The World Will Run Out of Silver in Nine Years

Posted by - Wednesday, November 30th, 2011

Surging silver demand – for industrial uses as well its position as a safe-haven for many investors – is creating some serious supply deficiency issues...what will this mean for the future of the silver industry?

Many financial analysts, investing experts, and even geologists have one big thing in common: a silver shortage is upon us. Peak silver is no joke.

Here are a few factors contributing to many investors' wildly bullish views on silver:

There's no denying it; the world is running out of silver. And the cheap silver has already run out.

If you don't believe that, research any major silver mining company. If you could talk to the CEOs of those companies, you would learn how many silver mining projects never really pan out successfully. More times than not, there's simply not enough silver in any given ore.

At least not enough to supply all of these growing industrial uses:

silver uses


silver 2
*Images coutesy of The Market Oracle.

According to metal expert Luke Burgess, "Despite the lack of global stockpiles, new technology will continue to discover more industrial applications for silver, putting a further strain on world supplies." Right in line with this assertion, the Silver Institute predicts that silver demand for industrial purposes will increase by 36% by 2015.

Industrial silver demand creates a greater sense of urgency than gold demand because it is needed rather than simply desired. Silver has been needed for decades, so it has been mined for decades in order to fulfill those needs.

Silver is required in the production of products like CDs, cell phone batteries, calculators, printed circuit boards, hearing aids, electronic switches, TV screens, catalytic converters, inks, computer monitors, RFID chips, and thousands more.

Nonetheless, silver is still very-much desired for its aesthetic value too. Burgess reported that 28% of jewelry suppliers saw silver sales increase by 25% from 2009 to 1010.

For these reasons, silver has solidified its position as a major necessity, and a highly desirable one as well, in the industrial realm.

But something has changed dramtically in the silver suppy-demand curve in the past few years. Silver is fast-becoming a top-asset choice for cautious investors. 

This is happening because nations across the globe are currently digging themselves in some pretty deep holes full of unbacked fiat currencies and suffocating layers of debt. Traditional currencies are no longer safe.

Take the United States for example. Every time we run into a financial blunder, the Fed retaliates by printing bucket loads of paper money. Essentially, this overprinting trend further contributes to our region's long-term financial woes.

As citizens lose faith in the spending value of these devaluing dollars, savvy investors begin to look elsewhere; specifically, the precious metals sector.

In times of recession, depression, and overwhelming uncertainty (sound familiar?) investors have few viable options. Thus, they inevitably – sooner or later – flock to the precious metals market as a safety net. Otherwise, their hard-earned wealth is at stake and many other investment options are too risky during such fragile times.

Simple statistics prove this type of investor mentality. In the past two decades alone, gold has returned investors 6.9% on their investments. In 1993, gold returned 9.6%.

But the yellow metal isn't the only big gainer. Silver has exploded in the precious metals market, especially after the financial meltdown in 2008. In 2009, silver investment increased by 184% in just one year! 

By 2010, the U.S. Mint announced that they had run out of sillver bullion blanks. At the time, they also suspended production of American Eagle Silver Proof coins. Why? The answer is a simple. The didn't have the supply to meet the demand.

Economics-101: If supply decreases and demand remains unchanged, prices go up. If supply runs out, you can no longer sell the product, making it even MORE valuable in the eyes of the beholder and the product-less consumer.

Bottom line: prices appreciate.

Fast forward to November of 2011 and that trend is on track. In fact, silver prices are increasing exponentially.

At the beginning of this week, both silver and gold got going on a positive note. As the situation in Europe is slowly working itself out less dramatically than originally anticipated, silver is set to advance even higher. Those benefits will seep over into the new year as well.

Heading into the New Year, silver could be poised to see an uptick. "Conditions in 2012 are likely to remain highly supportive of further growth in investment demand, underpinning additional price gains," Philip Klapwijk, Global Head of Metal Analytics for the group, told an annual meeting of The Silver Institute.

This is especially good news for two silver-related companies. Silver Wheaton Corp, a silver streamer, and Hecla Mining have profited quite substantially due to silver's recent price-gains.

And profit they will continue to do...until supply runs dry. But, experts warn that may be sooner than you realize. And you don't want to be kicking yourself ten years from now for the investment opportunity still available to you right now.

*Indented excerpt from The Bedford Report.

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