Carlos Slim-The Richest Man In The World, Entering The Silver Market? A $3-5Bn Position Will Mean Half The Global Market For The White Metal!

The European source commented, “This deal has been floating around for a while, but I think this time it is going to happen.  It’s in his backyard.  This is the world’s richest man wanting to get into silver.” 

I view this as the only way for the richest man in the world to enter the silver market at this point in terms of any scale, is that your take as well?

“Yes, I agree with that.  Let me just add that when he buys into it (Fresnillo) he will have the leverage to silver he is looking for.  There are very few ways to get into silver with the amount of money he has, this is the most likely option at this point.  He has to pay a hefty price or otherwise the deal will not happen.  It is beginning to look like the longer he waits, the more he will have to pay.  It is a bull market and things to tend to get more expensive, not less.”

King World News reached out to James Turk to get his comments.  When asked about the potential buyout Turk stated, “If this is true he is following in the footsteps of John Paulson and his exposure to gold through Anglo Ashanti.  In Carlos’s case, when you have billions of dollars to invest, it is impossible to buy physical silver in any significant quantity with the market so tight.  The point I am making is that Paulson ended up buying 30% of Anglo-Ashanti for a few billion dollars giving him exposure to the gold price.  

If you have three, five, ten billion dollars to invest, you cannot buy physical gold or physical silver without sending the price sky high.  So what can you do?  You can buy a mining company.  

I know of one wealthy individual who bought resources in the ground so he could develop the mine and keep all of the gold it produces. This is essentially what Carlos would be doing with silver.  I don’t know if the rumor with Fresnillo is true or not, but there is a lot of logic to it.  Also, looking at the chart, it is obvious it was under strong accumulation for most of 2010.”

James if you were Carlos Slim, would you buy Fresnillo to gain exposure to the price of silver?

“Absolutely, sometimes when you have billions of dollars to invest it can be a hard thing to do without moving the market.  Given that you can’t buy billions of dollars of physical silver without sending the price into the stratosphere, the best way to do that would be through this acquisition.  To be clear, let me disclose that I have no position in Fresnillo.

If this deal goes through, it’s going to cause a lot of people to take a look at the silver market.  One thing that is certain is that a lot of smart money with billions to invest is looking at ways to get exposure to both gold and silver.”

As gold and silver continue to gain prominence in the financial world, it may be the biggest money in the world which is now wanting a stake.  If Carlos does this deal as Turk said, it will make a great many investors around the globe take a look at the silver market.

Team MarketDhara

Gains In Silver Would Be Durable, Exponential...

Why Silver will Always Beat Gold

The Gold-Silver Ratio

If you average out the price ratio between gold and silver throughout history, you land on a single magical proportion: 16 to 1. This chart is slightly outdated, but gets the point across nicely.

And even experts who do not subscribe to fixed pricing relationships generally agree that a price ratio of around 20 to 1 should be considered normal. What is not normal is the current ratio of — wait for it — 40 to 1!

We've been screaming about silver for a while (since $6 levels). Just last year, when silver was around $18, we noted that we could see a major squeeze. Today, with silver trading above $30, we're happy with the call.

To investors, this should mean two things:

1.) That silver is undervalued historically; and

3.) When combined with mad Federal Reserve printing, prices can go much higher, as we highlight in Silver Going to $100?

Any way you look at it, silver’s price cannot be predicted to drop in any of these scenarios.

And since these same experts are continuing to predict gold’s rise towards $2,000, a realistic target price for silver could be between $100-$175/ ounce range.

Silver’s Two Faces

Silver isn’t just a precious metal and (unofficial) currency; it is also one of our main industrial metals. One of the most conductive substances known to man, it’s used in everything from photography, to compact discs, to semi-conductors, to medical equipment. Basically, if something is high-tech, it contains silver.

Here's a breakdown of silver usage by sector:

The metal’s so heavily used, in fact, that for the last several decades, the world’s total silver supply has barely been able to keep up with demand — even though the 20^th century saw historic production increases. Demand ramped up in the last quarter of the 20^th century to the point where, for almost two decades (between 1998 and 2007), silver was in a fully-fledged global deficit.

It wasn’t until the worst economic disaster in three generations that supply finally dropped to below production levels.

However, with photography alone consuming 128 million ounces of silver annually as of 2007 (that’s more than 3 times the US’s total Silver reserve), and other industrial processes accounting for another 312 million ounces, the world’s total available silver (both produced and hypothetical) is steadily — and irretrievably — decreasing.  

So while gold is constantly being transferred based on price fluctuations and demand alone... silver, as an element, is actually vanishing.

The Broadest Options

With China and India buying up silver at unheard-of rates (Chinese silver demand tripled between 2004 and 2007), the industry has had no choice but to create new ways to own the metal. There’s never been so much variety in the way you can own silver as there is today.

For those looking for that wealth-saving hedge, there are a number of silver bullion producers that are minting high-quality, high-purity coins for minimal premiums. A perfect example of this is the 1 ounce Mexican Libertad.

