. This applies to silver as well. I suppose many expect me to say bullish things about silver, because I do so regularly. Even though I always try to present hard evidence and the facts, and I am sincere in my presentation (and mostly correct), let’s face it - it’s somewhat expected when I conclude that silver is a great investment. But I would imagine it would be somewhat shocking, even a bombshell, if the President of the United States said what I have been saying about silver. No, not President Obama, as he was only three years-old in 1965.

Thanks to a poster on the Internet (hat-tip to Cajun Coin), I had the opportunity to read the speech that President Lyndon Johnson made on July 23, 1965, in which he announced the US Government’s plan to remove silver from coinage. http://www.presidency.ucsb.edu/ws/?pid=27108 I had not read the speech before. The President said this was the first change in our nation’s coinage in 173 years, since the very first Coinage Act of 1792. Talk about historical.
Allow me to excerpt the pertinent sections of the President’s speech. Please remember that these are his words, not mine:
"Now, all of you know these changes are necessary for a very simple reason--silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The hard fact is that silver consumption is now more than double new silver production each year. So, in the face of this worldwide shortage of silver, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.
If we had not done so, we would have risked chronic coin shortages in the very near future.
Some have asked whether our silver coins will disappear. The answer is very definitely-no.
Our present silver coins won't disappear and they won't even become rarities. We estimate that there are now 12 billion--I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.
Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.
If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content."

