In Jim Cook's Archive

By James Cook

A client who happens to have a $32 million profit in silver sent me an interesting set of facts.  He titled his study, “Which Would You Pay $1,000 An Ounce For?”  He points out that silver inventory held above ground totals 1 billion 400 million ounces.  Annual industrial use of silver is 900 million ounces.    Meanwhile, gold inventory above ground is 3 billion ounces while industrial use is only 20 million ounces.  Forty-five times more silver is used each year than gold.

That means the years of inventory remaining are amazingly different.  A year and a half supply of silver exists while one-hundred and fifty years of gold supply remains.  Here’s another shocker. In 2010, silver usage, year over year, was up 18% while gold was down 40%.

Sometimes it’s hard to fathom all the bullish aspects credited to silver.  You have a rare metal used in so many important industrial applications as to be termed miraculous.  The world supply of this cherished metal has been consumed.  The billions of ounces mined over 2,000 years are gone forever.  The disappearance of this hoard should have sent the price to much higher levels.  It didn’t.  This caused the world’s foremost silver expert Theodore Butler to track down the reason.  The oversized short position he discovered in silver added an even more bullish element.

Now we are apparently on the edge of a serious silver shortage at the same time investment demand for silver has reached record levels. There’s more.  Most silver is extracted as a byproduct of base metal mining.  Primary mining is growing but this takes time and money.  Increases in supply will be slow in coming.  In addition, silver is used in tiny amounts in its multitude of applications.  This makes much of its usage insensitive to price.  Industrial users must have it and this demand will not diminish as prices rise.  Furthermore, the low price for so many years has eliminated research on substitutes for silver.

Silver was money for thousands of years because it was a store of value, a unit of account and a medium of exchange that people wanted because of its beauty, imperviousness to the elements and divisibility.  Today there isn’t enough silver left to act as money in even the smallest country.

Finally, the seemingly endless series of government created financial crises beg for ownership of valuable tangible assets.  Silver has an historical record of protecting against inflation and deflation.  A case can be made that silver is the ultimate asset for profit and protection.

Here’s what you should buy now:  100-ounce bars of .999 pure silver.  They can be easily stacked in a corner or in a safe.  They have a bright shiny finish and are always liquid.  We also have 10-ounce bars.  They are small, portable and highly reflective.  These beautiful 10-ounce bars are another great way to own silver.  U.S. Silver Eagles are easily the most popular silver coin in the world.  Each is one-ounce of pure silver, and they have been struck

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