Great reasons to invest in silver after recent price falls
1. Recently the spot price has fallen yet the mining cost has increased by almost 10% in the last 2 years.
2. Spot prices have fallen yet refiners and dealers margins have both increased substantially signifying supply pressures as retail demand increases.
3. Refiners cannot keep pace with the increased demand every silver price drop brings, it is clear there is a divergence between paper and physical markets. Buyers realise the value when a paper sell off allows them to buy physical product at a cheaper rate.
4. Margins on silver increase because the physical product is unavailable, every price drop in the last 6 weeks has increased the margin for physical product.
5. The unsustainability of the present low prices is clear because miners already operating in very difficult circumstances (financially) are squeezed further by the drop in price i.e. there is an increased demand for physical driven by the price drop and miners are expected to deliver more silver to the market and still remain profitable?
6. For every kilo of gold sold by miners to market there is 30 kilos of silver sold, despite the fact that the rate of mining is 1 kilos of gold to 10 kilos of silver.
7. The silver-gold price ratio has increased to over 60:1 which the highest for 2 years.
8. Silver’s key industrial uses in non-recyclable items could potentially be a important factor as silver reserves are further depleted.
9. Two of silver’s best years in the last decade(2009 and 2010) were preceded by its worst year(2008), silver being a highly volatile metal tends to have big swings in one direction then the other. Silver is now due a period of outperformance.
10. Although sentiment is against silver right now, the saying that your profit is made when you buy not when you sell couldn’t hold truer than now, with silver at 17.50euro(current spot price 24/05/13).
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