Friday, February 11, 2011

Got Silver? You Should Think About Getting Some

Silver just rocketed past $30 USD. Rumor has it that JP Morgan is unwinding its silver shorts. If history is any example, anytime a commodity had shorts unwound, that commodity saw prices skyrocket.

This means that silver has just begun. But there's more!  

This just across my desk from the Mogambo Guru in his most recent (and always entertaining) article entitled, "Buying Silver While it's Still Relatively Cheap," and verified on Investment Rarities Incorporated

"....silver inventory held above ground totals 1 billion 400 million ounces.  Annual industrial use of silver is 900 million ounces.    Meanwhile, gold inventory above ground is 3 billion ounces while industrial use is only 20 million ounces.  Forty-five times more silver is used each year than gold.

That means the years of inventory remaining are amazingly different.  A year and a half supply of silver exists while one-hundred and fifty years of gold supply remains.  Here’s another shocker. In 2010, silver usage, year over year, was up 18% while gold was down 40%." 

Sometimes it’s hard to fathom all the bullish aspects credited to silver. "

Catch that? The entire world's existing supply of silver can only last us for one and one half years. Last year, silver useage soared by 18%! Very soon, we are going to have more and more hundreds of millions of Chinese and Indian workers enter the middle class and they are going to want electrical devices for the homes... Silver is a required compenent for almost every electrical device that you can imagine.

Mogambo Guru

What's this doing to the price of silver today? What's it going to do in the near future?

The Mogambo Guru continues:

"Theodore Butler writes that JP Morgan, apparently the biggest naked short-seller of silver futures and thus the biggest price suppressor, looks like it has decided to get out of the business of depressing the price of silver by creating and selling so much “paper silver” futures out of thin air, and has unexpectedly “covered roughly 4,000 contracts in the past month and 8,000 contracts in the last two months, the equivalent of 40 million ounces” of silver.

Familiar with the explosive results of suppressed prices that stop being suppressed, I am beside myself in Greedy Mogambo Glee (GMG) in anticipation of silver shooting to the moon, and I am humming the tune 'We’re in the money! We’re in the money! We got a lot of what it takes to get along!'”

Also, it is being reported that The US Commodities Futures Trading Commission says there have been "Repeated attempts to influence prices (suppress) in the silver markets." These have brought class-actions suits against HBSC and JP Morgan and these suits have been recognized and consolidated in New York! Could the silver fireworks be just beginning?

From the Gata homepage:

The CFTC has been investigating the silver market for two years, and 
Chilton said the "fraudulent efforts to persuade and deviously control" 
silver prices should be prosecuted.

The suits, which specifically allege violations of the Commodity 
Exchange Act and the Sherman Act, claim that the banks collaborated to 
suppress the price of silver futures and options contracts by amassing 
"enormous" short positions in Commodity Exchange Inc., or Comex, 
beginning June 1, 2008.

Many of the allegations in the suits come from information provided 
by a whistleblower who used to work in the London office of Goldman 
Sachs Group Inc., the suits say.

The whistleblower is not named in the complaints, but in testimony 
before the CFTC in March, Bill Murphy, chairman of the advocacy 
group the Gold Anti-trust Action Committee, said it was a metals trader 
in London named Andrew Maguire.

After Maguire went public in March, the defendants began to unwind 
their positions in Comex, the suits claim.

Since then, the net short position of silver futures that are held 
by commercial banks -- the vast majority of which are made up 
of JPMorgan and HSBC -- has dwindled by more than 30 percent, 
the suits say.

As that happened, the price of silver skyrocketed, reaching $24.95 an 
ounce in October, its highest level in 30 years, the suits contend.

JPMorgan and HSBC declined to comment on the suits.

I hope you have some precious metals. This is starting to get really interesting. 

In Japan and want silver click here? For gold, click here.

Thanks to Lew Rockwell

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