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Chinese Silver Demand Surges Incredible Four Fold in Just One Year
Gold is flat and silver marginally lower despite dollar weakness this morning. Some market participants are blaming the precious metal sell off on speculation that China may take more monetary action to curb surging inflation. This is unlikely to be the reason for the sharp selloff, rather it looks like another paper driven sell off in the futures market by leveraged players on Wall Street with various motives.
The fact that silver is again in backwardation at the front end of the curve suggests that tightness in the physical bullion market continues and may even be deepening. Indeed, the massive increase in silver bullion demand from China (confirmed overnight – see below) suggests that silver’s bull market remains very much intact despite becoming overvalued in the short term towards the end of 2010.
Table Courtesy of Mitsui
Surging inflation in China, India, wider Asia and much of the world is of course positive for gold and silver as it will likely lead to an even greater appetite for the precious metals in order to protect against the ravages of inflation and the further depreciation of paper currencies. Read more…
Gold Reserves of the World
Bullion analyst Mark Robinson says this is the biggest and most ambitious task that China has ever announced.
“If China wants to take its gold reserves to 10,000 tonnes in 10 years, the country needs to buy or acquire the yellow metal to the quantity of nearly 1000 tonnes per year.”
Which countries own the largest quantity of gold reserves right now?
- World leader the United States has 8133 tonnes of gold reserves, accounting for 76.5% of its foreign exchange reserves;
- Germany has the second highest gold reserves at 3412.6 tonnes;
- France has 2508 tonnes of gold constituting 58.7% of its forex assets;
- Italy has 2451.8 tonnes of gold constituting 61.9% of forex reserves;
- China became the fifth biggest holder of gold reserves this April with 1054 tonnes;
- Switzerland has 1040 tonnes of gold reserves constituting 23.8% of total forex reserves;
- India which recently bought 200 tonnes of gold from IMF has 557 tonnes of gold reserves representing 3% of total forex reserves.
- The IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal, but is not technically a sovereign central bank. The IMF has made gold sales a key element of its new income model aimed at lowering its dependence on lending revenue to cover expenses.
Silver Hits A New 30- Year High
Spot silver rose to a 30-year top on base metals strength, dollar weakness reaching $30.72 . European sovereign debt crisis and uncertainty in US economic boosted the investments appeal in the precious metals as a means of wealth protection. The white metal is up 74% which is almost triple the growth recorded by the price of gold, which rose 26 percent.
The strength of silver has resulted in a wave of development around the world and a planned production increase in 2010 to 733.2 million ounces, representing increases of 3.3% compared to 2009 and 14% since 2006.
The metal has an inherent appeal due to its industrial use in electronics, cutlery and coins. In addition, supplies are limited.
“The fundamental picture for silver is much more attractive relative to gold,” said Jessica Cross of the precious metals consultancy Virtual Metals.
Finally, the chief raw material analysis of Deutsche Bank , Michael Lewis, said: “The growth potential of silver is greater than gold.”
Demand for the metal is going to the moon!
What is the true value of your dollar?
Ever since 1913 when the Federal Reserve was created the dollar has been loosing its purchasing power. Currently you can only purchase at 3 percent today of the 100% that you could buy in 1913 resulting in a 97% loss. For instance milk was just an average of 32 cents a gallon in 1913. Today, the average price for a gallon of milk is $4 or more. Almost everyone tends to think that everything is getting more expensive when in reality the purchasing power of the dollar is going down which is the cause from inflation (which have averaged about 3.3% a year). It is only a matter of time when these Reserve Notes are declared worthless, hopefully, I pray you were wise enough to invest in physical precious metals. Remember the age old cliche “Where there’s smoke, there’s fire”.
USD Purchasing Power since 1913
Coinflation.com shows what the actual value of the metal contained in our coins today. At the time of this writing, the market value of each coin is as follows:
- Pennies are worth $0.0053329 (1/2 cent)
- Nickels are worth $0.0525026 (just over 5 cents)
- Dimes are worth $0.0183166 (1.8 cents)
- Quarters are worth $0.0457932 (4.5 cents)
- Half Dollars are worth $0.0915876 (9.1 cents)
![[Most Recent Quotes from www.kitco.com]](https://i0.wp.com/www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
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