The Fundamental View on Silver

"On May 8th this year I wrote a piece called It Is Time To Make A Play On Silver

I could not have been more accurate in my thoughts, although to be quite honest with you, anyone following the “fundamentals” should have seen the rise in precious metals coming. In that piece I said to my readers quite bluntly, “Dear readers: Expect a Move on Silver Prices and get positioned for it”. I hope some of you did. At the time, Silver was trading at roughly $18.40/oz give or take a few pennies. As I write this, Silver is trading at $23.46/oz well beyond my initial projected break out target of 22.76 as I hypothesized in my May 8th piece. I’ll take a 27.5% rise in a precious metal over a 5 month period any time! I still continue to maintain that the Silver will see a meteoric rise in the coming months and years so relax, you haven’t seen the start of it yet.

Traditional uses for silver remain coinage, photography equipment, jewellery and silverware. Industrial demand includes batteries, stainless steel products, bearings, electronics and soldering. Other uses include medical applications, mirrors, coatings, solar and water purification. The world simply uses more silver than it produces and doesn't recycle enough of it. The last estimate I read was that it costs approximately $50.00 an ounce to re-cycle silver. Considering the current price of silver, it is cheaper to simply buy new silver. This is clearly reflected in the dwindling estimated world silver reserves estimated by the U.S. Geological Survey. Until the cost of re-cycling silver comes down, the world will simply consume new silver. Silver, like any metal, doesn’t grow on trees. It must be discovered and mined. Cheaper discoveries are become scarcer and the cost of mining the metal is increasing.

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