{"id":50208,"date":"2014-04-28T18:55:21","date_gmt":"2014-04-28T22:55:21","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=50208"},"modified":"2014-04-28T18:55:21","modified_gmt":"2014-04-28T22:55:21","slug":"listen-silver-we-need-to-talk","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/04\/28\/listen-silver-we-need-to-talk\/","title":{"rendered":"Listen, Silver: We Need to Talk"},"content":{"rendered":"<h3><em>Will \u201cthe other monetary metal\u201d be stuck in the doldrums forever?<\/em><\/h3>\n<h4><span style=\"font-size: small;\">By Jeff Clark, Senior Precious Metals Analyst, Casey Research<br \/>\n<\/span><\/h4>\n<p>I wrote to Silver last week, and she answered back. I\u2019d like to share our correspondence with you\u2026<iframe loading=\"lazy\" src=\"http:\/\/trk.caseyresearch.com\/f\/?content_id=838&amp;code=PIP&amp;editorial=listen-silver-we-need-to-talk-1\" width=\"1\" height=\"1\" frameborder=\"0\"><\/iframe><\/p>\n<p style=\"margin-left: .5in;\">Dear Silver,<\/p>\n<p style=\"margin-left: .5in;\">Happy anniversary. It was on April 25, 2011 that you hit $49.80 per ounce in the New York spot market.<\/p>\n<p style=\"margin-left: .5in;\">Today, three years later, you sell for around $20, nearly 60% less.<\/p>\n<p style=\"margin-left: .5in;\">Is your bear market almost over\u2014or are these low prices here to stay? Your price has lagged gold this year, so your normal volatility is lacking. How much longer will you be stuck?<\/p>\n<p style=\"margin-left: .5in;\">Jeff Clark, silver investor<\/p>\n<p>Here\u2019s her polite response:<\/p>\n<p>Dear Mr. Clark,<\/p>\n<p>I have good news for you. While some investors have lost interest in me and my price is at 2010 levels, things will soon change.<\/p>\n<p>I put together this historical chart for you, and I hope you\u2019ll share it with your fellow silver investors. It shows every major bear market over the past four decades. The black line represents what\u2019s taken place from April 2011 through last Friday.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 434px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/TheSilverBearMarketisNearingExhaustion.png\" alt=\"\" \/><\/p>\n<p>Of the seven prior bear markets, four lasted longer and three were shorter. Four declined less than today; two were about the same; and only one was significantly deeper.<\/p>\n<p>If I were to match the two longest bear markets, my price would stay down until this October. If it matched the other two longer bear markets, it would end this summer.<\/p>\n<p><strong>Over the past 40 years, there has been no bear market that would extend my low past this October.<\/strong><\/p>\n<p>Or my low may already be in.<\/p>\n<p>Either way, I think it\u2019s safe to say that I\u2019m close to the end of my down cycle. In fact, the historical data say the opportunity to buy me at $20 or less will soon be unavailable.<\/p>\n<p>Let me relay some other data to you that also signal current prices can\u2019t last too much longer\u2026<\/p>\n<h3><strong>The US Mint (Still) Can\u2019t Keep Up with Demand<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">The sharp drop in my price in 2013 unleashed a wave of pent-up demand for silver coins. Look at the response from investors.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 435px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/USMintsSilverCoinDemandisSoaring.png\" alt=\"\" \/><\/p>\n<p>The question this year is if those record levels could continue to be supported. The first quarter is over, so I can tell you the answer\u2026<\/p>\n<p>The US Mint sold 13,879,000 ounces of me in Q1, 2.4% less than the 14,223,000 sold in the first quarter last year. Here\u2019s the monthly breakdown:<\/p>\n<div align=\"center\">\n<table style=\"border-bottom: 3px solid #F17C14; font-family: Arial; font-size: 13px; line-height: 15px;\" border=\"0\" cellspacing=\"1\" cellpadding=\"4\">\n<tbody>\n<tr style=\"color: #fff;\" bgcolor=\"#F17C14\">\n<td valign=\"top\" width=\"100\"><strong>\u00a0<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>2013<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>2014<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>\u00a0Gain\/Loss<\/strong><\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>Jan.<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">7,498,000<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">4,775,000<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">-36.32%<\/td>\n<\/tr>\n<tr bgcolor=\"#E2E2E2\">\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>Feb.<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">3,368,500<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">3,750,000<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">11.33%<\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td align=\"center\" valign=\"top\" width=\"100\"><strong>Mar.<\/strong><\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">3,356,500<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">5,354,000<\/td>\n<td align=\"center\" valign=\"top\" width=\"100\">59.51%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>&nbsp;<\/p>\n<p>January\u2019s 36% decline from the prior year looks big, but it\u2019s not what you think: the Mint didn\u2019t begin sales until the end of the second week of the month. The monthly total thus reflects only 2.5 weeks of sales.<\/p>\n<p>&nbsp;<\/p>\n<p>And March sales were the fourth-biggest month ever. <strong>Add in April\u2019s sales figures and the US Mint is now on pace to exceed 2013 totals.<\/strong><\/p>\n<p>It\u2019s clear that your fellow investors think my price will go higher.