The Silver Market and Inflation

Uploaded by edrsilver on 29.11.2011

(Text on screen): The Silver Market and Inflation
Narrator: There are a few basic things I could tell you about silver.
We could look at a breakdown of global mine production.
We could go over the various uses of silver. The supply from Chinese mines versus Chinese fabrication demand.
We can discover that global silver inventories are dwindling; that the silver market is tiny in comparison to other commodity markets.
But what does all this information really mean? What do we need to know?
Supply and demand.
Victor Adair, Market Analyst: I think supply and demand; that's a wonderful question. What is supply and demand?
Maurice D. Levi: Supply and demand is the way of looking at how prices are determined.
Basically, people compete for what's available and the more competition there is and the less product there is, the more expensive it will be.
Victor Adair: You know, you have some farmer that's producing some wheat and he's delivering it into the market. That's supply.
Dr. Andrey Pavlov, Professor of Finance, Simon Fraser University: Clearly, if you have a higher price,
there's more and more people willing to supply the good or service.
And if you have lower and lower prices, you'll have more people willing to buy it.
Victor Adair: The farmer, just before he goes to harvest, he has a crop failure. So now, suddenly, there is a shortage of wheat.
Tara Immell, Professor of Finance, Simon Fraser University: There can be the time when there is a very low supply of silver.
So, if the silver supply is dropping, then, even if the demand stays constant, you've got high prices again.
Maurice D. Levi: I mean, that's so simply said that you wonder why nobody really fully understands it.
David Morgan, Founder of If you go back in the fundamentals of silver, you know; I'm talking physical silver,
in 1990 we pretty much peaked with about two billion ounces of fine silver above ground.
Victor Adair: Where supply and demand gets interesting, from my perspective as a trader,
is when you have some imbalance in this supply and demand.
David Morgan: So, right now, I'd say, there's probably one billion ounces,
or roughly half of the amount of the silver that was available, say, in 1990.
Victor Adair: Now, we all know what happens.
You know, it could be your grandmother in days gone by when there's a shortage of sugar. Or even just a perceived shortage.
And demand not only stays the same but it ramps up, so you get a much more dramatic change in the price of something.
David Morgan: Well, there's more and more industrial uses for silver all the time, and there's more and more demand for it
because anything electrical or electronic needs silver and as China's building out its infrastructure,
they're using more silver per capita than ever has been used before.
Narrator: So, does understanding supply and demand tell us all we need to know about the price of silver?
Not quite. We are missing something. Us. We have discovered fire. We have invented the wheel, the computer, war and art.
Yet, despite our brilliance, we have an uncanny ability to be utterly unpredictable.
Our emotions are both a blessing and a curse, and we are behind the wheel of the stock market.
(text on screen): Psychology
Maurice D. Levi: Of course, the way people view the world and the future and their optimism or pessimism
is going to affect the stock market.
Victor Adair: Clear your mind, which is actually your most important capital; OK?
You can lose money, make money, but once you lose your mind, heh heh. It's doesn't work anymore.
David Morgan: When I got out of college, and I've always been fascinated by the markets and started working and, you know,
looking at investments at a very early age, that all I needed was a strong math background and I could beat the market.
Well, I got my head handed to me, as the expression goes, because it's not a math formula. It's a psychological formula.
Victor Adair: In the markets that I trade, from time to time, speculative demand trumps, you know,
is much greater than the industrial demand.
Maurice D. Levi: For example, it was found that if something happened today, prices would go up tomorrow, prices will go up today,
in anticipation of them going up tomorrow.
David Morgan: Once I determined where I was making my error, thinking that doing good analytical research
on what a stock's value should be, based on the math or how many ounces in the ground or how many ounces you're getting per share,
and all the stuff that makes perfectly logical sense; I mean, there's no doubt about it.
I mean, there's an analyst I know quite well, I won't name; he does very good work in that area but like I like to say,
"Do you want to be right or do you want to be rich?"
Victor Adair: If speculators have a notion that the price of something should be going up, and they start to pile into a market,
buying it, then the price will rise. Their buying causes their expectation to become true.
Dr. Andrey Pavlov: And who knows? I mean, there's a lot of emotion going in there, and all the fear and greed.
Tara Immell: The expectation of where prices could be going, because really nobody knows,
but that expectation of where prices could be going will drive individuals' and companies' behaviors.
Victor Adair: When the markets are raging to the up side, the silver will go up faster.
When the markets are taking a tumble, the silver will move down faster.
So, that's why, to me, the silver is more emotional than gold.
David Morgan: I mean, as I said, there's no fever like gold fever. But there's no panic like a silver panic.
I mean, when it goes, it's gonna; you know, I think it will leave gold in the dust.
Narrator: So, if we know the stock market is driven by our emotions, how can we make sense of the price of silver?
Well, as it turns out, the price of silver is tightly connected to the global economy.
As the economy goes down, silver tends to go up. Why is that?
Well, one could say that the price of silver never really changes at all. What does change is the price of everything else.
Welcome to inflation.
David Morgan: Inflation, in the beginning, is a wonderful thing. There is plenty of money around. People feel good.
They're, you know, spending money. They're happy.
Victor Adair: You're convinced that you're a genius. You're feeling good.
David Morgan: But these things never last forever.
Maurice D. Levi: If you increase the money supply, you reduce the value of the pre-existing money
and that's if we are the ones that are holding the pre-existing money, so when the Central Bank heads to our money supply,
our money that we are holding in our pockets becomes worth less than before. So, it's hidden tax.
Victor Adair: Over the last 30 years, the GDP of the world has been greater than it would have been otherwise,
because we use more and more credit.
David Morgan: I mean, right now if you look at the Federal Reserve Board's own website,
they'll state that the 1913 dollar is now worth less than a nickel.
Victor Adair: In the United States, for instance, say '04, '05, '06 (that kind of a period), real estate prices were going up, up and away.
You know, people who barely had a pulse, certainly didn't have a job, were able to get;
borrow money to go and jump into the real estate market. You did not want to get left behind.
Dr. Andrey Pavlov: The problem with this is that it causes inflation sooner or later.
And then people like to buy precious metals to protect themselves against inflation.
If there's inflation, the price of those metals is going to go up in the future,
so you make money and then that's how you can preserve your wealth.
David Morgan: Now, how high will silver prices go? Well, I don't know. I know that they hit $50 one day in 1980.
But at that time there was four times more silver available for investment than there is now.
I know that, you know, in 1980 silver went to $50 on one day, but there were only about one-fifth the amount
of people available buying silver than there are today. Because now it's a global market.
You can buy in China, you can buy it in Russia, you can buy it all over South America, you can buy it in Mexico.
Maurice D. Levi: The 20th century was the age of the dollar. The question is what's going to be the currency of the 21st century.
Dr. Andrey Pavlov: I'm worried, in general, that we're going to have pretty substantial inflation in the next, you know,
three, four, five years.
David Morgan: If you don't trust this game; it's all built on confidence; it's all built on trust.
And when you lose the trust, and we have, then you have to go to something you do trust, and that's what the precious metals are all about.
There's no problem trusting something that's been proven to have value for, basically, time immemorial.
(text on screen): To learn more please visit Endeavor Silver Corp
Video created by Storybubble Media
Special Thanks to Victor Adair, Maurice D. Levi, David Morgan, Audrey Pavlov, Tara Immell