SILVER DEFICITS (millions) 1990 <30.8> 1991 <68.1> 1992 <75.7> 1993 <183.8> 1994 <200.6> 1995 <182.9> 1996 <207.6> 1997 <221.6> 1998 <205.0> 1999 <161.5> 2000 <154.9> 2001 <82.7> 2002 <81.3> 2003 <64.2>* Source: CPM Group, Silver Survey 2003 * = estimate		Silver on Sale by Doug Casey www.caseyresearch.com I have said it many times: mining is an innately risky business. Worse, it?s an impossible business if metals prices are too low. In the case of silver, during the long bear market from 1980 to 2003, when silver traded mostly in the $3.50-$5 per ounce range, there were no major, public, pure silver mining companies that generated free cash flow. None. The end result was that very few pure silver producers remained in business. With the exception of a smattering of mines in Mexico, Peru and very few other locations, it has simply been uneconomic to produce silver (other than as a by-product). That is not to say that there haven?t been profitable silver mines, but these are generally owned by very large mining companies such as BHP Billiton (BHP.Z, $17.20. SO 3.11 billion). These are not stocks you would buy strictly for the silver exposure, however, because silver is a minute portion of the overall value of the company. Which points to one of the fundamental caveats about silver: namely that around 80% of new production is a byproduct of gold, copper, lead and zinc. So silver is produced almost regardless of its price. That makes primary production of silver even more volatile and risky than mining in general. ... More
Silver The Undervalued Asset Looking For A Catalyst by Jim Puplava FinancialSense.com When I sat down to write The Perfect Financial Storm in the summer of 2000, my storm analogy was based on three storm fronts colliding with each other. Like the real storm on Halloween 1991, three economic forces were turning into storms fronts. The first and foremost storm was developing in the credit markets as a vast mountain of debt was being created. This ocean of money, which had ignited a boom, was now turning into a bust. In order to avoid the consequences of a deflating credit bubble, the Fed embarked on a massive monetary stimulus program. The Federal Reserve was using all of its powers in an effort to stave off the bust and bring temporary relief by manipulating the financial system with the creation of more credit. The result is that today interest rates are at historic lows and credit expansion within the financial system has accelerated even more The Fed is now pulling out all stops from lowering interest rates, monetizing debt and using unconventional means to prop up the markets and the economy. It is believed that ?unconventional? equates to intervening in the financial markets. In statements going back to 1989, recent research papers and comments made during FOMC meetings, the Fed has made reference to ?unconventional? measures in case current monetary policy becomes ineffective Unconventional in this case may mean buying or monetizing various assets. In the January 2002 FOMC meeting reference was made to buying any kind of asset to pump up the system from US equities, government and municipal debt to real estate and gold mines. If one views the second storm front as a bear market in stocks where we have seen a decline for three straight years and despite twelve rate cuts by 2002, unconventional may also mean propping up the stock market. Injecting reserves into the financial system through Federal Reserve Repurchase Agreements is one method of achieving this. When the Fed purchases securities from primary government bond dealers, it pays for these securities with cash, thereby adding liquidity to the banking system. Member firms then have the available cash to carry out Fed intervention in the financial markets through major purchases made in the futures markets or through the purchase of select market weighted stocks that are included in all three major indexes such as Microsoft and Intel... More