This article was originally written on July 2, 2003 and is part of Jim’s historical archives. We are republishing it due to the extreme relevance that it has to today for investors in precious metals, especially those invested in silver. It has been reported that this article was also circulated on the Chicago Board of Exchange shortly after its release when silver was originally trading at $4.60 an ounce.
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At some point in the near future, these above ground stockpiles will fall to critical levels and the price is going to explode like a NASA space launch. It will explode for three reasons. The main one is that it will be in short supply and in the short run there are no large stockpiles to supply a sudden spike in demand triggered by a price rise. Inventories of silver in the form of jewelry, silverware, and religious objects are not the same as silver bullion. They are held for personal reasons and not sold and traded in the same way as the metal. As such they cannot be mobilized to meet demand in the same way that bullion bars held in warehouses can if market conditions change. The price will also explode due to the thin nature of the markets. The actual physical market for silver and silver equities is extremely small. There are less then 10 pure silver mining stocks and the physical market is less then $4 billion. This compares to the trillions that are traded in the currency markets and the hundreds of billions that trade each day in the stock and bond markets. The final catalyst for an explosive price rise is the large perpetual short position that exists on the COMEX, a short position that is 4-6 times the actual amount of silver that could be delivered if investors insisted on physical delivery. Currently, it is almost 10 times the amount of available silver for delivery… [weiterlesen] MUST READ!!