Why I am bullish on
Silver-------By Shan Saeed
Strategic
insight from the market: Bullish on silver
Silver
is called a poor man’s gold. Its so true and correct in the present circumstances
when there are lot of headwinds in the global financial market. Silver is your
wealth insurance and protection. Silver
prices set to rise in 2013 thanks to China. Consumption in China, the world's second largest user, could climb to
record 7,700 metric tonnes next year.
Investors in China are seeking out silver as an alternative
value investment with the economy cooling for a seventh quarter. According to
the research firm from Beijing Antaike notes that demand for silver is set to jump
as much as 20% in 2013, with investors seeking to preserve their wealth and get
insurance.
Consumption may climb to 7,700
metric tonnes after gaining 6-8% in 2012.
Even for China, this would be a record level. China is the world's
second biggest user of the metal.
Silver soared 15% and holdings by
exchange traded funds jumped 6.5% in 2012. According to my research, the demand
for silver is coming from jewellery and coins, which accounts for 33% of
demand, and electrical appliances and solar panels.
A possible solar industry recovery
is also expected to help the white metal's demand, with the government
targeting 21 gigawatts of solar power installations by 2015. This compares to
an installation of 2.6 gigawatts in 2011.
Moreover, statistics have also
shown that overall jewellery sales in China rose 19.3% for the first eight
months of 2012 as compared to last year. China's week-long National Day Holiday
dubbed 'Golden Week' for domestic consumption lasted longer than usual this
year, aiding sales.
Buyers mainly targeted gold and
silver jewellery and clothes. Chinese consumers also became top luxury buyers
resulting in 25% of global purchases. Shoppers from the Asian continent are
also pushing global sales of luxury items to new heights, aiding the sector
post its third straight year of strong growth since the global recession.
While Europeans contributed 24%,
Americans 20% and Japanese 14% to global luxury sales, China's retail and
catering industries saw a surge in sales during the eight-day national holiday,
driven by demand for jewellery, clothes and home appliances. Combined sales of
major retail enterprises in the country rose 15% to $126.3 billion during the
September 30-October 7 holiday period as compared to the previous year's
holiday period. Even as the Shanghai Composite Index heads for a third straight
annual drop, silver has climbed to touch 592 million ounces as of
mid-October-2012.
Bailouts will continue: Moral Hazard, High Economic Cost and Burning of Tax Payers money
For those whose bread is buttered
by the status quo, falling money supply raises the never-ending cry for more
stimulus. Again from the Telegraph:
"This credit contraction is what happened in Japan in
the early 1990 and we have to be careful not get into deflationary
spiral," said Prof. Richard Werner from Southampton University, a Japan
expert. "They to need to launch true QE or an expansion in broad credit
creation, and it cant be done easily."
The Bank of Japan threw money into the big black hole of
stimulus for decades. The country now has pretty bridges that no one uses, and
a debt-to-GDP ratio of over 239% — the highest in the known world. Japan is a
country where the young can't find jobs, won't marry, and live with their
parents well into their thirties. Real estate has yet to find a bottom and
exports are shrinking. The Nikkei 225 is at 8,900 — well off its all-time
highs of 39,000. Japan is a case study in what not to do.
SILVER IS THE BEST OPTION IN THESE
UNCERTAIN FINANCIAL MARKETS.
Since that high-volume, blow-off top in the spring of 2011,
silver has slowly but surely lost value. Few investors stayed out of silver
until late August 2012 when it met its five-year up-trend line and broke out of
its shorter-term down-trend range.
SILVER OUTLOOK FOR 2013: Positive
I expect the price of silver will bounce along that uptrend
in a similar way to the action I saw from 2008 through 2010. Strategic investor’s
goal should be to buy when it hits that line.
Legendary asset manager Eric Sprott said
this will be the "decade of silver" during which silver will hit $100.
Silver is the next best investment after agriculture.
On June 18, 2012, the Federal Reserve (and the Office of
the Comptroller of the Currency) quietly issued firm warnings to all banks to
prepare to implement the new rules that make gold a legal currency — the same
as cash.
I will tell you all about this
"Bank of Bankers," a powerful cabal that presumes to dictate even to
the U.S. Fed, and how their
actions will lead to the most profitable gold opportunity of lifetime. There
is no reason for Europeans to expand a business or buy a house when the
European economy continues to fall apart and the political situation is in
chaos. To own or build is to become a target in the next riot. You can't spend your way
out of a debt crisis. The world has to eat the pain at some point. Sooner will
be less painful than later. But, the powers that be won't listen to reason. There
will be more stimulus, bailouts, and money printing. It will continue until it
can no longer stay afloat. Buy silver on the dips.
Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK
