NEWS RELEASE.

July 30, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) announces it has received conditional approval for the listing of the Company’s common shares on the Toronto Stock Exchange (the “TSX”). The approval is conditional on the Company fulfilling a series of standard requirements. The common shares of Balmoral will commence trading on the TSX once final approval has been received. Upon listing on the TSX, the common shares of the Company will continue to trade under the symbol “BAR”.

“Balmoral’s graduation to the senior Canadian exchange, and the premier global stock exchange for resource focused companies, represents a significant milestone in the Company’s evolution,” said Darin Wagner, President and CEO. “A TSX listing will further raise Balmoral’s profile, providing simpler and more comprehensive access to a broader range of international/institutional investors and capital pools at a time when retail, institutional and corporate investors are looking for expanding, higher grade gold assets like those under exploration by Balmoral in Quebec, Canada.”

To learn more about Balmoral Resources – CLICK HERE.

CompanyFeed™

Gold is trading back above $1322 which was a two-year low when hit by April’s gold crash. So is the recovery underway? Maybe, maybe not. We take a quick look at some of the factors currently shaping the price of the shiny yellow metal.

Wednesday’s action – opening higher but ending the day down – “formed a bearish reversal pattern called Key Reversal,” says gold price analysis from fellow London market-maker Societe Generale. “Gold is therefore poised to correct lower to the previous congestion at $1303/1295.”

After new data on Wednesday showed China’s manufacturing activity falling to an 11-month low, the State Council in Beijing last night unveiled what one analyst calls “a mini-stimulus.”

Aiming to “arouse the energy of the market,” the cabinet cut taxes on small business, reduced paper-work for exporters, and invited new investment in railway expansion.

“China’s leaders turned to credit-fueled investment… after export demand faded in the wake of the 2008 financial crisis,” says a Wall Street Journal report, noting that investment’s share of Chinese GDP rose from 42% to 48% in the six years to 2012.

“China’s world-renowned 8 to 12% growth rate is a myth,” writes financial author James Gorrie in London freesheet City AM today, “even as it now slips down towards 7% – China’s hard landing will… unfortunately be our hard landing as well.”

A cross-asset report from Societe Generale sees strong gold price volatility on a China hard landing, perhaps with “a sharp bounce from the initial sell-off if global central banks respond with further QE.”

Looking at US policy, “Recent communication by Fed officials has emphasized that the overall level of monetary accommodation will not be reduced significantly,” says a note from commodities analysts at investment bank Goldman Sachs.

Now forecasting an average gold price of more than $1400 per ounce for 2013 as a whole, the metal will average $1165 next year, the note says – repeating Goldman Sachs’ previous outlook – with a possible drop to $1050 by end-2014.

Dollar gold has so far averaged $1491 per ounce in 2013.

Gold mining companies took advantage of Jan-June’s drop in prices to reduce their hedge book, analysis from Thomson-Reuters GFMS said Thursday.

Building a total forward sale of nearly 3,000 tonnes by 2001, the gold mining industry then “de-hedged” that position as the price rose.

On top of the 11 tonnes bought back in the first 3 months of the 2013, “During the second quarter miners took the opportunity to reduce hedge cover further as the gold price fell sharply,” says the Global Gold Hedge Book Analysis, identifying another 17 tonnes of de-hedging between April and June.

Contrary to recent talk of a return to gold miner hedging by other analysts, “We forecast that producer activity will remain on the side of net de-hedging for the year,” GFMS adds, “despite the sharp fall in price.”

NEWS RELEASE.

July 24, 2013: Vancouver, B.C. – Golden Arrow Resources Corp. (Stock Profile – TSXV:GRG) has been granted additional concessions that surround the Chinchillas project, effectively tripling the area of the entire property to 1,160 hectares. The mining authority has granted the concessions as well as the drill permit for the newly acquired area.

The mineralization delineated at the Chinchilla silver project is open in all of these directions, and the potential to expand the current resource is high. To date the silver resource is 32.6 million ounces silver equivalent indicated and 72.2 million ounces silver equivalent inferred (1). This additional ground will be the focus of the next phase of exploration, with surface mapping, geochemical sampling and geophysics all planned. The phase III drill program will incorporate additional drill targets. The objective of the phase III drill program is to increase the size of the recently released indicated and inferred silver-lead-zinc resource (see news release dated May 9, 2013).

