Silver’s not rallying slowly and quietly for long… According to Bloomberg, silver assets in exchange-traded products are about to set historic records on quantitative easing measures across the globe. In addition to our own Federal Reserve’s establishment of QE3, the European Central Bank, the Bank of Japan, and China have all injected funds into the financial system with plans to buy debt and assets and spend extra on infrastructure. Investors fear that their money will lose its value amidst intense inflation. Therefore, they’re hedging with precious metals, and silver’s becoming the most popular choice. Silver futures gained as much as 0.7 percent, rising to $34.225 on the Comex yesterday. So far, silver is the best performer of this quarter on the Standard & Poor’s GSCI Spot Index of 24 raw materials. Silver holdings specifically in ETPs have surged by 7.1 percent this year. ETPs allow investors to make bets without taking physical delivery of assets, and they trade like typical shares do. Meanwhile, Fortune magazine is focused on one silver mining company that has grown its profit by an impressive 340% in just three years. Silver Wheaton’s CEO Randy Smallwood told Mining Weekly Online that he was confident the company would remain in the #1 position on Fortune’s list for “quite a while.” From Mining Weekly: The world’s largest streaming company, which recorded $575-million in net profit over the last three years, had also grown its revenue by 76% to $771-million over the period. “It is all about choosing the right commodity, and being focused on silver has proved to be a good decision for us. We are careful to select projects that will deliver significant organic growth,” he said. The company enters into silver-streaming contracts with miners who would mostly produce silver as a by-product. The company currently has 14 long-term silver-purchase contracts to buy all or part of the silver production of its partners at about $4/oz, in return for upfront capital funding. Smallwood continued to discuss the company’s financial business, saying that Silver Wheaton currently had roughly $1 billion at its disposal that would help it pay for new projects – with about about $200 million of free quarterly cash flow, one can certainly see that there is strength and promise in the company’s business model. Likewise, investors are heeding Smallwood’s advice and going for the commodities that deliver returns and companies that are working on projects delivering “significant organic growth.” As soon as silver industrial demand catches up to speed – already, industrial demand from solar panels to batteries accounts for about 53 percent of global silver consumption, according to the Washington-based Silver Institute – with the current record-breaking silver investor demand, companies like Silver Wheaton are going to explode like never before. The supply crunch is in full force, and silver buyers are getting as much as they can while silver’s still available for purchase. Expect $50 silver in the near future…
Brittany Stepniak – Wealthwire – Tuesday, September 25th, 2012