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October 2, 2010 - An Unexpected Boost for Silver

By PiercePoints by Dave Forest

I wrote last week about Asia’s love for platinum. This week, it’s looking like there’s a new “hot item” in the East.
Silver.
Open interest in silver on the Tokyo Commodity Exchange has been on a tear. Since last Friday, outstanding contracts have jumped 20%.

It would be tempting to chalk the rising interest up to general enthusiasm about precious metals. After all, prices for gold, silver and the PGMs have all been rising of late.
But it appears that silver is something special in Japan. At the same time as silver contracts are being bought up, open interest in TOCOM gold has remained relatively flat.

The patterns on the two charts are divergent. Gold open interest in Japan spiked in July and has declined considerably since. Silver, by contrast, has been steadily rising for the last six months.
Of course, silver can be a tricky metal to pin down in terms of source of demand. With both industrial and investment applications, buying can be driven either by commercial users or individuals.
It appears in this case that individual buying is responsible. Most of the rise in open interest the last few weeks has come from “non-commercial customers”, suggesting the buyers are individual investors looking for a “store of value” spot to stash their money.
The rise is striking, and certainly helping the silver market. We’ll see if it continues.
Here’s to “poor man’s gold”,

http://www.thedailycommodities.com/2010/10/02/an-unexpected-boost-for-silver/

03 Oct 2010 - Investors see silver lining in economic gloom

By Garry White
Published: 7:00PM BST 03 Oct 2010

Silver prices have risen 31pc in 2010 to a 30-year high, outperforming gold, equities and most base metals. On Tuesday, the gold-silver ratio dropped below 60 for the first time in 11 months.

The gold-silver ratio is simply the number of ounces of silver it takes to buy one ounce of gold. The silver price is currently $22.11 and the gold price is $1,317, so the silver ratio now stands at 59.6.

The ratio varies wildly. In 1970, it was about 20 and it peaked at just under 100 in 1991. The average is around about 40 – and that is the key to any silver bull's argument. Historically, it appears that silver is undervalued in relation to gold, they argue.
In 2010, the ratio has been as high as 72, recorded in February, and is now just below 60. Many believe it could have further to fall.
The reasons for gold's outperformance are well documented – inflationary fears, currency woes and safe-haven demand – but does the declining ratio towards its average mean that silver is going to continue with its charge forward?

[continued]

http://www.telegraph.co.uk/finance/markets/8039595/Investors-see-silver-lining-in-economic-gloom.html

BNP Paribas Buys Physical Silver At $20.58

20th September 2010

News like that would be totally unimaginable even few weeks ago, when price of silver looked ready to go below $17.
But with new buyers of PHYSICAL silver entering this – less than $12 billion market, it’s no wonder why price of silver jumped so high in such short time.
It all started on August 24th 2010 with big German conglomerate buying huge amounts of physical silver and now also BNP Paribas (with headquarters in Paris), joined this rush to get physical silver as soon as possible.

What’s the actual deal that BNP Paribas just made?

BNP Paribas has agreed to pay $20.58 an ounce for 680,000 ounces of the white metal to be delivered from December through to June 2012.
The deal is with Jabiru Metals which will bank $14 million upfront under the hedging deal, money it can well use to speed its mine development program. The 680,000oz is 60 per cent of its forecast silver production over the period of the BNP deal.

If this deal would be done by a small bank, this wouldn’t even be such a big news.
But, since BNP Paribas is one of the largest global banking groups in the world and in 2010 ranked by Forbes as the largest company in the world by assets with over $2.95 trillion – this gets a whole new dimensions.
When one of the biggest banking groups decide to go into a deal to get PHYSICAL SILVER in exchange for their paper money, this is huge signal that price of silver is going up.
It’s not important how much the price of silver will be in a short term – going up or even having a correction.
But it’s important that in the long term – there are more and more signals and confirmations that price of silver is going UP.
Stick with your physical silver (and gold) and if you don’t have to or don’t need to, then DO NOT SELL your PHYSICAL silver!!!
http://agaupm.com/bnp-paribas-buys-physical-silver-at-20-58/

History Says Silver Is Cheap

“If the price ratio between [gold and silver] were to revert back to it’s historical average, then silver prices would outperform gold by more than 2 to 1. In fact, the physical ratio of silver to gold in the earth’s crust is 16 to 1. During the inflationary 1970’s, the ratio between gold and silver prices was at exactly 16:1…mirroring the proportions in which the two metals occur in nature.”
–The Little Book of Commodity Investing, by John Stephenson (Wiley)
With gold currently trading around $1250 per ounce, and silver just above $19, the current ratio of gold’s price to silver’s price appears skewed. One ounce of gold presently buys 65 ounces of silver, so if balance is restored based on the physical ratio of silver to gold in the earth’s crust (16:1), an ounce of silver should be trading near $80.
While silver has many of the same investment attributes as gold, it enjoys the added advantage of industrial demand. And as a currency alternative, silver is more practical. It’s been used as a currency, most notably by the United Kingdom (pound sterling). The French word for money is argent, or silver. In fact, the United States and Great Britain were both on a silver standard up until the 1800’s.
History does have a way of repeating itself, so perhaps our papered money modern world will rediscover silver. Meanwhile, industrial demand continues to grow for silver. Every day another 200 thousand souls are born into our world. The mature and emerging markets demand for industrial metals should continue to expand, and silver enjoys the added benefit of having investment appeal. While not a Fallen Angel in the formal sense, it’s depressed price relative to the growing fundamental case for silver makes it worth considering. I like the iShares Silver Trust ETF at or below $20. Given the exchange traded liquidity and low overall expenses, we view SLV as an efficient way for investors to own exposure to the price of silver.
http://blogs.forbes.com/greatspeculations/2010/09/14/history-says-silver-is-cheap/

Thunder Road Report On The Imminent Surge In Silver

I can’t remember a time in my 23 years in the market when there was so much confusion and uncertainty about the outlook. As the monetary catastrophe unfolds gradually, some days things look a little brighter, then the sheer enormity of the problem becomes only too apparent once again. Sentiment keeps flipping between optimism and pessimism, but the debt bubble just gets bigger! Noel Gallagher wrote “These are crazy days, but they make me shine”, and that sounds like a good enough motto for trying to invest right now (fingers crossed). The silver price has started to trade differently and it appears that BIG MONEY is moving in to the metal (at long last) and fighting the Cartel. There is evidence that the supply of physical silver is getting tight and it could be the beginning of a major upward move in the price.