 Silver Zoom Ignored
Todd Stein & Steven McIntyre
The Texas Hedge Report
March 3, 2006
Courtesy of www.texashedge.com
So, after a quarter of a century,
silver finally returned to double-digits. While we aren't fans
of following day-to-day moves, the recent zoom past the $10/oz
mark is noteworthy. It seems that the precious metals community
is anticipating the launch of the silver ETF - so perhaps this
is what is causing the grey dog to bark. Maybe that's the case,
but we certainly don't think that abnormal amounts of
bullion are being gobbled up by Barclays in anticipation of the
ETF's launch. Nor do we think that the public is suddenly hoarding
silver.
What is interesting to us is
that the mainstream media and average investor have no idea what
is going on. CNBC has a ticker in the morning that includes some
commodity prices, but silver remains absent. Web sites such as
MSN and Yahoo spit out headlines about Google, retail sales,
and oil - it is only on rare occasions that gold is mentioned
and that is when the price breaks $400/oz or $500/oz. Even the
commodities sections of major financial web sites seem to ignore
silver. For example, we can find nothing about the recent strike
at Penoles, the second largest mining company in Mexico. Compare
this to a hypothetical strike at Exxon, which would make top
headlines.
A little more than twenty six
years ago, when the silver market was being cornered, the general
public started to wake up. At the very top, there were news stories
about average people taking their silverware in to be melted.
While we are not anticipating a repeat of early 1980, it is logical
to think that the bull market will not end until we see the public
paying attention to what is going on.
The combination of miner unrest
in Mexico, increasingly radical leaders being elected in Latin
America, and the silver ETF is adding more fuel to the already
bullish fire of silver supply/demand. As with any asset that
has had a huge run in a short period of time, a meaningful correction
could occur at any moment to shake out the weak hands and momentum
players, but we think that continued annual supply deficits of
silver will not go unnoticed by the mainstream investing public
for long. Oh, and we haven't even mentioned the ticking time
bomb that is the U.S. Dollar and how its looming decline will
almost certainly add a great deal of investment demand to gold
and silver at a time when silver supply and inventories are very
limited.
March 3, 2006
Todd Stein & Steven McIntyre
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