Four TOP Reasons Silver Prices Are Set to Soar
By John Manfreda
Editor's Note: On January 23rd, we started painting a picture for you regarding the current troubled gold and silver mining industry and the opportunity it presents to you. That first alert in a five-part series was painted with a broad brushstroke.
With the remaining alerts in this series, we provide you the finer details of supply and demand for both gold and silver.
Given the following...
1. Strong and strengthening demand
2. Severely stressed supply
3. Unprecedented monetary expansion
4. Artificially low interest rates
5. Prices for gold and silver at or below all-in costs of production
... you don't need to wait for all five alerts to recognize now is a prudent time to acquire both gold and silver for wealth insurance and profit.
-- Rich Checkan
Does the price of silver look attractive to you? If so, you are not alone. The increasing demand for silver in industrial and other uses presents a major opportunity to buy now before prices begin to reflect that demand.
Yet, many investors remain sidelined. They see demand pressure building, but would first like to see some upward price pressure as confirmation before purchasing.
So, before I get to the four top reasons to expect higher silver prices, let me address a couple factors keeping prices in check first.
Why is the current price of silver low in the face of its use in solar energy, healthcare, jewelry and almost every industrial and manufacturing process or component, from computers to fabrics?
A careful analysis reveals two potential reasons...
First, some of the demand, particularly in technology and energy, is still on the drawing board. For example, a massive Indian solar plant is just starting construction in 2014, with silver as an integral part of its functionality.
Second, in addition to a growing number of industrial uses, silver is also growing in investor demand. The affinity for silver is building. The case for silver is strong. But, investors remain focused on the stock market – down thus far this year, but coming off one of its best annual performances in some time. Although many are beginning to suggest the stock market is overvalued and positioned to implode, it is clear greed has replaced fear in the stock market...at least for now.
What demand factors are in place to push silver prices higher?
Four Very Strong Indicators Favoring a Rise in the Silver Price:
1. There is growing industrial demand for silver in the most important economic sectors like energy, healthcare and technology.
2. Solar energy expansion is increasing in the world, especially in India.
3. Import duties imposed on gold to India and other international barriers to gold acquisition make silver an accessible and viable alternative for gold investors, hedge funds and banking institutions.
4. The comparative price of gold to silver makes silver the new 'go-to' alternative for jewelers, designers and investors, with Silver Eagles setting a sales record in 2013 of 42.4 million ounces.
Now, let's take a closer look at the many and varied uses of silver...the "Poor Man's Gold."
Silver in Industrial Use: It's Not Just Spoons
When it comes to industrial use, silver is a leading precious metal essential to the manufacturing of the world's most important sectors. In 2014, silver industrial demand is estimated at 511 million ounces or a 6% rise in use; and this excludes jewelry.
Healthcare- Silver is an essential component of silver sulfadiazine, used to reduce infection throughout hospitals in the United States. Silver aids in sterilization in surgical threads, bandages, catheters and hospital duct work.
Under federal and state legislation, hospitals are now penalized financially because of re-admissions due to infection promoted by an in-hospital procedure. Hospitals have incentive to make sure infections do not occur, forcing the demand for infection-fighting silver to rise.
Electrical Conductor- Silver is one of the top electrical conductors and does not corrode, making it especially useful in electrical and motor control switches.
Chemical Catalyst- Silver improves efficiency of chemical reactions important to the manufacture or production of fabric, ethylene gas, polyester textiles, small appliances, VCRs, recording tapes, and most computer keyboards. In fact, circuit boards use silver to connect the electronic circuitry that control aircrafts, automobiles, security systems, mobile phones telecommunications and T.V. networks.
Silver Electroplating- Silver has always been an integral part of domestic products like Christmas tree ornaments and cutlery, but is now used in heavy-duty electrical equipment.
All jet engine manufacturing includes silver bearings for lubrication required by the U.S. Federal Aviation Administration (FAA).
While you may think your mobile phone is really your camera, millions of ounces of silver are used in silver-based photography.
Silver Coatings- Another use for silver is coating on windshields and windows, which decreases energy use. The U.S. Department of Energy's 'Energy Star' program gives tax credits and other incentives when home or industrial energy is conserved. The program has resulted in a 50% increase in silver coated glass, creating a 5 million ounce demand in the past six years.
