Scroll down to "TIGHTENING PRODUCTION" at this link
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Almost 70% of silver production derives as a byproduct from the mining of other metals.
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In the past two months, the data concerning inventories and price seems to confirm that the storm is firmly in place. In spite of cutbacks in base metal mining, there has been a large increase in base metal inventories and a further fall in price. That should accelerate additional base metal mine closings. For example, London Metal Exchange (LME) inventories, measured from the low points of the past six months, have increased in copper by 165%, in zinc by 65%, nickel 70%, and aluminum by 100%. These are important economic indicators of industrial demand. In addition, COMEX copper inventories have also tripled in the past few months. LME lead inventories are still down for the year, but have grown in the past month by 10%.
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How has silver fared in terms of inventory and price over the past few months compared to the base metals? That’s the point of this article - silver has moved in the opposite direction for both inventory and price.
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If supply stays constant and demand stays constant, prices stay constant.
If supply stays constant and demand increases, prices increase.
If supply declines and demand stays constant, prices increase.
If supply declines and demand increases, prices increase even more.
And, if the unit of measure of value (the US Dollar and other government fiat tokens) declines in value because of increased supply, then the US Dollar price, and other government fiat token prices of stuff (in this case silver) will increase.
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The Coming Hyperinflation?
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So much potential new money is now impounded in the commercial banks’ holdings of excess reserves that it is difficult to see how the Fed will be able to stem the flood once the banks begin to transform those excess reserves into normal loans and investments. If the Fed attempts to sell enough government securities to soak up the growing money stock, it will drive down the prices of Treasury bonds and hence drive up their yield, increasing the government’s cost of borrowing to finance the huge budget deficits the government will be running because of its various bailout commitments and so-called stimulus programs. This scenario holds the potential for a complete monetary crackup.
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Scroll down to the bottom of the Excess Reserves of Depository Institutions column of numbers
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Ron Paul, probably the only person in Congress who understands Austrian economics, does not seem to hold out much hope for the US economy (therefor the US Dollar):
dollardaze.org/blog/
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The course has been set for several decades, and in reality there is little the new administration could do to fix things without actually making them worse. But I expect them to try. The only real solutions involve allowing the market to liquidate the debt and malinvestment. The political reality is that this is not going to happen.
Through the coming months and years, our nation will find itself at many crossroads, as all manner of socialist, corporatist, protectionist and nationalist initiatives will be thrown at the economy to see if anything will reflate it. Some of these so-called fixes will be enacted amidst much outcry, as with the $700 billion TARP bailout, which the public was right to oppose. About half of that money is gone without a trace, with no accountability, and the economy is no better off for it. Others, such as the proposed new $800 billion plus economic stimulus the new administration is already clamoring for, might have limited public support, as many will find the prospect of receiving a government check a little too tempting to object to. After all, Wall Street got a bailout. What about the little guy? Everything will be attempted by government in the short run to remedy the worsening situation - everything, that is, but freedom. Therefore everything attempted will fail. Unfortunately, government will continue to consolidate and abuse power at an accelerated pace. Government will get bigger, in the short term, and as monetary policy goes from irresponsible to absurd, I have every expectation that we will soon shift from some prices falling to an inflationary nightmare.
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It is regrettable that we keep forgetting what history has shown over and over to be true, because truly, it is a hard and destructive lesson to keep learning.
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Silver is making a nice saucer type base and probably will develope a higher high next week:
Silver can do one heck of a job protecting stored value that you may have from being stolen by the world's current fractional reserve banking system.
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