Buy Silver Bullion Coins

Dorothy Kosich
Friday, May 28, 2010
www.mineweb.com
RENO, NV -
GFMS' short-term forecast for silver "is that through to July silver will trade between $16.40-$19.50, broadly shadowing gold," GFMS Chairman Philip Klapwijk predicted today.
In a presentation of "The World Silver Survey 2010" Thursday morning to the Silver Institute in New York City, Klapwijk predicted that before the end of this year, "a more decisive break-put to the upside is probable, with a fair chance that 2008's London-high of $20.92 will be exceeded."
The "World Silver Survey 2010" noted that, in spite of a strong rally in silver prices last year, "the annual average price in 2009 fell for the first time since 2001, slipping 2% to $14.67."
"Despite the significance of the supply/demand fundamentals, we would still regard investment as the prime driver of silver prices last year, with the steady gains for the silver ETFs and the more volatile upward path in the net investor long on Comex both being critical," GFMS said.

INVESTMENT
Last year, implied net silver investment recorded its highest levels in GFMS' 20-year data set, "motivated by safe haven purposes and ‘bargain hunting' early in the year," the report noted.
"ETFs and retail investment were key vehicles for silver investment in the first quarter of the year, the rally in the latter part of 2009 being more focused on the Comex."
In fact, GFMS research showed commodity investments had "an outstanding year in 2009."
Total silver ETF holdings rose by nearly half or 132.5 million ounces in 2009 ending the year at 397.8 million ounces. In fact, the strong demand for silver ETFs was the primary driver of the silver price in the first quarter of last year.
The iShares Silver Trust saw its holdings rise by 87.5 million ounces over the year to 305.9 million ounces at year-end 2009, making it the largest silver ETF by far.
CFTC data showed that aggregate positions across commodities reached new highs in the fourth quarter of last year. The report also discovered the nature of commodities investment has also changed, including a "growing interest in actively managed funds."
Silver ETF holdings have shown some resilience, but still dropped 12 million ounces in the first four months of this year.
Trading volumes in Comex silver futures fell by 10% last year to just over eight million contracts, the survey said.
In 2009, investment in physical silver bullion was at very high levels, "as the grave prognosis for the global economy and the financial sector in particular drove investors toward hard assets," the survey noted.
Nonetheless, the Indian physical silver market saw net disinvestment of around 41 million ounces last year, the first time net dishoarding has been recorded in GFMS' 20-year data series.
So far this year, GFMS says, "silver investment has been notably lower year-on-year."
"Looking ahead, investor interest in silver is set to remain positive, bolstered by the sovereign debt crisis," the survey said. "This may continue to trigger ‘shocks' which should attract safe haven investment. Industrial demand should also continue improving, which should further boost silver investment."

DEMAND
The World Silver Survey noted that tough times economically took their toll on silver industrial fabrication in 2009, which sharply dropped 20.6% to a six-year low of 352.2 million ounces. Total global silver fabrication demand dropped 11.9% in 2009 to a 17-year low of 729.8 million ounces.
Klapwijk said all regions except the Indian Sub-Continent "suffered double-digit losses, with the heaviest in percentage and absolute terms being East Asia's." He noted the loss was apparent in most sectors of end use, although some continue to show growth.
Nevertheless, GFMS forecasts "a strong recovery" for industrial silver demand this year, "reflecting stock replenishment and higher GDP growth."
Two new uses of silver in industrial applications are gaining momentum including silver oxide batteries and silver conductive inks used in electronics.
Although the quantity of silver used in medical applications remains modest due to the lead times in adopting new technology, silver nano-technology is gaining. "Indeed, there are few areas in the medical field where the use of silver cannot be beneficial," GFMS suggested.
Demand for silver is rising in households as new anti-bacterial uses are being introduced.
However, demand for silver in photographic applications continues to plummet to less than half the level seen five years ago, falling 21% in 2009 to million ounces. "Looking ahead, the future of silver use in photographic applications looks set to decline even further," GFMS predicted.
Meanwhile, jewelry demand only declined slightly in 2009 by 1.1% to what was, nonetheless, an 11-year low of 156.6 million ounces "due to weaker consumption in western markets and destocking at the trade level," said Klapwijk. Jewelry is expected to be down again marginally this year, primarily due to losses in the Indian market.
In contrast, however, coin and medal silver off take rose strongly, while silverware bucked the trend of recent decade and posted an increase of almost 5% to 59.6 million ounces last year.
Global coins and medals fabrication jumped 21% in 2009 to a new record of 78.7 million ounces. Every leading producer of bullion coins saw total minting rise last year with the U.S. Mint leading the way with an 8.8 million ounce increase.

