patience required; only a matter of time

Silver Price: Attention All Crybabies, Get the Checkbook Out!

Posted by Dominique de Kevelioc de Bailleul on Dec 29, 2011

The tears stream from the faces of the silver bugs. Boo-hoo! Where’s my $100 silver?

Toughen up! Better yet, go buy a 10-year Treasury, then. I hear Greek 1-year paper is even better, paying out 150 percent. What a deal!

Look! The Fed wants you OUT of precious metals. Understand?

But before you hit that sell button, there are some pretty smart fellas who’ve done a lot of legwork and research on the subject of silver and see $100 as chump change when the dust settles from these manipulating bankers. Keep the faith.

Physical buyers will break the cartel, and not by Max Keiser’s gang of JP Morgan haters getting together to clean out the COMEX, though Keiser’s laudable efforts will aid the cause of protecting investors from the Fed’s insanity.

No sir. It will be China who will drive the silver price higher for all silver bugs. So relax, be patient and enjoy.

One man who provides the silvery details to the China story, Stephen Leeb Ph. D, economist, NY Times best-selling author, and promoter of his latest book, Red Alert, is back to remind silver bugs of the bright future for the silver price in his latest interview on GoldSeek Radio (GRS). (Previous BER articles about Leeb and silver, click here and here.)

“Silver is an utterly critical metal when it comes to renewable energies, solar panels; there’s no other game in town,” Leeb told GSR. “ . . . Silver-based solar is going to play a major part in our energy future . . . China used to export silver, now they’re importing, and they are very big importers. And they [China] went on to say that they’re not going export any silver what so ever.” Though China recently relaxed its strict export quota of rare earths, silver was not included in the increased export quota. And for good reason, according to Leeb.

Who is Stephen Leeb. He’s not the marquee name in Google’s search results. He is not as well-known as Jim Rogers; he’s not Marc Faber; and he’s not Peter Schiff.

Leeb is, however, a prolific author and researcher who’s looked at China’s multi-decade economic plans—plans that require a monstrous amount of critical industrial metals, including silver, to fulfill a national, strategic goal of reducing fossil fuels consumption within the People’s Republic. Leeb predicted the oil price would top $100 when it traded at $27. Now, he’s more alarmed at what he has discovered about China’s future consumption needs for the new energy commodity, silver. (See Robert Hirsch interview (audio) on the subject of Peak Oil on Financial Sense Newshour of Dec. 15.)

Leeb’s emphasis on detailed points about silver and its importance to renewable energy projects in China is ahead of the curve from most precious metals advocates—though, Rogers, in a broader sense, has already taken Leeb’s thesis regarding China voracious needs to include almost any commodity. And according to Leeb (echoed by Jim Rogers), the supply and demand characteristics for silver in the renewable energy sector must include a much, much higher price.

“I do believe [$200] is not an unreasonable target” for silver, Leeb told GoldSeek Radio host Chris Waltzek.

Leeb believes the silver’s industrial usage for renewable energy will greatly outweigh its usefulness as protection against central banker monetary profligacy. The need for silver will become a global security issue at some point, especially in the US, but the America must “wake up” to, first, address the issue of Peak Oil and publicly recognize the vital commodity for the next decade or two will be silver.

“But the problem is,” Leeb continued, “once it reaches one hundred [dollars], people start getting very, very nervous. It’s a very, big broad round number and they [bankers and/or government] start taking action; they might consider outlawing the ownership of silver as a monetary metal.”

The future must include breaking from fossil fuels as a source of energy; there’s just not enough cheap oil to go around, and China doesn’t want to take on the U.S. military to get the amount of oil it needs to increase its own GDP, according to Leeb in an earlier interview on Financial Sense Newshour of Nov. 10.

Wind and solar power are the future, and China “gets it,” he said.

“Along with rare earths, which are obviously so vital, so critical, you also have copper, which is on no one’s radar screen as a potentially scarce metal,” Leeb said in his most recent GSR interview. “And you have silver, which is on some people’s radar screen, but they don’t know if it’s like gold, a precious metal, or whether it’s an industrial metal. Well, it’s both.

“But I do believe that its primary purpose over the next five to 10 years is going to be as an industrial metal; it’s going to be critical to defining our energy future. And China really does get this. They’ve written about peak oil and they’ve written about peak coal. So they’re preparing.”

Shedding some light on the probably plans for China’s $3.2 trillion reserve, Leeb expects a lot of that money as well as future reserves will be spent on stockpiling strategic metals instead of using the cash to build a powerful war machine to match Russia to collectively compete directly against the U.S. and its allies during the remainder of the decade—speculatively speaking, a sort of a Sun Tzu tactic inspired by the book, The Art of War (English translation & Wiki synopsis), which has been reported by several sources as required reading for all Beijing senior officials.

“Their major expenditures . . . they have cited seven industries, of which, the most important, are energy based industries, which they plan to spend, I would guess, nearly $5 trillion to the end of the decade. That’s the equivalent to two world wars . . . and they’re going to spend that over the next eight or nine years.”

How much silver will be needed during this $5 trillion outlay in renewable energy projects in China? “Mind-boggling” amounts, according to Leeb. And as far as price, Leeb steps up his $200 per ounce easy layup prediction to venture into much bigger price levels as possibilities for the white metal.

“There’s no way of saying how high it [silver] will go; it’s dramatically high[er],” according to Leeb, when taking into account, too, central banks opting to inflate out of a debt bubble gone popped.

At $27 silver, the price is “ridiculous,” he said, and added, “I’m a believer of $10,000 gold. . . but I would not be surprised, if we avoid a Depression between now and the end of this decade, I would not be surprised if gold doesn’t touch $10,000.”

Given Leeb’s prediction of a gold/silver ratio touching at least 7.5, that calculates to a silver price north of $1,000 by the end of the decade, making a $200 prediction seem easily attainable, indeed, under a Leeb scenario.

http://www.beaconequity.com/silver-price-attention-all-crybabies-get-the-checkbook-out-2011-12-29/