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Precious Metals
I once read a 4 inch thick book on the secret power of money, it was dry dry dry, but outlined the rise and fall of Rome and other coinage collapses until history led us to paper money and off the gold standard that once was the underpinnings for the US $. Now metals are a commodity, a future commodity, and an ingredient in coinage.
Date: 10/26/2005 7:47:37 PM ( 19 y ) ... viewed 1306 times COMMENT: Silver Bullet-in
Dear A-Letter Reader:
On Monday, I told you about platinum. Today, we'll look at silver.
Like platinum, this is a metal that has pluses and minuses.
On the plus side...
* In June, Barclays Bank began seeking SEC approval for a new
exchange-traded fund, iShares Silver Trust. Each ETF unit would
represent 10 ounces of silver to be backed by silver bullion stored
in vaults in London. This is both a reflection of increased investor
interest in silver and a sign that the trust itself could be a new
source of demand for silver.
* In August, New York-based precious metal and commodities
consultancy CPM Group released its annual silver survey. CPM says
world silver mine production will total 527.3 million ounces this
year, up 1.7% from last year. Total supply in 2005 is estimated to
increase 3.2% to 774.3 million ounces. But it's not enough. CPM
forecasts a global deficit of 31.4 million ounces this year. When
combined with coinage and changes in inventories, CPM expects
an overall silver deficit of 43.4 million ounces in 2005.
* China has traditionally been an exporter of silver. But due to its increased industrial demand, it may stop exporting silver. There's
mixed views on this-see below.
On the minus side...
* The Indian Government is selling silver-19.2 million ounces of
silver in 2005.
* Unlike gold, silver is not as rare as you might think. New, BIG
mines are coming online. In 2007, Apex Silver will bring its San
Cristobal mine online. That mine alone will produce 22 million
ounces a year. Meanwhile, Barrick's Pascua Lama could produce
18 million ounces annually starting in 2009.
* And while some experts think China's domestic use is going to
swallow its supply, don't be so sure. New silver discoveries in Henan
Province in Central China are expected to come online in 2006. Just
one operation is expecting to produce 5 million ounces a year. And
the area is being compared to the Coeur d'Alene mines in Idaho, which
has produced more than 1 billion ounces of silver in 120 years.
Now, just because someone in China says he's sitting on 36 rich
veins of silver doesn't necessarily make it so. Mark Twain said that
a gold mine was a hole in the ground with a liar on top - that goes
double for silver.
Would I invest in silver? As with platinum, my first choice is gold.
But if I felt the urge, I might look at the kind of silver stock that Eric
Roseman has in Commodity Trend Alert. It's a mining company that
expects to produce over 9 million ounces of silver this year with a cash
cost of less than $4 per ounce. With silver trading over $7.60, that's a
company that should continue to make money - and lots of it. Eric's
subscribers already have a 48% open gain on this position - and
probably a lot more ahead.
Speaking of Eric, I always like to get his view on precious metals.
On Tuesday, Eric told his Commodity Trend Alert subscribers:
"It's going to be catch-up time for gold, silver, platinum and even
palladium next year. Right now, I think we're at Phase II for gold.
Phase I occurred as the dollar plunged and gold took off. This move,
Phase II, is occurring versus all major currencies in 2006. And Phase
III will kick-in with public participation as spot gold breaks the key
$500 an ounce resistance level. That will likely happen in 2006."
So if you like silver, good news. 2006 could be its year to shine.
Yours for investing profits,
SEAN BRODRICK, Investment Director
The Sovereign Society Ltd.
E-mail: seanbrod@bellsouth.net
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