So you want to know to how you can tell silver is doing well? When all the mainstream analysts and commentators, who have managed to be a 100% wrong about silver so far, start to give it the "gold analysis" treatment. The incredible and spectacular increase in silver pricing in the last year has caught many by surprise, and it is second nature to be suspicious about this run and to suspect an "asset bubble" in the making. However, if you don't know the fundamentals driving this very strong performance you might be relying on misperceptions to drive your silver decisions and positioning. The plain facts are most analysts have completely failed to understand silver and how, along with gold, this precious metal is signaling a systemic monetary shift.
The mainstream's failure to "get it" about silver is very odd indeed. It's almost as if they have a belief structure that won't let anything as trivial as facts get in the way of their reasoning and conclusions. But instead of name calling, let's just take a look at some of their predictions and analysis for silver for this year.
Bloomberg reported the "expert opinion" for peak pricing for silver in 2011 would be $29.50, with a predicted 25% fall in 2012, leading to a floor of $20 an ounce in 2013. But here is the stunner: The mainstream consensus was silver would be trading at an average of $18.65 for this year. Wow, that's over a 100% margin of error! And when you consider the 21% annual silver price increase of the last 10 years you have to ask yourself what kind of dramatic turn-around would have to occur to reverse this systemic trend
The greatest indicator of the future of silver is the most fundamental: supply and demand. In 2010 approximately 735 million ounces of silver was mined and in this same time frame over 605 million ounces were consumed by industrial demand, the balance going to satisfy investment consumption. Further it is estimated there is currently about 1.2 billon ounces of silver held in inventories, which is contrasted with the 2.2 billion ounces of gold being held in inventory reserves. Over the last 100 years the overall above-ground supply of gold has steady increased, but the silver total has fallen from a previous world-wide inventory of over 12 billion ounces.
That's right € we are now down to 10% of historical silver levels while gold reserves have grown over the same period of time. What happened to all that silver? It has been used up by over 7000 industrial and medical applications, most of it gone forever. Silver is a true and universal commodity, which makes silver the most unique element in the world. Everyone wants or needs it both as money and as a vital and irreplaceable industrial commodity.
Here is one of the simplest pieces of advice and investor insights anyone can ever give you: Have a lot of what everyone else wants and needs.
Get some silver today, tomorrow, and next week. Or listen to the chattering class of TV pundits, who get everything wrong, and let yourself be lulled back into inaction.
