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In my research this week, I came across a couple of articles that were particularly interesting.\u00a0 They made the case that a silver shortage could be exacerbated by as early as August of 2012. \u00a0The first reason given was that currently there is a majority of long positions on silver in comparison to the shorts in place.\u00a0 As we speak, there are currently 2 long positions in silver for every one short position.\u00a0 This is truly amazing considering the massive short positions that have been held by major financial institutions like JP Morgan Chase and others.\u00a0 This disparity in short positions compared to long ones shows how the overall disposition toward gold and silver now are changing.<\/p>\n
The second reason brought up was the major silver mine strikes in both South Africa and Indonesia.\u00a0 In South Africa, a one days strike was held in which tens of thousands of miners came out in opposition to current working conditions and wages.\u00a0 In the Gold Fields mines in South Africa 85% of workers stopped working leaving mining activity virtually at a stand still.\u00a0 Gold Fields is the world\u2019s fourth largest producer of gold.\u00a0 These strikes right now have only had a small impact on supply provided, but if they continue they could significantly reduce the supply readily available on the market today.\u00a0 As if that is not enough many mining company are reportedly keeping larger quantities of silver as a reserve than before, which also places stress on the world supply.<\/p>\n
Third, most economists expect the price of oil to go up dramatically over the summer.\u00a0 Many economists have estimated between $4.50 and $6.00 a gallon.\u00a0 This major increase in fuel cost will also affect mining costs, which will increase the cost to the consumer.\u00a0 Additionally, when fuel prices increase it usually means an economic slow down.\u00a0 In these types of situations other metals like zinc, copper, and lead typically have reduced demand.\u00a0 Right now approximately 75% of all silver mined comes as a byproduct of mining other metals like zinc, copper, and lead.\u00a0 Thus a reduction in the demand for these metals will also reduce the available silver from mining activity.<\/p>\n
Iranian War?<\/strong><\/span><\/p>\n Finally, many experts believe a war with Iran is eminent.\u00a0 If such a war were to break out the effect on silver would be dramatic.\u00a0 Silver is used in a large number of military products.\u00a0 The United States does not have a large mining industry in comparison to the rest of the world and would be very dependent on foreign allies.\u00a0 There is also a strong possibility if war is declared with Iran that both Russia, China, and many other socialistic and communistic nations might not sell us large amounts of the metals any more due to their close ties with Iran.<\/p>\n Do I believe that a shortage will happen by August. \u00a0At this point it there are too many what ifs, but the important point is that it would not take much for a shortage to develop quickly. \u00a0So regardless of whether or not a silver shortage takes place in August or three years from now investors need to be ready.<\/p>\n","protected":false},"excerpt":{"rendered":" In my research this week, I came across a couple of articles that were particularly interesting.\u00a0 They made the case that a silver shortage could be exacerbated by as early as August of 2012. \u00a0The first reason given was that … Continue reading How Likely?<\/strong><\/span><\/h3>\n