Physical coins can be purchased at a number of dealers online, though we have found the cheapest prices through www.MarketDhara.com (no, we don't get paid for this link, it's just the best source we've found). However, for those interested in riding silver’s imminent rise will look for something less tangible, like silver ETFs, or, the most aggressive option: silver mining stocks.

And it’s that last option that I wanted to talk to you the most about.

Because with so many people piling into gold exploration companies for all of the reasons mentioned above, the case for silver is just that much stronger.

With the magic ratio currently at such a disparity — 40 to 1 vs. 16 to 1 — those moving into silver exploration today stand to make about three times what their counterparts can expect to cash in investing similarly in gold. Sounds nice, I know... And the fact is that investing in silver mining right now may not just be the most profitable angle to take with this most consumed of precious metals — but also the easiest.

 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

Forget $ 38/oz Silver May Head For $ 96/oz

Soft Currencies, Hard Commodities..

Unlike Gold where the World essentially has the same tonnage available in physical form, either with individuals, in bank vaults or under-the surface as it was 5000 years ago; Silver actually is getting consumed, with mere traces available in the Oceans apart from physical metal held by ETFs, jewellers and the left-over mines. In all practicality, Silver is disappearing away thus becoming rare. More importantly, while Gold mines are strewn across Russia, South Africa, Mexico, Peru, Chile and China-Silver actually appears as an after-thought in Lead or even Zinc mines as an associated metal. The extraction rate is a lowly 1 gm to a 1 tonne of mud. 

Well....

I’ve always had a soft spot for silver.

It’s the people’s precious metal.

It’s gold’s cheeky cousin.

If gold’s fine dining, then silver is a lazy Sunday roast with your family.

And something amazing has started in the silver market. The silver price took nine long months to crawl from $18 to $20.

It then jumped by 50% to hit $30 in just three months.

Silver off like a fire-cracker

Source: goldprice.org

Silver finished 2010 with a gain of 70% for the year, leaving other commodities for dead. This is not normal! What IS going on?

If you haven’t been keeping up with silver lately, a lot has happened. There is a huge move in silver which could continue into 2011. So, what’s behind it?

Compared to gold, the silver price had been pretty flat for a year. Then a good old-fashioned scandal got things moving. A few months ago, Bart Chilton of the Commodity Futures and Trading Commission (CFTC) said he “believes that there have been repeated attempts to influence prices in the silver markets”. Global banking firms JP Morgan and HSBC now potentially face class action lawsuits alleging they had forced silver prices down for their own benefit.

Once Chilton blew the whistle, it was game-on. The silver price started playing catch-up without fear of getting crushed by the big players. The price may be jumping like a kid on red cordial, but I reckon it still has a long way to go yet.

But how much further can silver go?

Well, for the last few thousand years the gold price has been fifteen times more than the silver price on average. This wasn’t by design, and was probably just because gold is fifteen times rarer than silver in the earth’s crust. This fifteen-to-one ‘gold-to-silver price ratio’ stayed true through history right up to start of the twentieth century.

Then as Central Banks grew in power, silver was kicked off the podium and lost its importance. It soon became a shiny financial relic from a ‘less educated’ time. So the relationship between the gold and silver price changed completely. So much so, that silver has been around seventy times less valuable than gold for the last few decades. This belittles silver. It’s like seeing an old mate queuing up at the soup kitchen.

But all this is changing. Paper money’s value was based purely on the bond of trust we have in Central Bankers. But this bond has been broken.

I believe the market is now witnessing a once-in-an-investment-lifetime event.

A whole asset class is suddenly re-valued on a different basis. Precious metals functioned as money for thousands of years, and after forty years off-duty are returning to this role. They are ‘remonetising’. Silver is coming out of hibernation, and is now back on its feet and fighting. Money is pouring into the silver market, as investors rush to allocate funds into what little silver is still available.

So as the silver price races to catch up with gold, the gold-to-silver ratio is falling like a stone. Silver’s price jump means it is now just fifty times less valuable than gold. Gold to silver ratio returning to former glory?

Source: Goldprice.org

But the silver price would still have to triple to more than $90/ounce to get this ratio back to its historical average of fifteen to one.

Is this really possible?

Because, as you should know from any financial advice disclaimer, ‘previous performance does not guarantee future returns’. Mullets were cool once upon a time. Just because something happened in the past, it doesn’t mean it will come to pass again. Anyway, if you take a quick look at the silver market today, it’s coiled like a spring waiting to pop.

There are only 1.2 billion ounces of silver bullion in the global ‘stockpile’. At $30 an ounce, there are only $33 billion worth of silver available. I’ll put that in context. The value of the entire global silver stockpile is less than Woodside Petroleum’s market capitalisation.

Considering how many buyers there are worldwide, this market is tiny!

Silver is being bought by the ute-load. Coin sales have gone through the roof. The US Mint, Canadian Mint and Perth Mint are all setting new record silver sales each month. The urgency of the demand means that a one kilo silver bar is now going for a 10.6% premium to the spot-price of $945.

