“The demand is coming from all areas, including jewelry, investment and fabrication and this has resulted in a physical market shortage in the Far East...” “There are Chinese investors now hoarding silver, along with other resources, amid anticipation of higher inflation,” Feng said. “China is short of resources so these investors believe the metals will be more valuable in the future.”Here's the link to the news report: China hoards silver.
Not much commentary is needed to highlight the implications of that report. I will, however, point out a couple of things: 1) the Comex paper short in silver is absurdly several multiples higher than the ability of those who are short (JP Morgan, HSBC mostly) to deliver actual physical silver if the buyers make that demand; 2) The gold/silver ratio is currently around 56; historically this ratio has been fixed as low as 8 (ancient Rome) and usually reverts down to its long term historical ratio of approximately 16 from time to time; 3) It is clear that even if gold were to remain at the current price level, the "poor man's gold" is rediculously cheap in relation to golden gold.
The best way to play this out is to keep accumulating physical silver, especially on price corrections - my preference is 1 oz. silver eagles in sealed mint boxes - and invest in high quality silver stocks (HL, SLW, SVM) and mix in well-researched junior exploration stocks. I will point out that Silver Dragon (SDRG, I own this stock and so does the fund I manage) is sitting on several properties in the heart of China's silver mining district (Erbahuo), one of which (Dadi) is being developed in partnership with Shengda (China's largest silver mining company). It has been determined that the size of the silver mineralization of Dadi is quite prolific. The 43-101 is available on the Company's website: SDRG.
In addition, the Comany has announced its intent to file for a listing on Toronto Stock Exchange (most of the conditions for this have already been met) and it will be filing a 43-101 on its second largest property, Laopandao, sometime this year. If you are interested, please spend ample time with the Company's website. In addition, CEO Marc Hazout is one of the few corporate CEO's who promptly and personally returns all investor phone calls or email inquiries. For rediculous regulatory reasons, a lot of valuable information is posted on the website which the Company is not permitted to announce with press releases (don't ask, it's a b.s. NASD regulation). My view is that once the Chinese have trouble satiating their demand for physical silver, they will turn their attention to investing in local silver mining stocks and SDRG will be get a lot of capital attention when this occurs.