Will silver be in short supply? This is the first question you should ask yourself in the process of establishing whether you are ready to buy/acquire silver or not. We are here in reference to physical silver which is limited and cannot be created out of thin air like paper silver.

Should I consider the level of world inventories of silver in establishing whether silver is going to be in short supply? No, you should only be interested in whether silver gets delivered on time or not. If silver doesn’t get delivered on time, then you will know for sure that a silver shortage is developing. Now some will ask, but how can I know beforehand since I want to buy silver before delays in delivery starts? Well, you can buy silver based on existing info available in regards to the supply and demand fundamentals affecting the silver market, but due to silver market manipulation and outright lies and deception, it’s not the best means of establishing whether silver will be in short supply or not. If you are a first time silver investor, who seeks absolute certainty before buying silver based on a possible short supply situation, then it should be encouraging to you to know that any silver shortage is expected to develop over time and in stages. Silver Bullion is of opinion that stage one will leave enough room for the first time silver investor to still buy silver at price levels, well below silver’s true worth. In fact, we are of the opinion that we have already entered stage one of a silver shortage (at the time this was written) and that the opportunity to buy silver at ridiculous low price levels will pass sooner rather than later.

Let’s consider the various stages and the price levels that can be expected…

We will quote excerpts out of an article titled: “Physical Silver Yes, Speculation No.” It was written by Israel Friedman in July 2006. Friedman is a silver enthusiast, which is one way of saying that he’s extremely bullish when it comes to silver. He has owned and studied silver for over 30 years. If his opinion on silver doesn’t count, what will count, especially considering that at the time this was written only an estimated 0.5% of the world population knew about the true prospects and value of silver.

Stage one:  3-6 weeks extra delay shipment, $20-$30 per troy ounce (t oz / ozt)

“One, pre-shortage – the users will have to wait 3 to 6 weeks extra for shipments. Then the prices can rise to $20-$30/oz.”

Like stated above, Silver Bullion is of the opinion that we’ve already reached stage one (as the time this was written). The reason being is because we are currently experiencing extended delays on shipment. In fact, we have received a letter from one of our suppliers to the effect that they apologize for the extended delay in shipment due to the high demand, etc. The plan was to publish the letter, but it was accidentally destroyed while clearing desk. No, it has nothing to do with a conspiracy theory, but if you are looking for one, you should read about the “paper gimmick” if you haven’t done so yet.

Stage two: 6 weeks – 4 months extra delay shipment, above $50 per troy ounce

“Two, shortage – the users will wait an extra 6 weeks to 4 months for silver. Then the prices can rise above the old all-time highs of $50/oz.”

Given the above, it should be clear why one shouldn’t wait until stage two before one decides to buy physical silver. Yes, at this stage, any price under $100 per ounce will still be a steal, but why pay more if you can pay less? What happens between $30 and $50 in terms of the stages of shortage? Well, it’s a valid question, given the fact that Friedman didn’t provide for it. It should be safe however to say that the ‘grey area’ between $30 and $50 presents the last opportunity to buy silver at levels below the previous all-time high of around $50 per troy ounce. It can be seen as a transitional stage between stage one and stage two of shortage.

Stage three: More than 4 months shipment delay, above $100 per troy ounce

”Three, super shortage – the users have to wait more than 4 months for their silver shipments. The price will range from $100 to prices you won’t believe. If this last scenario occurs, and gold has plenty of supply, the price of silver, at a minimum, will equal the price of gold. And my crystal ball tells me that silver can exceed the price of gold by a great deal.”

Given the above, it will not be easy to get hold of silver at stage three, although not impossible. In fact, Silver Bullion is of the opinion that silver will always be available, but not always readily available and not at the same price levels. This is of course assuming that a tyrannical government don’t try to confiscate silver and fix the price at a certain level. Well, even then, silver will still be available at the right price on the black market. The higher the silver price goes, the longer the silver investor can expect to wait for delivery/shipment of the silver purchased (assuming that all silver sellers experience silver shortages). Is silver expected to become so expensive that the Average Joes won’t be able to afford it? Yes, it is expected that a time will come again in history when silver will simply be too expensive for the Average Joes to buy. When we write, “not able to afford it” or “too expensive,” we’re not saying that it will be entirely impossible for the Average Joe to buy silver, we’re just saying that it will not be as easy and affordable as before. Where the Average Joe can buy silver today for more or less 1-3 days’ worth of wages per ounce (at the time this was written), it will not be that easy when silver reach levels reflecting it’s true worth/value. It will take more man hours, more blood and sweat, and definitely a great deal of patience to acquire/earn/buy silver in future.

How was the prices calculated for the different stages of silver shortage?

Friedman explains: “My calculation is very conservative. I only take into consideration the future deficits between the producers and users, which is currently [June 2006] at around 50 million ounces annually. I also take into consideration that private investors have 400 million ounces in bullion and coins that they will sell in some stages. In stage one, pre-shortage, I think investors will be willing to sell 50 million ounces at a price between $20 to $30. Stage two, shortage, investors will sell 200 million ounces between $30 and $100. And the remaining 150 million ounces will be sold in stage three, super shortage and the prices will be truly shocking.”

Furthermore: “These prices are very conservative, in my opinion, because they don’t take into consideration the naked shorts, new investments, or those banks worldwide that sold silver certificates without real silver backing, only derivatives backing. “

Decision time…

Now back to the original question: “Will silver be in short supply?” If you can answer “yes” to this, then you’re ready to move unto the next question in the process of establishing whether you are ready to buy/acquire silver or not. If “no,” then we recommend you do additional reading and consider for one that silver is money, silver is limited and has various industrial uses. In addition, you should also read more about silver market manipulation.

The next question: “Can I make a minimum of 5 times my investment?

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