MINE SUPPLY
Mine production was up 4% in 2009 to achieve a new record of 706.9 million ounces of silver. Primary silver mine supply was significantly higher, while silver produced as a by-product of gold mining increased 21% to 15.2 million ounces.
However, primary silver supply is anticipated to only increase marginally this year with the bulk of growth instead coming from the gold mining sector with an estimated 25% increase in silver production.
The world's top silver producer was Peru with 123.9 million ounces of output last year, followed by Mexico with 104.7 million ounces of silver production. China ranked third at 89.1 million ounces of mined silver.
The top silver-producing company was BHP Billiton with 42 million ounces of silver output last year, followed by Poland's KGHM Polaska Miedź with 38.7 million ounces, and Mexico's Fresnillo at 37.9 million ounces of production.
GFMS expects silver mine supply to increase this year, reaching another successive record high "with a strong contribution from the by-product gold sector."
The survey found silver mine cash costs were almost flat year-on-year with a global average cash cost of $5.23/oz last year.
Silver Wheaton entrenched itself as the top silver streaming company, partly by securing 25% of the life-of-mine silver production by Barrick's massive Pascua-Lama gold/silver mine.
Meanwhile net supply from above-ground silver stocks dropped an astounding 86% last year to just 20.2 million ounces. GFMS said the decline was driven "by a surge in net investment, higher de-hedging, lower government sales and a drop in silver scrap supply."
Klapwijk said scrap supply will continue to decline this year, "although the scale of losses is likely to be more modest."
The World Silver Survey 2010 was sponsored by 18 companies and organizations involved in most aspects of the global silver industry. Washington, D.C.-based Silver Institute publishes the report.

Further information about silver investing:


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American Silver Eagles
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5 Reasons Why Buying Silver Is The Best Thing You Can Do With Your Money by: Dennis Beaman

I have nothing against gold. But if you want to get the most for your dollars, you need to start a regular silver saving strategy NOW! Here are 5 reasons for beginning as soon as possible:

1. When foreign investors realize the the U.S. Government is bankrupt, you can expect to see double digit inflation and double digit interest rates. Plus our double digit unemployment is expected to continue according to economist, David Wiedemer, author "Aftershock". You can expect a major loss if you are still holding U.S. dollars or dollar-backed assets when this happens.

2. Silver supplies above ground worldwide are at their lowest levels in 700 years according to silver guru Ted Butler. The U.S. Mint has had to purchase silver on the open market to mint its silver American Eagle coins and, recently, had to suspend minting due to a shortage. As the demand continues to increase, so will the price, stimulating more demand. When frantic buying sets in, expect the prices to go vertical.

3. There is about 5 times as much gold above ground as silver. Consequently, in our current bull market for precious metals, silver can be expected to out perform gold. Many experts agree on this and are bracing for an all out buying panic in the near future. Israel Friedman, friend and mentor to silver expert Ted Butler had this to say: (Based upon the estimate of only 500 million ounces of silver available for use)..."the first 100 million ounces of visible silver will disappear at a price of $60 to $100 an ounce. The second 100 million ounces will disappear at $250 an ounce, and the third 100 million ounces will disappear between $300 and the price of gold. We will be left with 200 million ounces of silver which the owners will not be taking profits at any price."

4. If any of the major worldwide currencies collapse, a barter economy may develop. Anticipating gold going to $2000 to $3000 an ounce in such a scenario would make most gold coins unacceptable for everyday purchases. Silver, on the other hand, though, would be much better suited for such use. Even at $200 to $300 an ounce, bags of junk silver would be useful for such a purpose. Pre 1965 dimes, quarters, and half dollars could serve the purpose should the unthinkable happen. Dimes contain approximately 1/10 troy ounce of silver, quarters contain approximately 1/4 troy ounce of silver, and half dollars contain approximately 1/2 troy ounce of silver.

