Welcome to Illuminati Silver – we tell you
the truth about Silver. Silver prices are going to continue to fall
further even based on fundamentals. The so called Silver Gurus of this world say
the market is manipulated and silver prices are deliberately held down. Are they correct?
It’s possible, but on basic fundamentals alone, the Silver Price should fall further
regardless of manipulation. Why do we say this?
Well let’s examine the evidence: 54% of Silver demand is that received by Industry.
The actual physical quantity of silver demanded by Industry over the past 4 years to 2013
has gone down and over the past 10 years has remained at best static.
Yes, despite the rumours it has reduced – from 643 million ozs to 546 million ozs. Once the
2014 figures are announced we are likely to see this trend having continued. As far as
2015 is concerned, with the World’s economies in their current state of deflation and recession
its even likely to get worse. Yes, it is true that there are more uses for
Silver than ever before, but don’t listen to the so called experts who tell you that
regardless of the price of silver, Industry will still buy the same silver quantity for
that Fridge Freezer or Computer. Look what’s happened to the Solar Industry.
Only a few years ago, Solar Panels were going to use so much Silver, it would cause supply
shortages. What actually happened? The Industry found a way of using less Silver in their
panels. Whilst silver is perhaps the most conductive
and reflective precious metal, substitutes do exist when Price becomes a factor –even
though quality may admittedly be affected, – for we live in a ‘throw away’ society
where goods have built in obsolescence. I pity those in the USA taking out 7 year
car loans for example – why? Because the cars won’t last that long. You will be selling
them at a major discount in 3 – 4 years and still have a hefty loan balance to cover.
So with the economies of the world suffering deflation and or recession, with declining
economic activity and now including the Far East, the Industrial demand for silver at
best will remain flat, or at worst will reduce for the next couple of years. If it were not
for people like you who are listening to this message who went out and bought physical silver
coins and bars providing a 75% increase in purchases, then Silver will have lost its
lustre some time ago. Therefore, do not listen to those so called
silver gurus who perhaps made 1 or 2 correct price predictions since 2008 and the rest
all being wrong – you know who they are – those who say buy silver now while its
cheap, – average down if you bought when it was high (who incidentally recommended that
you should buy when it was high?) – for demand is going to rise exponentially and
supply is falling – Many of them have a vested interest in telling you this as they
have their own precious metal businesses and silver investments or a latest book to promote.
So let’s dispel one of the myths they engineer – Silver Mine supply is not declining. I
repeat Silver Mine supply is not declining. According to the Silver Institute, the supply
of silver rose by over 3% in 2013 and by over 30% since 2004. Last year’s supply according
to our sources show a similar picture. It’s not going to run out any time soon.
We also hear that mines are going to close. Yes some will as do other businesses in a
world economy. Those mines which began production anticipating $26 oz silver and higher, whose
costs are in the $20 + per oz category, will survive for a time but will eventually close
or be bought out by a more efficient operator. But you only have to listen to the Kitco and
Cambridge House Interviews to see that a number of Pure Silver Mine Owners have managed to
reduce their costs to around $16 oz (which also includes exploration costs by the way
– I will come back to this later) and they are few in number and represent a small proportion
of the Silver Market. Other mines which produce Silver as a by-product
(which represents almost 70% of the Silver mined) have all in costs of between $9 and
$15. So it is quite possible to see sub $15 Silver prices and the Industry still continue.
I want to come back to this ‘all-in’ cost which also includes exploration charges.
It is true, that at sub $15 silver, many companies will hold back on exploration and cut back
unprofitable seams. This means they can still function and pay their bills. It does not
bode well for the future admittedly i.e. 10 years’ time but for the next couple of years
its impact will not be reflected in the price. Please understand this. It takes on average
10 years from exploration find – to full mine production. So the time to be bullish about
silver is not today but in a few years’ time when those explorations which have not
occurred result in a possible shortage. However, with Silver ranging from $20 – $35 during
2010 – 2013 a number of exploration projects did occur, deposits were found and developments
begun. Now some analysts are predicting 2015 or 2016
to be the Year for ‘Peak silver’ – really? OK lets suppose they are right for a moment
– this means, 2015/16 will see a further rise in the supply of silver – peak meaning
highest point. So with supply reaching a peak and demand remaining flat or falling – what
do you really think the price is going to do?
Now what about Investor demand? So many Naysayers are telling us the Mints
are running out of silver. Well not strictly true.
Each year, the Mints have to assess their demand for Silver and place their orders accordingly.
In Simple terms the process of making silver coins is as follows: 99.9% pure silver is
Melted at a temperature of around 2,000F, its then extruded (in other words) – made
into long thin strips, 1oz for example blanks are then cut out of the strips, they are then
burnished – which is a polishing process, and finally the blanks are pressed or struck
from a steel die with the appropriate design etched into it.
So if the demand for such coins exceeds what the Mint predicted then yes it does temporarily
run out of Silver – but there is plenty of supply to call upon to correct this – which
is why previous delays or rationing have only lasted a few weeks at most.
So don’t listen to the scare stories, it’s not that Silver has run out, it’s that the
Mints have underestimated the demand for a particular coin or bar. So a rise in demand
for coins and bars from 139 million ozs in 2012 – 245 million ozs in 2013 did catch
the Mints by surprise. But supply was shortly re-instated and you can buy today as many
Philharmonics, or Canadian Maples as you wish. Finally I want to address Black Swan events.
Yes, if the world currencies collapsed tomorrow then we shall see Silver Prices rise – not
because one immediately thinks of buying silver but because there will be a flight to Gold
and Silver prices have a close, (but not identical) direction correlation to Gold. So it will
move up in sympathy, but not because of its inherent demand. This only kicks in when Gold
prices go parabolic and those who cannot afford it flee to Silver as a substitute.
So let me summarise, We are not running out of Silver – at least
not for the foreseeable future. Prices will fall further just based on supply
and demand (regardless of any manipulation that does or does not exist – if it does
occur then prices will definitely fall even further).
Miners can still supply Silver under $15 per oz and only a few mines will close.
Exploration will be affected but this will impact on prices in around 5 years’ time
and seriously impact in 10 years– not today. Industrial demand for Silver has slowed and
declined in real oz terms and this will continue until the economies of the World Improve.
The only reason India purchased so much Silver in 2014 and now 2015 was because of the tax
levies placed on gold. Just imagine what would have happened to the price if the demand from
India was not there. So Supply up and nearly peaking, demand down
(if it were not for Private Investors being influenced to buy silver coins and bars demand
would be considerably down) we see prices falling further.
By the way, it has recently been brought to our attention that Bullion Dealers are having
orders resold back to them before delivery or shortly after receipt of their orders.
This does not bode well for Investor demand and will further influence the price of silver
downwards. Thank you for listening. We appreciate those
Silver Bulls amongst you may not like this message and frankly we don’t particularly
care if you like or agree with it or not but we do care that you have an opinion – so give
us a thumbs up or down but at least respond and subscribe for further messages.
Disclaimer: Silver Illuminati owners; come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are therefore not qualified to give investment advice. Therefore, this and other
productions must not be deemed to be giving such advice and merely represent the personal
views of its owners.