Silver.... The New Safehaven?

[MARKETWAVES]

I found this article recently. It's from Jan-05.

Just wanted to share it with the forum ...
I am not an Australian , (I'm a New Yorker) what's going on with this comany that this article speaks of. Anyway if anyone gets the ticker symbol for them please send it marketwaves here in the forum, so that I can check it out ...

Unfortunately, I dont have any Australian stock data ....



SILVER the new safe haven?
--------------------------------------------------------------------------------

SILVER is shaping up as the new safe haven for investors, hitting close to a 5 1/2-year high in spite of concerns that its main market is declining.

The white metal ended at $US5.97 an ounce on Friday, managing to match gold's climb in December.

Silver's appeal has managed to survive two big question marks hanging over it: first, will digital cameras set off an unrelenting decline in the use of film (which contains silver) and, two, will China's plans to export larger quantities of the metal undermine its market value?

Australia, the third largest producer of silver after Mexico and Peru, has the world's largest silver mine, BHP Billiton's Cannington in Queensland.

Cannington produced 38 million ounces of silver in 2002 and the mine is being expanded this year. Another producer is Anvil Mining which has the Dikulushi copper-silver mine in Congo. There are also several up and coming silver plays among the juniors. These include Macmin Silver, Malachite Resources, Mt Conqueror Minerals and Golden Cross Resources.

These companies have predominantly silver-gold exploration properties, whereas most of the metal's production comes as a by-product of base metals mining.
Macmin is drilling for silver at Texas, Queensland, where it now has a 14-million-ounce resource. Malachite is active in northern NSW and is drilling the old Boonoo Boonoo gold-silver field.

Golden Cross has reported high silver values at the old Sunny Corner mine near Lithgow, NSW, and Mt Conqueror has picked up the historic Ruby mine near Armidale, NSW, where high silver intersections were reported in 1969. In India, which is a substantial market for silver for use in jewellery and silver-plated products, the metal has now reached an all-time high through local traders.

Silver, while never having the glamour of gold, has appealed to some investors - most notably, Warren Buffet - because, unlike gold, it also has a range of industrial uses.

The price did take a hit last September when Eastman Kodak announced it would invest less in film photography, but the market no longer seems fazed by this development.

Another long-term concern is that China, as a result of greater zinc, lead and copper mining, also has more silver to release on the world market. China is expected to raise silver exports by 27 million ounces this year.

However, US metals analyst Eidetic Research notes that global consumption of silver has outpaced production for 14 straight years. It believes silver's price could accelerate faster than gold's in 2004.

The Australian

 

[bvbfan]

Re: Silver ,,, The New Safehaven ?

what's going on with this comany that this article speaks of .. Anyway if anyone gets the ticker sympbol for them please send it marketwaves here in the forum , so that i can check it out ...

Unfortunately , I dont have any Australian stock data ....

Anvil Mining - AVM, also listed in Canada under AVM, listed in Germany under FBJ
Macmin - MMN, also listed in Germany I believe
Malachite - MAR, also listed in Germany I believe
Golden Cross - GCR, also listed in Germany I believe under GCL
Mt Conqueror - MCO

 

[MARKETWAVES]

Re: Silver ,,, The New Safehaven ?

SOME FACTS ABOUT THE SILVER MARKET

Four billionaires that are heavily involved in the silver market, George Soros, Bill Gates, Warren Buffett and Larry Tisch.

The Dow/Silver ratio bottomed in 1980 at 18 to 1, which means that it took 18 ounces of silver to buy one share of the Dow. At the peak recently in silver it took an unbelievable 2,526 ounces of silver to buy one share of the Dow !!! The Dow/Silver ratio has clearly turned down in favor of silver, but still stands at an incredible 1,835 to 1. The average ratio over 100+ years at the bottom was around 80 to 1, so for silver investors this indicates tremendous upside.