<\/p>\n<h3><strong>Silver ETFs Have Net Inflows (Again)<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">You might remember that silver ETFs\u2019 holdings were largely flat last year, unlike the mass exodus seen in gold funds. The pattern is continuing this year.<\/p>\n<p>Holdings in my exchange-traded products (ETPs) have risen 3.5% year to date, an additional 17.5 million ounces. In fact, the net purchases by silver ETPs have totaled $354 million YTD, the largest influx of all commodity ETPs!<\/p>\n<p>Meanwhile, gold-backed ETPs have seen sales of 500,000 ounces, about a 1% drop.<\/p>\n<h3><strong>Jewelers Love Low Prices<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">Low prices for me have led to increased silver jewelry purchases.<\/p>\n<p>As just one example, the UK reports that silver jewelry sales jumped 40.4% in February, to 351,791 items.<\/p>\n<h3><strong>India Just Won\u2019t Stop Buying<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">India imported 5,500 tonnes of me last year, 180% more than 2012. Imports comprised 20% of all global demand.<\/p>\n<p>Last month\u2019s silver imports were 250% lower. This was mostly due to the recent increase in import duties, and the fact that six banks got permission to import gold, which would soften purchases of me. This could partly explain why my price has struggled.<\/p>\n<p>But as long as politicians keep gold restrictions in place, Indians will keep buying me.<\/p>\n<h3><strong>China: More Silver for Solar<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">Chinese imports of me rose drastically in February, up by 75% month on month and 90% year on year to 358 tonnes, the highest since March 2011. Though lower the following month, March imports were up 16% year over year.<\/p>\n<p>China\u2019s solar industry is growing explosively. In 2009, it represented about 0.2% of the global market; this year, it\u2019s estimated to be one-third.<\/p>\n<p>It\u2019s interesting to note that my price rose in February and fell in March, which suggests that Chinese demand affects my price, too.<\/p>\n<h3><strong>Supply Sources Are Concerning<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">So far, suppliers have managed to meet demand. However, there are dark clouds on the horizon\u2026<\/p>\n<ul>\n<li>Very little excess supply is expected this year, as production is projected to remain flat, and demand for me shows no signs of letting up.<\/li>\n<\/ul>\n<ul>\n<li>Solar power accounted for 29% of added electricity capacity in America last year. \u201cMore solar has been installed in the US in the past 18 months than in 30 years,\u201d says the US Solar Energy Industries Association. <strong>\u201cEventually solar will become so large that there will be consequences everywhere.\u201d<\/strong><\/li>\n<\/ul>\n<ul>\n<li>Supply from recycling will probably be weak, because it\u2019s not cost effective to recover every tiny bit of me from cellphones or prescription eyewear or casino chips. One report says that Americans threw away 130 million cellphones last year, containing over 46 tonnes of me.<\/li>\n<\/ul>\n<ul>\n<li>Several major base-metals mines are expected to be depleted over the next several years. The problem is that two-thirds of me is a byproduct from base-metals operations\u2014if their output falls, there will be less of me, as well.<\/li>\n<li>The Silver Institute says that demand for industrial products made from me continues to grow.<\/li>\n<\/ul>\n<h3><strong>No Regrets<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">As I look at your current situation from a historical perspective, I see a lot of catalysts that will catapult my price higher in the near future. It seems rather clear that as demand continues to grow, supply tightens, and my role as money grows more substantial, I will trade at much higher levels in just a few short years.<\/p>\n<p>In fact, I offered to bet my cousin gold that I will outperform him before this cycle is over. He declined to take the bet.<\/p>\n<p>The clock is ticking. Don\u2019t set yourself up for regret when my price leaves $20 in the dust.<\/p>\n<p>Your friend,<\/p>\n<p>Silver<\/p>\n<p>P.S. Learn about the three best ways to invest in silver, where and when to buy physical silver, and how to find the best silver stocks, in the free <a href=\"http:\/\/www.caseyresearch.com\/go\/v5982-2\/PIP\" target=\"_blank\">2014 Silver Investor\u2019s Guide<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<div id=\"xvMdV95u77zU\" style=\"clear: both;\">The article <a href=\"http:\/\/www.caseyresearch.com\/go\/v59t3-2\/PIP\" rel=\"permalink\">Listen, Silver: We Need to Talk<\/a> was originally published at <a href=\"http:\/\/www.caseyresearch.com\/go\/v59w4-2\/PIP\">caseyresearch.com<\/a>.<\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Will \u201cthe other monetary metal\u201d be stuck in the doldrums forever? By Jeff Clark, Senior Precious Metals Analyst, Casey Research I wrote to Silver last week, and she answered back. I\u2019d like to share our correspondence with you\u2026 Dear Silver, Happy anniversary. It was on April 25, 2011 that you hit $49.80 per ounce in &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2014\/04\/28\/listen-silver-we-need-to-talk\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Listen, Silver: We Need to Talk&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-50208","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/50208","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=50208"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/50208\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=50208"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=50208"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=50208"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}