Tuesday, December 25, 2012
Eric Sprott: Smart Investors Are Flocking to Silver
Sprott Asset Management published their monthly newsletter Market at Glance (December 2012) entitled "Why are (Smart) Investors Buying 50 Times More Physical Silver than Gold?"
Eric Sprott explains that demand for Silver relative to Gold has dramatically changed since 2008. The table below shows the US Mint gold and silver sales in ounces over the last few years:
Each year there's about 130 million Gold ounces and 1 Billion Silver ounces available per year, but due to use for industrial applications, the annual availability for investment purpose is respectively 120 million and 350 million ounces. Therefore, the ratio of physical silver availability to gold availability is roughly 3:1.
Investors are choosing to buy silver at a ratio to gold that is well above what is available. The silver price is currently mainly set in the paper market where the daily average trade on the Comex is approximately 300 million ounces. An outrageous number when you compare it to the daily mine production of about 2 million ounces, and the current price is most probably where it is because of market manipulation.
Sprott believes the current investment trend into silver is likely to continue.
The full version of the newsletters is available at http://sprottasset.com/markets-at-a-glance/why-are-%28smart%29-investors-buying-50-times-more-physical-silver-than-gold/