Another ratio is the Gold/Silver ratio. It is currently at 73 to 1, meaning it takes 73 ounces of silver to purchase an ounce of gold. This ratio bottomed in 1980 at 16 to 1. Richard Russell has stated publicly many times that he believes the price of gold is headed to $3,000/ounce. You can do the math, but one subscriber sent an email to Mr. Russell, which was published indicating that gold at $3,000 and a Gold/Silver ratio of 16 to 1 would put silver at $187.50/ounce. No wonder Richard Russell has recently become "bullish on silver" saying, "silver may be the cheapest thing around." The Gold/Silver ratio historically has been at a ratio for many thousands of years of around 12 to 15 to one.

The United States had literally billions of ounces of silver stockpiled after World War II. As the Chairman and CEO of Pan American Silver wrote the other day (which was published) the massive "strategic stockpile" which the United States possessed after World War II is now completely gone and stands at "ZERO." Comex inventories, which stood at about 330 million ounces in 1980, are now down to 106 million of which over 60 million ounces are already spoken for by investors. Above ground stockpiles, which were around 2.5 to 3 billion, ounces in 1980 have been reduced according to all documented sources to only 500 million ounces of above ground stockpiles.

We have been running documented deficits for over 14 years and this is why these stockpiles have been disappearing and are near crisis levels. This silver is consumed and lost forever. Just one example of this is when your computer keyboard ends up in the dump eventually, the 12 cents or so of silver is not economically feasible to retrieve, so it is lost forever and will never be recovered. There are many other examples, which I will not go into, you get the idea.

Another ratio is the Housing/Silver ratio, which over the last 100+ years peaks at around 20,000 and bottoms at an average of 5,000 (under 2,000 in 1980). What that means is that at the peaks it typically takes 20,000 ounces to purchase a "median" priced home. Today the average home purchased in silver stands at an amazing level of around 50,000, meaning it takes around 50,000 ounces of silver to purchase the "median" priced home !!!

The lag times on new mining for silver is around 5 years so it won't matter if the price spikes significantly because it takes an enormous amount of time to get new mining projects under way. Any increase of silver mining on existing projects would negligible and not worth discussing in my opinion.

A final point is silver just broke out above a twenty year sloping downtrend line from the high of 1982 which touched the "Buffett peak" of 1998 and continued down to the highs of 2002 and early 2003. This is a major breakout for silver and one that many have been waiting to see before getting long silver.

Those are the facts and those are the types of things I have always looked at as a professional investor/trader in order to make profit.

It is quite obvious to me that those ratios are way out of whack and will cycle back down the other way (where they have typically bottomed) and I will be moving the portion of my portfolio allocated to silver investing out of silver at that time and into some other types of investments which will be unloved (out of favor) and which the ratios will favor at that time (such as real estate and stocks).

In summary, the big picture on silver exposes that the days of capping the price of silver at $5.00 may soon be over. More importantly digital is not killing conventional photography, just the opposite, silver usage in conventional photography continues to expand as does the worldwide market for conventional photography. Finally, I believe silver is way undervalued and is in the beginning stages of a massive bull market!

 

[RichKid]

Re: Silver ,,, The New Safehaven ?

Anvil Mining - AVM, also listed in Canada under AVM, listed in Germany under FBJ
Macmin - MMN, also listed in Germany I believe
Malachite - MAR, also listed in Germany I believe
Golden Cross - GCR, also listed in Germany I believe under GCL
Mt Conqueror - MCO

Thanks for the list, all those stocks are in solid downtrends, some have slowed and have gone sideways. Does this mean that the silver market is down? Just a guess without even looking at the silver chart. It could well be that all those co's have exposure to other metals that have gone down too or that they just go hit in the last market downturn. One or two possibles there about to break the downtrend if silver comes right (assuming it is leveraged to silver price).

 

[bvbfan]

Re: Silver ,,, The New Safehaven ?

MMN pure silver
MAR is an explorer, was silver focussed but some annoucements about gold at Tooloom
AVM sells copper concentrate in Congo

MMN is the only one I've held, but I like them and AVM at the moment

don't know much on the others

EQN also something I need to look into but the shares are non-chess so selling is an issue