5. Gold has not been used as money nearly as often as silver in history. It is possible that the holders of U.S. debt may demand gold and/or silver for payment. If that happens, the amount of precious metals the U.S. would need would cause such a silver shortage that there would be no calculation of how high prices could go. China is reported to be accumulating gold and silver and shifting just a small percentage of the $682 billion of U.S. dollars into gold and silver would also have an gigantic effect on those markets.

These are just 5 reasons why many, many people knowledgeable in silver are predicting silver to outperform gold, platinum or palladium in the near future. Other reasons, which will be covered in later posts are the industrial demand for silver, the mining problems of silver, and the trading of ETF's or Exchange Traded Funds which affect the price of silver as well.

Why Are Silver Sales Soaring?
Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

The U.S. Mint just reported another record, but this time it wasn’t for gold. The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986.

While this is certainly bullish, there’s something potentially more potent developing in the background. Namely, how this matches up with U.S. silver production. Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.

Yikes.

This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

To be sure, mine production is not the only source of silver. In 2009, approximately 52.9 million ounces were recovered from various sources of scrap. Further, the U.S. imported a net of about 112.5 million ounces last year. (Dependence on foreign oil? How about dependence on foreign silver!) So it’s not like there’s a worry there won’t be enough silver to produce the Eagle you want next month.

Still, why so much buying? The silver price ended the quarter up 15.5% from its February 4 low – but it was basically flat for the quarter, up a measly 1.9%. We tend to see buyers clamoring for product when the price takes off, so the jump in demand wasn’t due to screaming headlines about soaring prices.

I have a theory.

For some time, silver has been known as the “poor man’s gold.” Meaning, silver demand tends to increase when gold gets too “expensive.” The gold price has stubbornly stayed above $1,000 for over six months now and spent much of that time above $1,100. You’d be lucky to pay less than $1,200 right now for a one-ounce coin (after premiums), an amount most workers can’t pluck out of their back pocket. But Joe Sixpack just might grab a “twelve-pack” of silver.

What would perhaps lend evidence to my theory is if gold sales were down in the face of these higher silver sales.

The U.S. Mint reported a decline in gold bullion sales of 20.8% this past quarter vs. the same quarter in 2009. Further, other world mints have seen sharp declines in gold bullion coin sales as well: the Austrian Mint reported an 80% drop in sales for the first two months of the year and the Royal British Mint a 50% decline in gold coin production for the first quarter.

What’s even more dramatic is the difference in the dollar value of the sales. Gold Eagle sales in the U.S. dropped $10,263,500 from a year earlier – but silver sales increased by $61,855,290. So, not only did silver sales make up the drop in gold sales, they exceeded them by $51,591,790.

Is the rush into “poor man’s gold” underway?

Why the answer to that question is significant is that a shift toward silver for this reason could signal we’re inching closer to the greater masses getting involved in the precious metals arena. And that – for those of us who’ve been invested for awhile now – would be music to the ears. Because when they start getting involved, the mania will be underway, and from that point forward, it’s game on.

I’m not saying the mania is starting, and I actually think we could see another sell-off before things take off for good. Gold could dip to $1,000 and maybe even $950, with silver going to the $14-$15 range. But as clues like these begin to build up, we’ll know we’re getting closer. (And any drop to those ranges would clearly be a major buying opportunity.)

Everyone talks about gold, myself included, but a meaningful portion of one’s precious metals portfolio should be devoted to silver. The market is tiny, making the price potentially explosive. Remember that in the ‘70s bull market gold advanced over 700%, but silver soared over 1,400%.

Don’t be a “poor man” by ignoring gold’s shiny cousin.

While buying silver is a must, it’s the silver stocks that will truly soar in a mania. And I’m convinced we recommend the two best silver producers in the world. Get their names and our suggested entry points with a risk free trial to Casey’s Gold & Resource Report... click here.