In addition, Golden Arrow is undertaking an internal economic analysis of the Chinchillas project to determine whether to complete a preliminary economic assessment prior to, or after, completing the drill program. The internal review is being co-ordinated by independent consultant Ken Kuchling, a mining engineer specializing in economic reviews.

Golden Arrow has also engaged the services of Knight Piesold Ltd. (KPL) of Vancouver to commence engineering studies for the Chinchillas project. The work will include a preliminary mine development plan, as well as the commencement of environmental and social baseline studies. KPL is an international consulting company providing engineering and environmental services for the mining, power, water, transportation and construction sectors. KPL has offices in Mendoza, and has provided engineering services for several prominent mining projects in Argentina, including the Pirquitas, Alumbrera and Gualcamayo.

Concurrent with the engineering studies, Golden Arrow is continuing its metallurgical testing program with Inspectorate Exploration & Mining Services Ltd. Initial flotation results were very positive for the recovery of silver, lead and zinc (see news release dated May 6, 2013). The company is now engaged in optimizing the flow sheet with the goal of producing a separate high-grade, silver-bearing lead concentrate and a zinc concentrate.

The project web page has links to the technical report, as well as interactive three-dimensional models and sections of the deposit, provided by Corebox.

With respect to the company’s Mogote project in San Juan province, the company discloses that pursuant to the investment, exploration and option agreement dated Sept. 2, 2010, between the company and Vale Exploracion Argentina SA, Vale provided notice of its decision to terminate the agreement effective 30 consecutive days from the notice date of July 5, 2013. Golden Arrow’s management wish to thank Vale’s technical team for its outstanding professionalism during the term of the joint venture, and the company will remain in contact with Vale to discuss possible future endeavours.

For more information on Golden Arrow Resources – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

July 23, 2013: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) announces an updated Mineral Resource estimate by GeoStrat Consulting Services Inc. for the Renard Diamond Project, Stornoway’s 100% owned flagship development project located in north-central Quebec. The update follows the successful completion of the Renard 65 bulk sample earlier in the year and, additionally, incorporates refinements to the geological models and diamond content estimates of certain other kimberlites made since the project’s previous Mineral Resource statement was published in January 2011. Highlights of the new estimate are as follows:

A total Indicated Mineral Resource of 27.1 million carats representing an increase of 14.0% over the previous estimate; the successful conversion of 2.3 million carats (7.86 million tonnes at 29.3 carats per hundred tonnes) of near-surface Renard 65 Inferred Mineral Resources to Indicated Mineral Resources, representing kimberlite amenable to open-pit mining to 150m depth; a total Inferred Mineral Resource of 16.9 million carats, a 3.5% decrease compared to previous estimate, as increased estimates of Inferred Mineral Resources at Renard 2, 4 and 9 partially offset the conversion of material from the Inferred to the Indicated category at Renard 65.

An additional 25.7 to 47.8 million carats (54.6 to 74.9 million tonnes) have been designated a “Target for Further Exploration” to 775 m depth, below which each kimberlite remains open.

The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, the potential quantity and grade of any exploration target is conceptual in nature, and it is uncertain if further exploration will result in it being delineated as a mineral resource.

Matt Manson, Stornoway’s President and CEO, commented: “We are pleased to be able to confirm the successful conversion of a large part of the Renard 65 kimberlite to the Indicated Resource category, for its inclusion in the Renard mine plan. This open pit ore will allow us to utilize the designed expansion capacity of our plant from 6,000 to 7,000 tonnes per day, and is expected to provide for an extended reserve tail for the project. At the same time, we have been able to convert into new Inferred Resources the large quantity of diamonds contained within the brecciated country rock that is entrained within and around the Renard 2 kimberlite. These diamonds are derived primarily from the abundant hypabyssal kimberlite which has been drilled and sampled repeatedly within the Renard 2 eruptive envelope, but which has never been incorporated into previous resource estimates. A large part of this material is expected to be mined as waste or mining dilution, and has previously been designated a zero grade in our production schedule. Both of these resource additions offer near term production gains for the project.” Matt Manson continued: “The updated Mineral Resource estimate has re-confirmed the very large upside of 25.7 to 47.8 million carats outside the formal Indicated and Inferred categories at Renard. Taken together, Renard represents one of the world’s most important new sources of high value diamonds.”

