posted 12-28-2009 12:44 AM            

Some interesting quotes from the article.

'As with gold, annual mine production of silver (the primary source of supply) is flat. Like gold, the investment demand for silver has been soaring, even as the prices of precious metals have also risen (a very bullish indicator for this sector). However, silver benefits from two extremely important supply/demand fundamentals which are completely absent from the gold market.

First of all, for many "market experts" who are uneducated about precious metals, silver is now referred to as an "industrial metal" - despite 5,000 years of history as a "precious metal". The reason for this ignorance among "experts" is that silver also possesses many extremely useful chemical/metallurgical properties which has resulted in the massive consumption of silver in a variety of industrial applications.

For many years, silver's use in photographic film dominated its industrial uses. However, even as silver's use in film has dropped off dramatically with the rise of digital photography, countless other industrial applications have recently been discovered - which more than offset the decline in that one source of demand. In fact, during this decade, new patents for silver exceed those for any other metal (see "Increasing Demand for Silver comes from MANY sources").

This brings us to the most important fundamental for the silver market: the world's supply of silver is (literally) being rapidly "consumed". The evaporation of global, silver stockpiles has occurred because the vast majority of silver used "industrially" is in products where silver is used in tiny quantities. Because of this, it is impractical (if not impossible) to ever recover/recycle this silver - meaning it is effectively gone forever (or "consumed").'

And:

'For example, over three million ounces of silver are currently being consumed each other in the production of polyester sportswear, alone (where silver's unequaled anti-bacterial properties dramatically reduce the amount of odor caused by perspiration). However, silver represents 1/20,000th of total inputs in this product, by weight. Thus, even a ten-fold increase in the price of silver would have virtually no significant impact on the price of this good - and thus no effect on demand.'