Silver in the Next Decade
David Morgan

"Silver is the best technology stock you can own." - David Morgan

As some of you know, I have finished a new seminar recently that I have only presented one time. This presentation focused on what is expected in the silver market for the next decade. Frankly, when beginning this study I was not really certain what conclusions could be determined about the future of the silver market. The main thinking was that the investment demand for silver would drive the price far higher than present and this is in fact the case as we go through this report. But it was also determined that silver's unique properties will be in higher and higher industrial demand over the next decade as well.

Before going into detail, it must be stated that anytime a long-term projection of anything is presented there are bound to be errors. Things change, life is dynamic, there may be new uses for silver in five years that no one is even aware of today. Secondly, there may be a substitute for silver discovered that might impact overall demand. However, as you study this month's issue keep in mind the facts as they are presented, and think through the ideas and projections to make your own conclusions.

In an effort to not show my bias toward the bullish case for silver, there are areas that are presented with little mention of increasing demand. For example, the consumer electronic area is one that we assume is static in this report. Certainly, if the economy improves or perhaps if it does not, a good case can be made that more electronic appliances will be in use on a worldwide basis over the next decade.

However, this study assumed little to no growth for two reasons. One: it is a more conservative approach, meaning that the forecast for silver demand will probably be better than projected. And two: the amount of recycled silver from electronics is increasing due to the amount of printed circuit boards that are recycled.

Something I have presented on many occasions is that silver is "uneconomic" to retrieve in many electronic applications, and this is the truth. However, governments do not have to run at a profit and can mandate almost anything these days, so in California, for just one example, silver, lead, zinc, etc., are demanded to be captured for environmental reasons and at a far greater cost than breakeven. Please under­stand that this is not a judgment call on our part but only a clarification of the fact that some silver is recycled - that is done, but not on an economic basis.

Further, gold is used in many of the printed circuit (pc) boards and is economic if enough pc boards are processed. Since silver is almost always on the same pc then obviously the silver is captured as well. So to be conservative, the idea is that although the consumer electronics portion of demand will increase, so will the amount of recycled silver. And for the purposes of this analysis, we will consider the growth to recycle rate to remain in balance over the next ten years. You do not have to agree with this assessment - just be aware of it.

If we examine the past decade we will find some interesting facts about the silver market, and for this report to carry the most meaning, it is important to review some of the most important points about the silver market from roughly 2000 to 2010.

The first fact is that the industrial demand was roughly 35% of the total market but by 2010 the industrial component was 54% of the total market, according to the Silver Institute.

The silver market was in a deficit situation from about 1990 and carried through until 2007 or so, when, according to both the Silver Institute and CPM Group, the total amount of mining had brought silver annual demand and annual supply into balance. Up until that time period, the aboveground silver supply was disappearing rapidly at a rate of roughly 100 million ounces per year. From 1990 to 2007, according to the best recognized studies on the silver market, about 1.5 billion ounces of silver were eaten out of stockpiles.

David Morgan is recognized around the globe as an expert on silver, gold, and natural resources. Since 2000 his subscribers to The Morgan Report have profited from his diligent work and expertise. Do you really need help in this sector? - Thousands of subscribers get help every month with The Morgan Report.

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