The Silver Shortage Will Come
Source: SilverSeek, Israel Friedman (9/28/09)
". . .will the shorts be successful to cover their short position on time?"
The biggest question I have is: will the shorts be successful to cover their short position on time? Currently, the CFTC seems to want to force all the manipulators to get in line by making them obey new rules of position limits, but I feel that the banks that are the big shorts will be exempt.
If the banks will not be forced to cover their short positions, only a true shortage in silver will bring the right price. Be prepared for that to happen. How much will silver be worth in a shortage situation? It's tricky to calculate, because a real shortage has never happened in silver history. But it is how you must think. When there is not enough of something is when you see real crazy prices.
My calculation is that it will be a gradual explosion of prices and slowly the users and new investors will eat up the world visible silver, which today is around 500 million ounces. The first 100 million ounces of will disappear at a price of $60–$100/oz. The second 100 million ounces will disappear by $250, and the third 100 million ounces will disappear between $250 and the price of gold ounce for ounce.
We will be left with 200 million ounces of silver, which the owners will be not taking profits on at any price. The bullion in private hands I calculate will be the first to take profits, but Silver Eagle holders will hold for the long run. I still believe that Silver Eagles will do the best investment-wise and will not be surprised that at one point the Eagle price will trade much higher than the price of silver in a bubble mania.