Silver Takes Flight

In my book "Silver throughout History" I quoted Israel Friedman, who wrote in 2006:

"Expected Prices for the Upcoming Silver Shortage.

To define what I mean by shortage of Money, I am not interested in the official level of world inventories or in ExCom, nor in the stories of market gurus. Only one thing interests me, the delivery time of silver to customers. When there is a delay in delivery times, I consider it to be a shortage.

1) Pre-shortage: Users wait 3-6 weeks for delivery. If applicable, prices will go up to $20-30
2) Shortage: Users wait 6 weeks to 4 months for delivery. So the prices will go up to $50
3) Super shortage: Users wait more than 4 months for delivery. Prices will start from $100 with no upward limit.

If that happens, and there is no shortage of gold, the price of silver will at least reach that of gold. To establish these prices, I based myself on the structural deficit between producers and users, which is around 50 Million ounces each year (for more than 60 years), and I weighed the fact that private investors hold around 400 million ounces in the form of bullion or coins, which they will agree to sell at one level or another.

1) Pre-shortage: I think investors will agree to sell 50 million ounces for between $20 and $30.
2) Shortage: Investors will sell 200 million ounces at a price between $30 and $100.
3) Super shortage: The 150 million ounces left in this phase will be sold at really shocking prices.

These prices are very moderate, in my opinion, as they do not take into account "short sales", derivatives and other financial products like ETFs that do not have real physical silver behind."

On Tuesday, July 28, Bloomberg published an article revealing that the US Mint at West Point will slow production of gold and silver coins for the next 12 or 18 months.

The US Mint is an independent agency of the United States government, which produces and distributes American coins. According to Wikipedia, the US Mint at West Point is called the "Fort Knox of Silver".

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