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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Commentary Of The Month
December 14, 2010
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(Israel Friedman is a friend and mentor to Theodore Butler. He has followed silver for many decades. He has written articles for us in the past. Investment Rarities does not necessarily endorse these views.)

Lately I’ve had a new bullish factor for silver swimming in my head. With the nice gains being enjoyed by silver investors, new attention is being placed upon silver. This tends to feed on itself due to human nature. I think the new attention on silver will even spill over to the non-investors in the form of increased demand for silver jewelry. With silver going up in price, but still very cheap to gold, platinum and diamonds, more people will rush to buy silver jewelry. Remember, people buy jewelry because they want to wear something valuable and show off. The price of silver going up will give more people something valuable to wear for others to admire.

If people try to buy more silver jewelry, then the jewelry stores must carry more silver jewelry in inventory. If you don’t have enough inventory, you can’t make the sale. Every businessman knows this. There are maybe 300,000 jewelry stores in the world. Right now the inventory mix for a jewelry store is 60% gold, 30% diamonds, watches and other stones, and maybe only 10% silver. With the great attention about to be placed upon silver because of the price moves, as regular people look to buy silver jewelry, the world’s jewelry stores will need to increase their silver inventories, I would guess to 20% of the inventory mix from 10%. That will mean a doubling of silver jewelry inventory held by the world’s jewelry stores.

My guess is that it would be not hard for the average jewelry store to increase silver jewelry inventory by 500 ounces. With 300,000 jewelry stores, that comes to a total of 150 million ounces in new silver demand. Where will these 150 million ounces come from? It must come from the same supply available to all the other users and investors in silver.  Surely the price will react strongly to this new jewelry inventory demand and that is why this thought is swimming in my head. Maybe it will start to swim in your head too.

To those who might argue that such a new demand like this could not emerge, think about Silver Eagles from the US Mint, the most beautiful silver coin in the world. A couple of years ago, I described how these would come into such great demand that the Mint would not be able to keep up with demand and may have to end the program. Then the Mint produced 800,000 Silver Eagles per month. Today they produce more than 3 million ounces per month or almost 4 times as much as when I wrote about them. And everyone knows they could sell more Eagles if they could make more. Don’t think for a moment that the world’s jewelry stores won’t increase their silver inventories.

I must tell you that out of respect to Mr. Butler, the real numbers I see for total silver jewelry store inventory demand is much greater than 150 million ounces. Because he is concerned that people won’t take my thoughts seriously if I used the real numbers I have in mind, I agreed to use 150 million ounces. He says that’s plenty bullish as it is.

From my family to yours, I wish everyone special holiday greetings and may good fortune continue to smile on silver investors.

By Israel Friedman