Dominique de Kevelioc de Bailleul: What seems unimaginable today, but in the near future it will take gold, not dollars, to buy an even more precious metal—silver, according to economist and best-selling author of investment books Stephen Leeb.
“Silver, it’s more than precious; it’s a critical, vital metal,” Leeb told King World News during the weekend. “You cannot run the world without it as the world stands today.” Get my next ALERT 100% FREE
Leeb continued to explain that China has been stockpiling resources, not because of current demand, per se, but because of Beijing’s stated plan to roll out huge alternative energy infrastructure projects throughout China. And these projects will require China-size quantities of various metals to fulfill its national objective of becoming less dependent on Middle East oil.
“The Chinese are frantic about building out renewable energies. Frantic, because they see the peak in oil. Frantic, because they see next decade peak in coal,” Leeb continued. “So what are you going to replace coal and other hydrocarbons with, if not wind and nuclear . . . you’re going to need all of the above in massive concentrations.”
The World Gold Council (WGC) data for 2010 back up Leeb’s analysis. According to the WGC, after being a net exporter of approximately 3,500 tons of silver in 2009, China has become a net importer of silver. In 2010, the WGC reported China suddenly became a net importer of 3,500 tons of silver. And that abrupt turnaround is just for starters, according to Leeb.
“Their [China] stated goal is: they want 15 percent of all energy consumption in the country, and I don’t mean just electricity,” Leeb explained. “I mean cars, et cetera, all of it, to be on renewables by 2020. I think their goal is more like 25 percent by the early 20s.”
To accomplish that ambitious goal for a nation of 1.2 billion Chinese, it will require staggering tonnages of copper, nickel, silver and other base and rare earth metals.
Leeb expects that all metals necessary for the development of alternative energies are, not only “critical” to their production, but will become increasingly “scarce” as well.
As an example, windmills, off the coast of China, Leeb said, will require more copper and silver than is currently available—which then leads Leeb to another logical conclusion: suppliers of these valuable commodities will not accept dollars some time this decade.
“And here you revolve right back to gold. You’re not going to be able to buy copper in three, four, five years with dollars,” he said. “I mean, you can’t have an auction for something that’s scarce and something you can just create at will. You’re going to have to have gold in there.”
After researching China’s economic policies and the impact on the mining industry Beijing’s stated goals will have on the marketplace, the author of Red Alert: How China’s Growing Prosperity Threatens the American Way of Life, strongly believes that silver will become the new oil due to its unique qualities critical for the production of renewable energies products, such as wind turbines and solar panels.
And because of the eventual inelastic nature of the silver price he sees for the white metal going forward, the JP Morgan manipulation scheme to cap its price is coming to an end. Leeb confidently predicts that the silver price will touch $100 in 2012 on its way to much higher prices throughout the remainder of the decade.
“I think the outlook for silver, both as an industrial metal and certainly as a monetary metal, is as bright as it can possibly be,” Leeb said in a Jan. 31 interview with KWN. “I’m sticking with my target of at least $100. But I tell you, Eric [King], it will happen this year. We are definitely headed for triple-digit silver in the not-too-distant future.”
Related ETFs: ProShares Ultra Silver (NYSEArca:AGQ), ProShares UltraShort Silver (NYSEArca:ZSL), iShares Silver Trust (NYSEArca:SLV), SPDR Gold Trust (NYSEArca:GLD), iShares Silver Trust (NYSEArca:IAU).
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