The price of silver will hit new highs as an explosion of investment demand will overwhelm supply in the future. This once in a lifetime event will occur not because of bullish rhetoric, technical analysis or brokerage recommendations, but because the fundamentals will finally kick in a major way.
Of course, this realization today may seem like selling ice water to an Eskimo by the silver investor as precious metal sentiment is at a decade low — or even lower. Furthermore, I have heard through the grapevine that even some of the precious metal analysts have thrown in the towel and sold their gold and silver miners for the typical large cap stocks on the S&P and Dow Jones.
This was the very plan by the Fed & member banks from the start. The big “V” correction in the precious metals back in 2008-2009 did not persuade investors from buying gold and silver at severe lows. Matter-a-fact, it actually motivated huge retail buying of physical bullion.
This time around the monetary authorities got smarter. They engaged a new “SLASH & BURN” tactic by bleeding the gold and silver investors dry by slowly crushing the price of gold and silver over a two-year period. To complete their masterpiece, they initiated two huge take-downs in April & June to make sure even the most hardcore precious metal investors would question their holdings.
Today, the precious metal investors are still holding onto the fundamentals knowing at some point in time things will turn around. To give comfort to the silver investors, Jeff Christian of CPM Group plans on speaking at the Silver Summit this week to make sure that investors realize silver is going to consolidate for the next few decades at $17-18 and move up to a new high before the end of the century.
Yes, I am exaggerating here, but that is basically their stance even though they are talking about the end of a decade, not this century. According to CPM Group’s new release:
Silver prices may rise to record highs within the next 10 years, according to CPM Group’s Silver Long-Term Outlook report released Thursday.
This year through September, silver prices have averaged 20% less than in the same period in 2012, CPM Group said, forecasting the declining trend to persist in the medium term.
Longer term, however, prices could begin to rise again within the next 10 years, it said, “continuing a secular bull trend that began at the turn of the century.” Silver rose at a compounded annual average rate of 23.2% between 2002 and 2011.
In the latter half of the next 10 years, investors are expected to approach the silver market “more positively as economic conditions improve relative to the first half of the projected period,” CPM Group said. “Investors are expected to step up their purchases, backed by expectations for strong capital appreciation amid rising industrial demand for the metal.”
And “in this scenario, silver prices could rise rapidly, possibly touching fresh record highs within the next ten years,” it said.
So, silver investors do not worry… according to Jeff Christian’s CPM Group, new silver highs are coming. Unfortunately, you are just going to have to wait a decade before this takes place. CPM Group seems to be hinting at the well-known market timing strategy of “Sell in May and go away.” However, they may be implying, “Sell today & come back towards the end of the decade.”
Now, I am not going to get into personal attacks or name calling here as I may have done in the past, because it does not bode well for an ongoing professional debate. I have gone to the CPM Group website and looked at the analysts there and I have to say, they are a smart group of people with a great deal of experience doing what they believe is right.
As for the “Manipulation theme” on gold and silver, I am not going to get into it. I realize Jeff Christian does not believe in manipulation even though central banks did conspire to rig the LIBOR, and GATA has proven that the U.S. is legally allowed to intervene in the precious metals, commodities or whatever markets they see fit according to a law passed in 1934.
So, I am going to let GATA and Bill Murphy fight and debate Christian on that issue as they are more qualified. That being said, I believe there is another angle that will almost guarantee much higher valuations for silver in the future.
We have to come to the conclusion that if manipulation is going on… then why would it stop? Or how do you stop the Elite from controlling the markets if they have been successful in doing so for hundreds of years? Proving that manipulation is taking place only makes those pulling the strings laugh and snicker because they realize nothing will become of it.
That being said, the common sense approach is to look at the variables and things that the Elite cannot control. Those of you who have read my articles are aware, my take is that a peaking energy supply is the fundamental the Elite can’t control. Peak oil will force the end of the fiat monetary system and bring a new life to the precious metals.
Even though there are some who agree with my premise, many don’t believe in peak oil and others eyes glaze over as they read about the details of energy and the EROI. This is quite a shame as I believe energy is the most important factor going forward for not only the precious metal investor but also for the public and world at large.
