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Do you think we will see more upside here in silver over the next six months?
“Yeah I do Eric, I think it really comes down to your comfort level with currencies. I think silver is trading along with gold as a store of wealth in a world that has become leary of holding euros, US dollars or British pounds for that matter. Providing we continue to see things like Ireland having to come to the European bank and ask for $85 billion, and your guess is as good as mine, it could be Portugal, it could be Spain, one of those two is going to come next to the parade.
And the borrowing they are doing is on printed money, no different with QE2 in the United States, we are talking about just printing money. In that environment, yeah, gold and silver are going to do particularly well. Unfortunately, there are a lot more problems to face in the financial markets. It could be years before those are resolved. In that sense I am very optimistic about the price of silver and the price of gold.”
What changes are taking place in the silver market?
“Well, I think a couple of things in the silver market have fundamentally changed. We have seen a shifting of above ground inventories of silver that once were held predominently by banks, People’s Bank of China, Bank of India. We have seen a lot of silver coming out of Russia, we have seen the United States sell down what they used to call their ‘strategic silver reserve.’ We have seen all of that material, that above ground supply go into silver ETF’s.
As of the end of last month there was almost 450 million ounces worldwide held invarious ETF’s. My view is that silver is in much stronger hands than government hands. The average investor tends to try to hang on to his investment and make money on it. He’s not as apt to just sell it the moment it goes down, and governments have had a habit of selling at the bottom and buying at the top.
That is a fundamental change. Now because of that I see a lot more long-term strength in the price because we don’t have governments who are going to lean on it when it starts to go down. So that gives me much more confidence in (limiting) the downside.
We are going to see some growth in mine supply but at the same time, offsetting that growth in mine supply are the two other parts of the market:
One is recycle, or scrap, and we’ve seen that declining because that is really a function of silver being used as an example in photography. That is in a secular decline, we are going to digital, and so we are seeing less recycle coming in to the market.
At the same time we are seeing lower government sales which is the other conduit into the market for silver supply.
So while I see mine supply growing, I think it is going to be on a total basis, it will be balanced by declines in those other two sectors.”
What about the potential for a mania in silver?
“If there is a real potential for torque in the price, that is if the global economy starts to recover, and global GDP starts to increase, that could drive the price a lot higher. Would you call that a mania, I don’t know. As the users start to look for silver, they are not really that worried whether it is $25 or $30 or $35, given that is such a small component of the product they are producing.”
With all of the extra people participating in this bull market, could it get a little goofy like it did in 1980?
“It could, I hope it doesn’t, certainly it has the potential for that. I mean we did see oil go above $140 a barrell at one point right? Someone in hindsight might have said that’s kind of a goofy price. We could see the same thing in silver...It’s a fairly small market.”
Anything else to add?
“Buy Pan Am!”
(Laughing) I am going to add that to the piece Geoff, do you mind?
“Not at all, we have great leverage to the price!”
King World News just interviewed Sean Boyd, CEO of Agnico Eagle, and now Geoffrey Burns, CEO of Pan American Silver. Something for both the gold bulls and the silver bulls. It is difficult to run a mining business, but somehow Boyd and Burns make it look easy.
Eric King
Pan American CEO - End Users Having Trouble Getting Silver
With gold and silver continuing to digest recent gains, King World News interviewed Geoff Burns, CEO of Pan American Silver. When asked if he had heard about tightness in the silver market Geoff stated, “Anecdotally Eric, I mean when you talk to some of the fellows who actually trade the physical, they can relate stories where they are actually having trouble getting their hands on quantity. Particularly for some of the end users who are looking for real product, not the investment guys, but the actual elctronics manufacturers, etc. who need physical silver in order to make their products.”
November 30, 2010
KWN BLOG INTERVIEWS
