Friday, February 29, 2008

GATA calls long term Global metals shortage

GATA the Gold Anti-Trust Action Committee came out this week supporting some of my beliefs that long term metal shortages will be an issue as inflation, labour shortages, equipment shortages and delays will play havoc with new mine production entering the market to meet new higher demand.

While this means higher prices and great profits for metal investors it also raises the risk as a company's development to timely production can be precarious not only for the reasons stated above but also political risk and newer more stringent environmental laws.

There are great profits to be made but there will be hard choices to find the right companies that can manage and mitigate these risks.


tim andren said...

How does this effect the silver market specifically?


tim andren said...

We've added your site as a link. We'd be very appreciative if you'd considering adding us too.

Best, Rich

Carter Apps, dabbler of stuff said...

To me it verifies that long term demand will continue to be strong in relation to supply.

Despite the raft of new mines that are proposed and all those juniors who make great promises it is very likely that many will fail to be developed due to rising costs, and all the various shortages mentioned. Other mines will miss deadlines or production targets which should stop any great glut from forming and suppressing the price.

Even the big boys are making mistakes and being hit by higher development costs such as the Galore fiasco.

The counter arguement is higher prices will bring new supply into the market but I believe energy costs, regional energy shortages and labour strife caused by ragging inflation will impact supply, silver being a by product will suffer supply issues as will other sectors.

Tight supply and higher production costs will keep silver high, It will never be below $12 again, I doubt it will ever be lower than $14 unless we have some nasty ass deflation but I definately don't fall into the deflation camp.

Does Gata's story have any special significance to silver compared to other metals? No, it's just reinforcement to today's commodity bull and assurance huge gluts won't destroy our recent gains.

you link is added.