There are 3 Demands of Silver that will drive silver to untold heights over the next decade. These demands will rise dramatically just as it becomes apparent that the supply of silver becomes scare. The confluence of these two forces will destroy the Quadrillion Dollar Empire of Lies and the current debt/war paradigm. I set out to show that these three demands occur in various stages and that the final stage is being set for the most dramatic rise in price we have ever seen.
The first demand is Industrial Demand. First and foremost, silver is an industrial metal. Silver is the indispensable metal. Next to oil, silver is the most widely used commodity ever and has more than 10,000 uses. As technology progresses and expands, silvers usefulness will explode even further. Its unique characteristics are unlike any other commodity in the world.
- Most Reflective of all Metals
- Greatest conductor of both Heat and Electricity
- Strongly Resists Corrosion and Oxidation
- Second most Malleable and Ductile Metal (Next to Gold)
- Recently Discovered to be a Very Effective Anti-Microbial/Bacterial
Silver is generally used in small quantities, and its unique characteristics make it irreplaceable. This makes its price inelastic. All commodities have a self-correcting pricing mechanism — except silver. If a commodity’s price rises too high, demand drops off as people seek substitutes or supply rises to meet the demand, thus lowering the price. This mechanism does not exist with silver. Silver is typically used in very small quantities in high-tech components, and there is NO SUBSTITUTE for it, so the manufacturer or customer will have to absorb any price increase. Silver is now starting to be used in clothing to reduce odors caused by bacteria. What is remarkable about this is that, by weight, silver represents only 1/40,000th of total inputs. When used in such tiny quantities, silver’s price is mostly irrelevant.
This Industrial Demand has been the primary demand of silver for the past few decades. The Silver Users try to keep the real physical price of silver low, so as to make more profits on their goods. When coupled with the draw down of billions of ounces of silver stockpiles over the years, this has been a relatively easy task. While it is obvious this demand of silver is physical but one demand where the participants want a low silver price to make more money. This demand is growing and inelastic to price which provides a strong base for the next demand to put some fuel on the fire.
The next and growing demand of silver is Investment Demand. This demand has been almost dead for the past generation of investors. This demand is a Jekyll and Hyde component to it. It has a paper trader/traitor component that simply wants a horse to bet on. These investors are primarily Anglo American Institutional Investors and tend to want the price of silver lower, but what they really want and get is, big swings in the market. They trade 45 to 1 paper ounces of silver to the REAL physical market and only take 3% of the REAL physical off of the market that is traded.
This Institutional Investment Demand is still in it’s early stages and seems content in the paper chase of the trader/traitor market. This Institutional Investment Demand is set to not only grow in acceptance, but in world wide audience and finally in physical metal. Institutions seem to follow the leader. When it becomes apparent that silver is up 20% a year while the stock market is flat, it won’t take long for these sharks to smell the blood in the water and want more exposure to silver and other commodities. At first they will play the paper market but soon will want the real thing.
The Foreign Institutional Investment Demand is quite different than our Institutional Investment Demand. They don’t seem interested in playing the paper chase and want real Physical Silver. They seem intent on dumping dollars for real assets. The opening of the Hong Kong Mercantile Exchange is a good example of this. During the last bull run of silver in the 80’s, only the Western nations really participated in the market. Since then there is 10 to 20 times more capital in the world. Twice as many people living and most importantly, now all of the world can participate in this bull run. China, India, Russia are leading the charge to buy more and more precious metals. There are a lot of potentially useless dollars floating around in the world and they want REAL tangible assets in return. This type of Foreign Institutional Investment Demand wants higher prices and has the potential backing for the final demand that will catapult silver into the stratosphere.
The final Investment Demand is Private Investors. These Investors tend to want physical and only dabble in the paper trader/traitor market. These investors buy and hold and they differentiate themselves from the other demands in that they specifically want a higher price for their investment. They plan on dumping their toxic paper assets and get REAL physical assets outside the paper chase. These investors are like ants, constantly taking food off of the table and storing it for a rainy day. This demand is joining the Industrial Demand in taking Physical Metal off of the market, but they want higher prices not lower like the Industrial Users want.
The final and completely absent demand is Monetary Demand. Silver has absolutely no Monetary Demand in the world. It is used in things and invested in for protection against inflation, but nowhere in the world can you just buy things with it. I believe that with the mathematical inevitable collapse of world wide currencies this new Monetary Demand will push silver through sky. Some countries or local communities will monetize silver and as history has shown, money goes where it is most appreciated. All of humanity will be crying out for REAL money as they try to recover from the collapse of the fiat, something for nothing dream. Monetary Demand is insatiable, as one can never have too much money.
We have seen that Industrial Demand has been the driving force behind the silver market for decades. This demand wanted cheap physical silver so as to make more money on their finished goods. This combination of cheap prices and more uses has pushed silver inventories to the brink which attracts the next demand. Institutional Investment is just now starting to catch on given a decade of silver put performing almost every paper market. The dominant Investment Demand has primarily wanted a lower silver price so as not to take away too much power from their paper money illusion, but they really want another paper asset to bet on. The final two Investment Demands are just now starting to take over the market, they want higher silver prices and primarily want physical silver. These Investors are surrounding the Elite and will eventually take control of the entire silver market. Finally, we have Monetary Demand that wants only physical and wants higher purchasing power. The Foreign Investors and the Individual Investors will be more than happy to take their physical Investor Demand and spend it where ever the Monetary Demand is appreciated the most. This will not happen until the mathematically inevitable collapse of the world’s fiat currencies. Until then it has been a great investment and based off of what we have seen here, the final demand will be much higher silver prices.