President Johnson’s words were unnerving to me, as I used them repeatedly over the years, completely unaware of this speech. The President of the United States, arguably the most powerful man in the world, using words like, "scarce," "shortage," and the need to reduce silver consumption for money. From an analyst, we expect discussions of silver production and consumption shortfalls and growing population and economic growth. But from a President?
The fact is that President Johnson and his economic team at the Treasury Department were proved both remarkably correct and incorrect with the passage of time. They were spot on in their fear that the demand for silver and the inability of production to meet that demand would soon deplete US inventories. They were dead wrong in their expectation that the US Government could hold down silver prices and prevent investors from making a profit. In just a few years, most silver coins were removed from circulation by investors. In less than 15 years, the price of silver rose from $1.29 at the time of the President’s speech to more than $50 in early-1980.
The speech prompted me to reflect and dig deeper into the facts. I hope it has the same effect on you. The deeper I looked, the more compelling the silver story became. It always does. Here are the facts, using the Silver Institute and others as data source, followed by my conclusions.
Six years earlier, in 1959, the US Treasury Department held approximately 2.1 billion ounces in silver bullion inventories plus 1.3 billion ounces in circulating coinage, for a total of 3.4 billion ounces. By 1971, through a combination of outright bullion sales and use in new coinage, the Treasury held only 170 million ounces of silver bullion and most silver coins were removed by investors from circulating coinage and eventually melted into bullion. More than 3.2 billion ounces of silver were transferred from the US Government to the private sector, over this 12 year period, or around 94% of what the government controlled. Much of this silver was consumed in industrial and other fabrication during this time period. Eventually, all the transferred silver would be so consumed.
1959 would be the last year the US Government would be a buyer of silver, as it had been for decades, until 2001, when it began buying silver for the American Eagle and commemorative coin programs. In 1959, when the US Government held 3.4 billion ounces of silver, the US population was approximately 180 million. That means the Government held almost 19 ounces of silver, for every man, woman and child in the nation. Today it holds none. This also means that the US Government can never be a physical silver seller again, until and unless it buys silver first.
Here’s a statistic that is stunning and troublesome at the same time. In 1959, there were about 5 billion ounces of silver physically held on US soil. This includes the 3.4 billion Government holdings plus privately held silver, including hundreds of millions of ounces of silver objects that would be subsequently melted in the early 1980’s. Today, I think I may be exaggerating if I say there are more than 300 million ounces held on US soil, including all the 118 million ounces in COMEX-approved warehouses and privately held silver. Before you disagree, please remember that the more than 400 million ounces in ETF-type vehicles are held outside the US. If my numbers are accurate (as I believe them to be), then the amount of physical silver held on US soil is down 94% in 50 years.
In 1959, there were about 9 billion ounces of silver bullion-equivalent in the world (half of that in the US, both public and private). With a world population of 3 billion, there was a per-capita amount of 3 ounces for each of the world’s citizens. Today, 50 years later, there is a per capita amount of silver of 0.15 of an ounce remaining (1 billion ounces divided by 6.8 billion population).
That is not a misprint. The per-capita amount of silver bullion equivalent in the world has declined by 95% over the past 50 years. By way of comparison, the per-capita amount of gold bullion equivalent in the world has remained remarkably stable at around three-quarters of an ounce per person, for more than 100 years. In 1900, there were around 1 billion ounces of gold versus a world population of 1.5 billion. In 1959, there were about 2.3 billion ounces of gold against a world population of 3 billion. Today there are roughly 5 billion gold ounces and 6.8 billion people.
I make these comparisons with gold, not to bad-mouth gold. I make them to provide a legitimate perspective. I make the comparisons because gold and silver are the perfect items to compare. I make them to show how undervalued silver is, not that gold is overvalued. In spite of evidence of manipulation, gold has done what it has been expected to do - it has kept pace with inflation and money and population growth. That’s proven by it’s price increase over the past 50 years and it’s incredibly stable per-capita amount in existence. Since 1959, gold has increased in price more than 25-fold ($35 to $900).
It’s a much different story in silver. Yes, silver has increased in price by more than fifteen-fold in 50 years ($.90 to $14), but that’s only half the comparison story. The other half is that 90% of the silver in the world has been vaporized over that time, put into forms that may or may not ever be recoverable, even at shockingly high prices. This, at the same time the amount of gold in existence has doubled. Yet the price of gold rose from 30 times the price of silver back then to more than 85 times last fall, and today is still double what it was 50 years ago. Only two reasons can account for this - a manipulation in silver and a global unawareness of these facts. I guarantee you that both reasons will be terminated in time.
The US Government and other nations around the world didn’t remove silver from coinage for any reason other than there wasn’t enough silver available. President Johnson’s words are crystal clear. They knew they couldn’t keep issuing coins pegged at an artificially low price. They were correct. But what no one knew 50 years ago was that even if the world stopped using silver as money, we would still run out of silver because of industrial demand. Even the investors in the 1960’s who bought and took away from the US Government the 3 billion+ ounces didn’t buy silver with an eye towards the day when silver inventories would be depleted by industrial consumption. Please allow me to explain.
The investors in the 1960’s who bought the silver from the government did so because it was an almost a no-lose proposition. Those who removed silver coins from circulation were further fortified with the knowledge that the face value of the coins provided a floor, making coins a no-risk proposition. Intuitively, investors back then knew that silver prices were artificially depressed by government dumping. They also knew the silver dumping had to end at some point. And it did, when the government depleted its inventory. Then prices rose and those early and intuitive investors did what made sense: they took profits and sold. Why not, as they doubled and tripled their investment, in a few years, with little to no risk?
Because the early investors sold what silver they bought or withdrew from coin circulation, the silver that was originally taken away from the US Government was in turn taken away from the early investors, albeit at a sizable profit to them. And who took it away from the early investors? The answer is not a who, but a what. What took the silver away was growing world population and industrial and fabrication demand over the next 40 years. My point is simple - whereas many billions of silver existed in the world 50 years ago, very little of that, maybe 10%, remains today.
So what can we conclude from all of this? First, that huge and verifiable inventories of silver did exist back then, and they no longer exist, due to decades of a continuous structural deficit. These former silver inventories are not hiding, they are gone. No longer can the US Government (or any other) dump massive amounts of silver on the market. Let’s face it - back then, the US Government was openly manipulating and controlling the price of silver, by selling at fixed prices. When they ran out of silver to sell, the manipulation and control ended in a flash and prices exploded.
Today, the manipulation is different. No longer is the US Government selling physical supplies at fixed prices. Instead, a Government-protected entity, most likely JPMorgan, sells paper silver contracts at artificially depressed prices. I contend that this abhorrent paper manipulation will vanish in a flash at some point, just like the Government physical manipulation of 50 years ago. Only this time the impact on the market and the rewards to investors will be greater, precisely because there is so little silver remaining.
Consider these facts. Back then, the US Government was the world’s largest silver seller. Today, the Government is a large buyer, perhaps the largest in the world, through the American Eagle and Commemorative silver programs. This year, the US Mint is on pace to produce and sell over 30 million ounces of Silver Eagles and other silver coins. Because the Government holds no silver and must buy on the open market, this makes the Mint a very large consumer, perhaps the largest in the world. Incredibly, just this buying by the Mint alone uses up 80% of what the US produces in a year, as the world’s eighth largest silver producing country.
Finally, it’s not just that the world had many billions of silver ounces then and does not have them anymore. It’s not just that the world economy and population will grow over time, demanding more silver than ever before. It’s not just the fact that most of the new technologies require silver’s unique qualities, like never before. It’s not just that the paper manipulation on the COMEX is becoming more apparent and less feared. There is something else that runs through my head when I contemplate President Johnson’s words and observing what took place over the past half-century.
The 1960’s were a simpler time. Communication and knowledge didn’t travel as fast back then, as it does now. It won’t take long for the world to focus on the silver story, once prices begin to reflect true value. Fifty years ago, we didn’t have a small fraction of the amount of investment money in existence as we do today. We didn’t have the concentrated pools of investment money looking for home, including hedge and sovereign wealth funds. We didn’t have then the surge of government simulative money being created as we do today. It’s impossible to imagine that given how the world is structured today and how much investment money exists versus how little silver remains, that we won’t have the greatest price explosion as the facts become known. Remember, it’s not about the facts turning in silver’s favor. It’s about investors becoming educated to the facts.

http://news.silverseek.com/TedButler/1242061902.php