Hopefully CCU challenges that 60 cent mark today.Last night DOW...

Hopefully CCU challenges that 60 cent mark today.

Last night DOW Jones currency index down below a resistance, looks like new down trend started which is good for gold and sliver.

Silver price moving along nicely. So many contradictory articles out there stating as to why? I think China is the reason there is a scarcity. You had investment funds saying silver production in 2011 should be close to demand. I find this hard to believe. I think there is a legitimate scarcity. Look at the following quotes from China,

"Shipments may decline from about 3,500 metric tons in 2009, said Feng Juncong, chief analyst at the state-owned Antaike, without providing a specific forecast. Customs data show exports plunged almost 60 percent to 970 tons in the first eight months (2010). Cancellation of an export rebate in 2008 is also hurting shipments, she said".

"China may sharply reduce its silver exports this year (2010) following the scrapping of the rebate and as domestic demand picked up amid expectations for higher inflation, Feng said. This years 5,100-ton quota is unlikely to be fully used, she said".

China was expected to export 5100 tons this year. By the 8th month of the year they only did 970 tons. Let's assume a 3000 ton short-fall this year. That's more than 10 % of annual global supply that has not been met. No wonder people have to wait to get physical silver delivered, there is a shortage of some sort. Those investment fund reports for 2011 seem to be a bit shonky.

Something else that is relevant,

"About 60 percent of Chinas silver mined output is in the form of by-product of base metals, according to Antaike estimates. An expected drop in lead and zinc concentrate supplies will affect domestic smelter production, weighing on Chinas silver output growth, she added".

Most of the world's silver production is as a by-product. Therefore increased production reaction to a silver shortfall is not easy. Industrial demand for the metal should increase in 2011 as well as investment demand. Looks like silver can perform throughout 2011 which is so good for CCU, absolute perfect timing. QE2 for all of 2011 bodes good for silver/gold.