But the real game-changer is the money going into Exchange Traded Funds (ETFs). Incredibly these hold about 60% of the world’s silver stockpile already.

There’s really not much silver out there left to buy, and the ETFs are quickly buying what’s left. They snapped up another 1.5% of the global stockpile in November alone. It would take less than two years to mop up the rest at that rate.

Silver also has an unusual supply problem, which keeps things tight. Eighty per cent of silver supply comes as a by-product from mining companies producing other metals. Silver is not their main concern, or source of revenue. When demand increases, these producers don’t give a monkey’s.

It won’t increase the silver supply:

• Huge investment demand pouring into a tiny market?

• Only two years left of spare silver?

• Mine supply that doesn’t give a rat’s?

These fundamentals will only push the price one way in the long term! Up. But more than any of this, what is driving the price up is that it silver has just had the brakes taken off, and it can now get back to turning into money. It’s getting back onto its podium and is ‘remonetising’ once again.

The silver price may yet pull back briefly after such a big run, but even after a 100% rise, it still looks cheap!

 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

Silver Could Hit $ 50/oz By Dec2011

Why are investors so gung ho on silver? Well, a number of factors have investors pushing silver to multi-decade highs.  We talked about them in past articles… inflation hedging, industrial use, and silver coin investing. But you can roll all those factors into one… its simple supply and demand.

Silver supply is dwindling…

Accurate figures for above ground silver stockpiles are hard to come by.  There are a few estimates, but most vary wildly. However, experts agree above ground silver inventories are extremely low.  The majority of silver is already used up or still sitting in the ground waiting to be mined.

Of course, miners are ramping up production to take advantage of high silver prices.  And they’ll likely be able to slowly increase supply in coming years.  But right now, demand is far outpacing supply for the illustrious metal.

In fact, the market is so tight that silver futures are in “backwardation”.

This unusual word essentially means the market is worried about near term supply.  Near term futures contracts are priced higher than outlying contracts.  Backwardation is a rare occurrence, but it’s happening right now in silver.

Silver has broken the important technical area of $35/oz, it can now become a major technical support.  What’s my ultimate price target for silver? Putting a price tag on future silver prices is pretty challenging.  Some estimate $70-$100 an ounce, while others have grandiose ideas of $1,000 for an ounce of silver.  While I think $1,000 is out of the question, $50 to $70 is very possible.

How long will it take it to get there? Well, if recent price movement is any indication, we may hit $50 by the end of this year.

Gold to touch $2000+, Silver to hit $50+ in 2011: John Embry

NEW DELHI (Commodity Online @ MarketDhara.Com): Gold and silver price predictions continue to dominate the New Year headlines these days. While celebrated commodities investors like Jim Rogers have predicted that gold price would zoom over $2000 per ounce in this decade, several investment banks are forecasting gold price to be in the range of $1500-$1800 in the next five years.

John Embry, Chief Investment Strategist at Sprott Asset Management, has come out with his forecast on gold and silver for 2011. In an online interview to News MarketDhara, Embry--a leading voice in investment circles around the world--says gold price will touch $2000 and silver would hit $50 in 2011.

“I’d be disappointed if it didn’t trade through $2,000 this year, in that event if gold were to make a run at that, silver is a layup for $50,” he said.

Embry said that the returns over the last 10 years, gold returned over 18% and silver close to 24% annually. These are spectacular returns and we haven’t seen anything yet, we’re not even close to the third leg which is the blowoff.

“This may be the best opportunity you’re going to get at least from a price sense to buy gold and silver in the next few days. I think when this correction however long it will last is over, it will probably mark the lows for the year which will then be the liftoff to the eleventh consecutive year of higher gold prices," he said.

When asked once again about tightness in the silver market Embry remarked, “There is infinitely more demand for physical silver than there is supply. I mean all of this stuff coming out of the ground is long since spoken for by traditional industrial and medical uses and what have you. And now with investor interest picking up, I just saw that on the 3rd of January there was 1.7 million silver coins sold in the United States which was equal to the amount that was sold in all of the month of December. So, investment demand for silver is going off the chart, this could only mean dramatically higher prices.”

When asked about his themes for 2011 Embry stated, “Basically I think we are going to see more of the same. I mean I don’t see how you could possibly shut off the paper spigot without causing a depression, the likes of which would make the 30’s look like a picnic. If that’s the case then you’ve got to continue to focus on hard assets, and when you get these violent corrections...you’ve got to be in a position to buy them. The things that I would be avoiding like the plague are bonds, particularly long bonds.

...Things are sufficiently dire that I think we are going to have to recast the monetary system before this is over. And in such an undertaking I suspect that gold may be remonetized, and given the amount of paper there is in the world, I mean it will have to be remonetized at a price which would sort of stagger the doomsayers today on gold. There are still more people talking negative on gold today than there are positively believe it or not,” Embry added.