Fall 2007 ConferenceFinding Marketsfor Your Silver InventoryBill TierneyManager, Microsoft Dynamics NAV GroupComputer Associates, Inc.
Silver & Gold • Silver differs from its more highly prized sister metal Au as it is both a Precious Metal Investment and an Industrial Commodity. • The value correlation between Au and Ag has historically been between 10-15:1. This can be traced back to the 1800’s when England, France and the U.S. set the relationship between Gold and Silver coins at 15:1. • Silver, unlike Gold, is chemically active and generally consumed beyond practical recovery. • Silver Demand: • fast approaching 1 Billion Ounces / Year • has increased 26% since 1995 • has outpaced supply every year since 1990 - 40% Industrial (430.6 Million Ounces in 2006) - 30% Jewelry / Silverware - 25% Photographic Applications - 5% Coins / Production Hedging The Silver Users Association 2007 Fall Conference
The Silver Users Association 2007 Fall Conference Industrial Strength Silver • Plasma TV and display screens use up to a Toz of Ag • Smart tags on products replacing bar codes • Low E squared windows require a double layer of Ag to reflect 95% of the sun’s rays • Ag kills germs without harming the body • Best electrical conductor of all metals Emerging & Entrenched Industrial Technologies
The Silver Users Association 2007 Fall Conference Emerging and EntrenchedIndustrial Technologies • Water purification • Brazing and soldering • 700 tons of Ag are in continuous use in the world’s chemical industry for the production of plastic • China / India Emerging & Entrenched Industrial Technologies
The Silver Users Association 2007 Fall Conference Silver Inventories • More silver has been consumed by industry than has been produced • U.S. Government has sold off its inventory of 5 billion ounces • U.S. Mint announced it will buy silver on the Open Market • 5x more Au than Ag in above-ground supplies • Fewer years of Ag production remaining underground compared to Au • Not currently reflected in market price There is no free market explanation for depressed Ag prices given the increased demand and depleted worldwide inventories. Artificially depressed Silver prices.
The Silver Users Association 2007 Fall Conference Industrial Strength Silver • The amount of silver used in an industrial product is a small percentage of the total cost of the product. • Industrial users will not readily substitute other materials for silver when the price rises. • More inclined to build inventories to protect themselves from delays and price increases. • Will not risk the shutdown of the assembly line for want of a single, lost-cost component. • Witness the rise in the price of Palladium to over $1100/Toz because industrial users panicked and built inventories. Silver has more industrial applications than Palladium.
The Silver Users Association 2007 Fall Conference Industrial Strength Silver • Establish Consignment stores of Silver for select Industrial customers • Customer-managed inventory • Your inventory at their location • Monthly Reporting and Invoicing • Min / Max inventory levels • Reorder Points • Value-added price for Silver A Refiner’s Response:
The Silver Users Association 2007 Fall Conference Industrial Strength Silver • Add value to Silver through fabrication • Innovation as a way to maintain a competitive advantage • Assume responsibility for a step in your customer’s process • Find new markets • Start small, test the waters • Become a Top Quality, 2nd Tier Silver Producer A Refiner’s Response:
Thank You. Bill TierneyManager, Microsoft Dynamics NAV GroupComputer Associates, Inc.firstname.lastname@example.org www.caisoft.com/refiners