Will silver make a spectacular comeback?

Silver is said to be on its way back and about to wake up from the slumber. This rumour seems to have been around for decades. It hasn’t quite got to that point yet. This is one of the reasons why a lot of investors have been exploring the silver market.

Is this fact or wishful thinking?

For some of the silver market specialists, the likelihood of this happening anytime soon is an unstoppable certainty! The good news is that investors have an easier time when they go online to buy silver bullion Australia wide because the internet reaches where no physical human being can reach.

Why were market specialists so sure about silver when it had been floundering in the financial wilderness for so long? Some reasons cited by market commentators include:

–      Accumulation of large silver assets by prominent business magnates.

–      Official market intervention ends that is supposed to end.

–      Proposals for market manipulation.

Records show that in the late 1970s the price of silver went from a low of 90.5 US cents per ounce to a high of over $50 in 1980. The price increase was in the region of 6000%.

At that time (1980), above ground silver reserves were close to 1.5 billion ounces. Thus, past price increases cannot be attributed to a lack of supply, which is the main reason for most price increase situations.

Comments in recent months from various sources confirm that above ground stocks at the beginning of 2003 were between 20 and 40 million ounces (m. ounce). It is estimated that this supply will be completely depleted sooner than speculated some 3 decades ago especially as the current levels of silver are being increasingly depleted throughout.

With known annual consumption figures confirmed by many reputable sources now approaching 1 billion ounces per year, 20-40 m.oz seems like a drop in the ocean compared to annual demand.

Taking that a step further to include current production from mining and scrap recycling estimated at around 600 m. oz, the current supply situation could be in shortfall to the tune of around 400 m. oz in this calendar year.

Statistics are boring at any time, so we won’t dwell on them here. But our research reveals there was a shortfall of 331 m. oz in 2001 and an average supply shortfall of 122.42 m.oz in each of the past 12 years. Not a small amount. If there ever was a time to buy silver bullion Australia wide now would be the perfect time.

If the aboveground supply is depleted, where does the shortage come from? How long will it take for the current suppliers, whoever they are, to wake up and realise that supply constraints will push prices to unprecedented levels?

The supply / demand situation is just one issue that will contribute to the inevitable silver price explosion.

If silver were to be regarded as currency by a large number of people then more people would turn to the precious metal when stocks, bonds and currencies fail to perform. If people decided to want silver used instead of money, the demand for silver would be a tidal wave.

Since history shows that silver has been used as money for most of the last 5-6000 years, with the exception of the last 70 years, there is no reason it cannot be used again.

Professional silver advocates who frequent the Internet are predicting silver prices anywhere from the low $100s per ounce to the high $200s. With the current price under $5 an ounce, what investor or anyone looking for a way to improve their financial situation would NOT explore this potentially explosive opportunity?

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