oneofsix welcome to Great Panther Silver, Ltd. (DB:G3U Sir, good to see you here -
There are some simple facts about silver production we should now....
1. 70% of silver mined is not primary silver mining. It is a mining by- product along with copper, lead and zinc. Therefore most producers of silver don't focus on it or devote large sums of capital to pursuing it.
2. It was so cheap for so long that mines closed and the cost of reining it alone made it unprofitable.
3. Just like any mining, it takes years, hundreds of millions of dollars and expertise to open a significant new primary silver mine.
4. Silver mining production can grow at 3-4% per year maximum.
5. Recycling of silver is cost prohibitive but legally mandated in more places is causing more recycling.
Bottom line new silver production can't even meet the growth in industrial demand, much less the exponential increases in investment demand.
Silver is used in literally hundreds of devices you use every day so the demand for it grows along with world economic growth. That can be a negative such as in the crash of 2008 and was the reason gold outperformed silver that year. However it also provides a longer-term secular driver of demand with very limited supply. A supply demand imbalance that can lead to rapidly rising prices for silver investors and that has already begun.
Silver is used in almost every mobile device, smart phones, tablet, notebook and personal computers. It is used in almost every electrical switch, microwave oven, refrigerator, car and every computer keyboard. It has uses in solar power, water purification, wound care, health care, preventing bacteria growth, mirrors, film, jewelry, missiles and coins. Now just think about how many hundreds of millions of people in the next three to five years around the world that are becoming more middle class and will demand more of these products.
Now let's look at the monetary policy situation in the US that is leading to the rise in precious metals and especially in silver:
1. The US dollar has lost 20% of its purchasing power just since 2000 and 30% since 1990. 70% of the decline in the dollar has occurred since 1978 when the mandate of the Fed was changed to a dual mandate that included full employment. Since the Federal Reserve was created in 1913, the US dollar has lost 95% of its purchasing power.
2. Right now is the first time in the history of man that all major world currencies are fiat currencies backed by nothing.
3. The total monetary supply and debt is now ten times as large as it was as recently as 1980.
4. The Federal Reserve has been more irresponsible in the last twenty eight years than in its previous seventy-two years combined.
5. The Federal Reserve after QE2 will have increased the monetary supply by 475%. When confidence returns and the velocity of money normalize, inflation will be everywhere.
Bottom line: The only way to protect your wealth from the debasement of the US dollar and the debt crisis to come is to allocate a majority or more of your assets to precious metals. They are the only asset classes that will protect and grow your purchasing power long-term in this scenario.
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