Water Purification- Silver is an important factor in the public health of emerging nations and in water filtering in general. Water shortages and impurities causing sickness are increasingly becoming two of the top environmental problems worldwide. Silver is used to prevent buildup of bacteria and algae in filters.
The catalytic action of silver and oxygen results in a sanitizer eliminating the need for corrosives like chlorine. This has wide-ranging implications for Africa and other areas where pure water is the number one public health issue.
Four Proven Ways to Own Silver
• Silver coins, bars and rounds.
• 90% silver, sometimes called "junk silver" $100 face value bags.
• Perth Mint Certificates – Safe, cost-effective silver ownership guaranteed by the government of Western Australia, and fully insured at current market value at no cost to you.
• ASI Precious Metals Direct - Our online service for purchasing silver in individual, joint, corporate, trust, IRA, UTA accounts and accumulation plans.
ASI also offers options for home delivery and secure storage with our affiliates here and abroad.
If you agree that you cannot pass up silver at today's prices in the face of current and near future demand, please call 1-877-340-0790 to discuss our easy access programs for silver.
Silver, Solar Energy and the Indian Expansion
Silver paste is used in 90% of solar cells, according to the Photovoltaic Technology Division of the U.S. Department of Energy (DOE). When sunlight strikes a silicon cell, it generates electrons that are collected by the silver conductors and converted into electric current. Silver is also an excellent reflector of solar or thermal energy making solar power more effective.
Solar energy is being tested and implemented all over the world, but India is a special case.
India is slated to construct what may be the largest solar power plant in the world in the Northern State of Rajastan, with a 4,000 Megawatt capacity. Their demand for silver is estimated at 20 million ounces per year. The estimated life of the plant is 25 years.
China and Japan are also expected to invest heavily in solar energy as part of their infrastructure, heaping more silver demand on top of the already certain demand in India. To understand the magnitude of India's undertaking and its impact on silver pricing, the ultimate goal by 2020 is to upgrade solar energy capacity from 2.5 GW (gigawatts) to 20 GW.
But, industrial uses aren't the only factors affecting silver demand...
Barriers to Gold Make Silver More Attractive
Fifteen million metric tons of silver have entered Gujarat, India, a prime import state for silver. At the same time, gold imports face severe barriers as India protects its balance of trade. This does not mean that gold demand is on the decline. My article "Gold Outlook 2014—'Mining' Profits from the Demand For Gold," analyzes the pent-up demand for gold that portends a rise in gold prices as well.
Presently, this demand for gold must remain unfulfilled because of taxes, tariffs and import barriers, leaving investors with silver as their precious metal of choice, until gold becomes more accessible.
Jewelers, Craftsman and Coin Buyers are Seeking Silver
With all the excitement over silver in technology, energy and healthcare, do not forget the importance of silver to the jewelry industry and the coin buyer.
Silver remains the primary precious metal for decorative items, cutlery, jewelry, and religious ceremonial items for nearly every major world religion.
Sterling Silver, 92.5% silver and 7.5% copper, has been the prevailing alloy for silverware since the 14th century. A design inroad for gold plated or gold toned cutlery never caught on. We still buy 'silverware.'
So, what does this all mean for you?
The case for the rising and enduring demand for silver is compelling. Now, we invite you to take advantage of the low price point, and Keep What's Yours through an allocation of silver to diversify your portfolio.
ASI is aware that you may be held back by uncertainty as to how much you should allocate, the form of silver you should own, and its place of storage. We can help.
Don't delay. Call 1-877-340-0790 or email your ASI Preferred Client Relations representative. We will listen to your goals, explain your alternatives, and guide you toward a decision that protects your portfolio across assets, across countries, and across currencies.
My next article on Silver Supply will be published on Tuesday, March 18th. In case you missed them, here are the links to the first three articles in this series:
Part I - Inside the Troubled Mining Industry
Part II - Gold Outlook 2014 - 'Mining' Profits from the Demand for Gold
Bloomberg Video Report - What's happening to all the gold?
Part III - The Supply Crisis in Gold. Where Has All the Bullion Gone?