Boss of Drilling-Services Giant Believes Peak Oil is Here
Dave Demshur was a speaker at the August 2013 Enercom Oil & Gas Conference in Denver. Core Lab is headquartered in the Netherlands and has 70 offices in 50 countries. They specialize in analyzing drill results from the major and 100’s of miner oil & gas companies in the world. They take this drilling data and assist these companies with increasing their efficiency in removing more oil and gas from their fields and reservoirs.
If anyone has a good idea of where global oil production is headed in the future, Core Lab is most certainly one of the best qualified. According to Dave Kamm on News-Press.com:
Never very bashful in the breakout session, CEO Dave Demshur readily offered his thoughts about the big energy picture. When queried about predictions of increased oil production he took the under in most cases.
Demshur is a “peak oil” proponent — translated it means that at some point the oil production of the planet will maximize, flatten, and then diminish. For the first time I can recall, he said we have reached the peak area.
He estimates planetary oil production in 2014, 2015, and maybe 2016 to be at the peak level we shall ever be able to generate. When asked about future oil independence here in the US, he just smiled — and added “no chance”.
Let me repeat what Demshur stated so it can really sink in. He estimates planetary oil production will peak in 2014, 2015 or possibly 2016 and the U.S. will have “no chance” in becoming energy independent.
It is very hard to give an exact date for peak as there are many variables, but here we can see that a CEO from one of the major drilling-services companies believes peak is coming in the next few years. Folks, if this is true… that’s not much time at all.
Silver Supply & Demand Forecasts vs Peak Oil
As I have mentioned in several articles in the past, peak oil-energy will destroy the ability to properly forecast supply and demand forces in the future. We are entering into uncharted waters. This is where I can offer a different opinion than the one suggested by Jeff Christian and the analysts at the CPM Group.
I have not purchased CPM Group’s 2013 Long Term Silver Outlook and actually do not plan to. I would imagine a great deal of research and effort was put into creating this report, but I have to say, if Peak Oil arrives in the next few years, the data from these high-priced reports will become increasingly worthless.
You see, Christian may be able to debate and confuse investors on whether or not manipulation is taking place, but he cannot deny the ramifications of peak oil and its impact on the precious metals. Folks, peak oil changes everything.
Who cares if a junior mining company has resources of say 3-5 million of ounces of gold in the ground if there isn’t an inexpensive enough or readily available source of liquid energy to extract the metal in the future. Sure, the mine may go commercial, but what happens in say 3-5 years into its 20 year mine lifespan if energy supply becomes short??
In a nutshell… don’t count on a growing supply of gold and silver once the PEAK OIL PHAT LADY SINGS.
Most analysts including Christian have no clue how to forecast in a peak energy environment….ZIP. Hell, even I don’t know the details on how things are going to unfold. However, I will assume that those companies who are now commercial and have proven reserves will more than likely continue for a quite while whereas most of the juniors will never become mines.
The irony of it all is… I actually had a speaking slot at the Silver Summit but had to cancel last month because of certain commitments. Now I wish I could have attended to present my views on how energy will greatly impact the values of the precious metals in a positive way.
Furthermore, I would have provided data that would have suggested that manipulation does not have to be proven for the precious metals to regain their roles as monetary metals. Basically, Jeff Christians negative views on manipulation… in the end won’t matter.
The world is heading straight for an ENERGY WALL shortly and most (99%) of the analysis are forecasting business as usual for the next several decades. Peak Energy will destroy the valuations of most of the stocks on the Dow and S & P 500 going forward as growth will not be possible for the majority of companies.
As the value of stocks, bonds, retirement accounts and etc continue to disintegrate under the gravity of a falling energy supply, there will be a radical change in silver investment demand. Gone will be the pathetic supply and demand calculations that will seem quite silly in the whole scheme of things.
At this point in time, investing will switch from owning paper assets providing yield to physical assets like silver and gold that will protect wealth — very much like squirrels hoarding acorns for the winter. The majority of investors are not prepared for this change.
At the SRSrocco Report we will continue to provide updates on energy data and explore how peak oil will impact the precious metals, mining and overall economy.