Monday, April 16, 2007

Silver and stuff

Recent Silver news has Toronto brokers GMP (Griffiths McBurney Securities) predicting an average silver price of 14.25 with peaks of $20 for 2007. That is certainly news to warm the heart. Studies show that both jewellery and industrial use of silver is growing faster than new mine supplies, all of which looks good for continued strength of silver this year. Silver looked flat and steady for most of last week but Friday’s jump over the important 14 dollar mark is significant, give it a few days and if it holds or continues up I think we are on the annual spring run which I predict will take us to near $17 U.S.

It’s my belief that India will stop or greatly lower government silver sales this year. With the natural yearly deficit and no Indian sales to fill the gap supplies could shrink by 100 million ounces this year, or 80% of the NYMEX holdings. No one knows or is saying how much silver India has but they have to see eventually that they are giving it away at today’s prices. It only makes sense that at some point they will see the coming shortage and hoard the remaining silver to exploit the price at a later date. Then again who says governments make the correct decisions, and who says they are not selling it to friends so they can exploit it personally rather than have the Government profit?

What is knowable is that India is in the position the U.S. was in for decades as the supplier of silver to make up for supply deficit. The U.S. with billions of ounces of silver eventually ran out so will India! The year India gets smart or runs out will be the beginning of the parabolic rise for silver prices. I only hope I can increase my position before that moment.

In the Gold world at least 29 tonnes of bullion has been released for sale in the last couple of weeks and the markets did not even flinch. Last year this kind of selling would have caused a severe price hit but this year nothing there was nothing but salivation as someone gobbled it all up. Aggressive central bank gold selling is not going to have the desired effect in dropping the price by flooding the market, 1 they don’t have enough left to do the job , 2 other central banks are the ones buying it up. If it was only funds and retail buyers the prices might have tanked but big money is in the buying mood and a meagre 29 tonnes is not enough to satiate them.

There is danger however that the IMF will open the vault and start selling its gold to cover operating expenses. The IMF should be put down like the sick animal it is, it has very few clients beyond Turkey and the bureaucracy continues to grow and suck up profits. This gold was deposited by the U.S. as collateral to open the IMF, this is loaned gold and I don’t see how the IMF thinks it can sell someone else’s property to cover their debts. If I was the U.S. I would be demanding the IMF close and return my gold. Or perhaps they intend to turn a blind eye to the bullion sales in order to temporarily support the strength of the dollar. It seems they are so intent on continuing the charade of U.S. economic strength they will sell their future in the form of gold reserves to fool the public until the next election. As long as the sales are not huge volumes I think they will have a minimum impact, but if they manage to coordinate with central banks to make a splash, who knows?

The U.S. dollar was getting killed on tough protectionist talk last week. When you add in the debt, war, trade imbalance and the over creation of money factors, the U.S. dollar looks like it has no where to go but down, which is good for those of us holding metals. This however will not be good for export economies like Canada, Yes they will continue to buy our oil and steel etc but our meagre manufactured goods sector will be hard pressed to maintain business as the Can dollar appreciates against the Greenback. The impending recession will also hurt Canada unless we start making more effort to market ourselves and our goods in Asia.

I’ve noticed a spike in hits to my site and to the feed services. I hope all my readers are getting something out of my ranting and I would appreciate comments and discussion on these or any related topics. I’m also willing to post full articles for anyone not inclined to build their own blog.

With the renewed level of hits I will try to write more, I blog politically as well as on Silver and since the Canadian scene for the last couple of weeks has been rather interesting I’ve been torn between reading metals and economic material and posting political. I can’t seem to post on all topics and research all topics within the time I have.

I’ve added some auction links which seem a little erratic. They are supposed to show silver bullion auctions but occasionally show other things, fortunately no sex toys yet! Do people think they are distracting or acceptable?

I’m just adding this at the last moment before I post. Gold went on a run last night in overseas trading (up 7ish) and seems to be holding early, silver moved little but is also holding.

Good news, I sold my second car (an attempt at frugalizing and being Greener) so now I can go shopping today, mmmm, coin store, the bullion counter, or Ebay? Decisions, decisions!