Do you see a short squeeze coming up in silver as the investors who have shorted silver get around to buying the metal as and when their deliveries come up?
Yes. Either that or some type of contract delivery default. I feel one of the two is inevitable. Either would result in sharply higher prices.
What are the various industrial uses of silver that make it indispensable? How do you see these uses of silver affecting its price in the days to come?
The list of uses for silver in industrial applications is endless. New uses are developed daily. Silver has more varied industrial applications than any other metal, by far. Silver is the best conductor of electricity, the best heat transfer agent, the best reflector of light, a marvelous lubricant and a versatile catalyst and alloy. It’s a biocide and has important medical uses. Based upon its unique properties, not only is it used in thousands of applications, all the promising new technologies will employ silver. Things like solar, and new electronic and battery and laser technologies, water purification… the list is endless. As demand and population and the quest for improving standards of living grow in future, that demand will bump up against limited supplies with a big impact on price.
Do you visualise a catastrophic event, which will lead to corporate users of silver piling up all the silver they can lay their hands on?
It wouldn’t take a catastrophic event to get industrial users to panic and attempt to build inventories. All it would take is a shortage. Industrial users, faced with a delay in deliveries for the first time in the history of silver, would most likely panic and buy physical material aggressively, rather than shut their factories and send their workers home. This, in turn, would likely lead to other users being deprived and reinforce the panic cycle. The buyers for the industrial users are human, like us all, and are as likely to panic in a shortage as anyone else. This is what caused Ford Motor Company to panic and drive palladium over $1,000 an ounce, years ago.
Have you seen investors getting into silver as well in expectation of a dollar collapse?
Yes. In fact, in many objective measurements, the rush into silver has actually been greater than the rush into gold. An investment rush by people seeking financial security has become very important recently. I don’t know what could be safer than silver at this point.
You have said that we will see silver selling at $50 to $100 an ounce. Why?
Because of the observable facts and the unrecognised rarity of silver. Please remember that I made those statements when silver was under $5. Since we have already seen $20, going to $50 or $100 shouldn’t seem so extreme.
In what form should people buy silver?
Buy first for personal physical possession. Buy the forms readily available that are the most accepted in your local market. In the US, I think US Silver Eagles. In India, that may not be practical. If you are buying so much that you need to have it professionally stored (because you get too much metal for the money in silver), use care and common sense. Unfortunately, there are many dishonest people in the world and you must take care not to be a victim in all dealings, not just silver.
Do you see silver getting more valuable than gold sometime in the future, as was the case in ancient Egypt?
I don’t know. Given enough time and depending upon how the world develops over the long term, I suppose it’s possible. But please consider this — if silver moves to a 10 to 1 price ratio with gold, from the current 70 to 1 ratio, that will mean silver will have outperformed gold by 7 times. Even though silver will still be one-tenth of the price of gold, investors in silver will have seven times better return on silver than with gold. That, I think, is very likely.
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