silver mania about to start?, page-5

Silver has a long way to run and is being consumed by industrial applications unlike gold.

Much of the price growth in Silver seems to be as a result from moves to use it as an investment/hedge to escape inflation and rampant money printing by indebted countries.

I think what we're seeing is Silver moving from predominantly an industrial metal to predominantly an investment commodity. Sure some applications will continue to consume significant silver, but as the prices rocket other materials become competitive for the same applications, or the costs become prohibitive and second line materials will start to be substituted on price grounds.

I'd really like to see some updated versions of the Kitco charts, as 2008/2009 may be unrepresentative due to the effects of the GFC

http://www.kitco.com/charts/CPM_silver.html

BUT industrial demand from photography has, and will continue to collapse, and jewellery demand may fluctuate on cost grounds. I'm pretty sure supply (for industry) will comfortably outstrip demand soon.

Meanwhile the price boom has made many deposits economic to mine, the above charts show that production had nearly caught up with demand in 2009 (POS around $15). If we are arriving at a production boom over the next few years as miners scramble to cash in on current POS, then we approach a situation where the POS decouples from the industrial demand and becomes entirely dependant on investor sentiment, giving the potential for more extreme volatility if not a price fall back (in several years time).

This enhances my worries that governments will stop at nothing to remain solvent and paper over cracks, don't put it past the US to facilitate further POS manipulation via banks or whomever or enact draconian gold and silver taxation laws.

Essentially, it seems likely that silver will increase in price for a good while, but some sharp corrections on the way, or a bubble then collapse are both eminently possible.

All that said it's looking very bullish short-medium term and for the time being I'll be staying on the silver bandwagon...