28 March 2006

A potentially explosive situation in Silver

Kitco Casey - Gold, Silver and Natural Resource Stock Quotes, Share Research and Analysis: "The Hightower Report commented on Friday’s bullish action by saying that “The gold market exploded in what seemed to be a catch-up bounce Friday morning. Certainly seeing the Dollar fall back from early highs, cleared the way for the U.S. bounce, but traders in the Tokyo gold market suggested that the soaring oil price structure prompted them to liquidate short gold position. Other players suggested that the persistent strength in the silver market simply inspired buyers to move into relatively cheaper gold positions.”

With regard to silver, and its recent explosion to the upside, Julian Phillips of goldforecaster.com had this to say: “As we have said consistently, the demand for Silver is going to overtake supply and it may well be in the process of doing so now. With demand for silver for photography having dropped, but being more than replaced by new applications in industry and prints of digital photographs, global demand has moved to a point where it is greater than new global production. This deficit has been accommodated by sales of ‘Official’ silver from the government of China. Sales of Indian ‘Official’ silver should be completed by the end of the year. At that point Indian demand should spill over into the global silver market. We suspect that the sales of Chinese ‘Official’ silver are near to completion as we see imports of silver into China rising quickly. However, we cannot be sure that this has happened. When it is completed, Chinese demand will come to the global market for the needs that are in excess of its present internal supplies. So irrespective of any other factors, the Silver market and its price will have to deal with a potentially very large demand on top of present glob"

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