Critically Low Warehouse Inventories Could Sink the Exchange
Close your browser... shut down your computer... and go buy silver!
The price of silver pulled back 8% yesterday afternoon, carving out a phenomenal investment opportunity for you right now.
At last look, spot silver stands at $39.21 an ounce. But the window to own silver below $40/oz will be open only for a short time, because silver prices are headed for an explosive breakout.
Silver will rebound to $60 an ounce following this correction on surging demand — and then quite possibly to $150-$200 an ounce amid growing concerns that the COMEX itself could default over critically low physical warehouse inventories.
While gold continues to claim the media spotlight, silver investors will be cut the biggest paychecks.
You see, there's one thing they never tell you about gold: 95% of all the gold that has ever been produced is still around in one form or another in coins, bars, artifacts, and jewelry. In fact the same gold that was mined in Egypt 8,000 years ago could be in a piece of jewelry you own today.
Gold has been historically priced ten to twenty times more than silver. So the reclamation of silver is not a priority as it is with gold...
The universal and intrinsic value of gold ensures the yellow metal is saved and recycled to be used in different applications throughout time.
But silver is different. Silver disappears from the market over time; 95% of the silver that has ever been mined has already been consumed by industrial use. That silver is gone forever — unrecoverable at any price.
| Silver Industrial Demand |
Last year, electrical and electronics demand for silver reached an all-time high of 243 million ounces. In 2010 alone:
The global solar photovoltaic industry alone is expected to call for 70 million ounces this year, and expected to double again — reaching 150 million ounces per year — by 2015. And this demand does not include the other tens of millions of ounces needed for the automobile industry, water purification, medical applications, and nano-silver in goods packaging and hygiene... Total industrial demand will rise from 487 million ounces in 2010 to 666 million ounces in 2015. |
In 1950, there were 10 billion ounces of available silver above ground. By 1980, that number shrank to 3.5 billion ounces. Today that figure has fallen to about 700 million ounces of above-ground, refined silver.
Above Ground World Silver Resources
The limited availability of physical silver for the industrial markets alone is enough to rebound prices to another record, past $60 an ounce.
There are about 300 million ounces of physical silver in private hands around the world. The ETFs hold another 350 million. And that's just about it.
COMEX physical supplies are running critically low — so low, in fact, the exchange is actually faced with a default.
There are now less than 30 million ounces of physical silver held at COMEX warehouses. These silver-starved warehouses could prove to be the catalyst that propels the price of silver past $150 an ounce in the near term.
Major COMEX Physical Silver Shortage Continues
Physical COMEX inventories of silver are now down to 27 million ounces. That's more than a 35% decrease since April — and down 48% in the last twelve months.
With so little inventory, it's likely that nine out of ten COMEX traders do not have their silver contracts backed by stockpiles of the physical metal. And at this point, COMEX itself could default if as few as 5,000 contracts stood for delivery.
But the chances of COMEX actually defaulting are slim. Bear Sterns, AIG, Freddie Mac, Fannie Mae, Ford, GM, CitiGroup, Bank of America — all of these companies were bailed out by the U.S. government... There's simply no way COMEX, the world's largest physical commodity futures exchange, is going to be allowed to go underwater. Not gonna happen.
Still, fears of a default will bubble as more investors realize the scarcity of silver relative to the paper that is representing it.
Something will have to be done. Unfortunately for the government, they don't have the physical silver resources anymore to cover a default on physical COMEX inventories. The Feds sold off the country's silver reserves decades ago, and the U.S. government's current stockpile is currently reported simply as "None."
If it comes down to it, the government will have to buy massive amounts of silver in the open market to supply COMEX with the bullion to cover contracts. This would lead to explosion in silver prices straight into triple-digit territory — past $150 an ounce, and I think even testing the $200/oz level.
We will see the price of silver rise to these levels in very short order.
So don't hesitate. Buy silver today.
Good Investing,
NB : Directed from link http://www.wealthdaily.com/articles/200-silver-as-comex-faces-default/3184
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