To learn more about the Renard Diamond Project – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

July 22, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported it has received, from the offices of Revenu Quebec, a cash payment of $2.12 million. The payment represents the Quebec mineral exploration tax credit relating to the Company’s 2011 exploration expenditures on its Detour Gold Trend and N2 properties located in Central Quebec. Eligible exploration expenditures on the Company’s Quebec Properties qualify for a refundable provincial tax credit of 35%.

With receipt of the 2011 tax credit the Company currently has cash reserves of approximately $9.5 million, working capital of approximately $10.0 million and no debt.

To learn more about Balmoral Resources – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

July 18, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported that the latest round of drill testing on the Company’s Northshore Property in Ontario has intersected a new high-grade gold bearing vein system in hole WB-13-47, the final hole of the current program, returning an intercept of 5.23 g/t gold over 6.00 metres at a vertical depth of less than 15 metres, including 19.20 g/t gold over 1.50 metres.

This shallow, high-grade intercept is located in an area of sparse testing between the Afric Gold Zone and the former producing high-grade Northshore mine on the Property. GTA Resources and Mining Inc. (“GTA”), the operator of the current exploration program on the Northshore Property, interprets this upper intercept, and a second high-grade intercept of 8.85 g/t gold over 1.00 metre located lower in the same hole, as trending parallel to the Northshore vein system and open for lateral and vertical expansion.

“We are very encouraged to see new, shallow, high-grade gold opportunities opening up at Northshore, as well as further progress in defining the broader elements of the gold system on the Property,” said Darin Wagner, President and CEO of Balmoral Resources.

To view a table of the results – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

July 16, 2013: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) announces the receipt of a positive Environmental Assessment Decision for the Renard Diamond Project from the Canadian Environmental Assessment Agency. The project has now received all of the major Québec and federal government authorizations required to commence construction.

Matt Manson, Stornoway’s President and CEO, stated: “Today’s announcement of the completion of major project permitting at Renard comes just 18 months after the filing of the project’s Environmental and Social Impact Assessment. This is an extraordinary achievement by Stornoway’s environmental and community engagement team, who have been aided throughout by the close cooperation and support of the Crees of Eeyou Itschee and the communities of Chibougamau and Chapais. With this latest milestone achieved, we look forward to the opening the Renard Mine Road later this year, which will make Renard the first fully-permitted diamond mining project in Canada with a permanent road.” Matt Manson continued: “With today’s news we are also pleased to announce the promotion of M. Martin Boucher to the role of Vice President, Sustainable Development, in recognition of his exemplary leadership of Stornoway’s permitting operations.”

The Renard Project falls under the social and environmental protection regimes of both the James Bay and Northern Québec Agreement and the Canadian Environmental Assessment Act. The project’s Environmental and Social Impact Assessment (“ESIA”) was filed with the regulators in December 2011, and public hearings were held in June and August of 2012. Stornoway received its Mining Lease from the Québec Ministère des Ressources naturelles in October 2012 and its Québec Certificate of Authorization from the Québec Ministère du Développement Durable, de l’Environnement,de la Faune et des Parcs in December 2012. Today’s announcement represents the culmination of all public consultations and regulatory assessments arising from the project’s ESIA. Operating permits can now be sought for site specific activities under the authority of the overall global authorizations.

To learn more about the Renard Diamond Project – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

July 16, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported that it has acquired a 100% interest, by staking, in a new property asset located proximal to the Company’s existing N2 property and the now producing Vezza gold deposit in Central Quebec. The new N1 Property is located 10 kilometres west of the N2 Property and 9 km west of the Vezza gold deposit along the projection of the horizon hosting the South Gold Zone on the N2 Property. The N1 Property straddles the southern boundary of the Casa Berardi deformation zone which hosts the operating Casa Berardi and Vezza gold deposits to the west and east respectively. Acquisition costs for the property were $325.

“The N1 acquisition represents a very low cost, prospective acquisition located along a major gold bearing structure in the Abitibi,” said Darin Wagner, President and CEO of Balmoral. “The new property shares logistical synergies with our N2 property which is located adjacent to Quebec’s newest gold mine.”

Accessible from regional highway 109, and located between the Vezza gold deposit and the Sleeping Giant mill complex, the N1 Property has a very limited exploration history with available assessment records indicating the presence of only three drill holes on/near the property. A map showing the location of the new property is available at www.balmoralresources.com.

CompanyFeed™

During a time in which the mining sector is struggling to survive a darwinian period, legendary mine developer Rob McEwen was kind enough to share perspective on the state of the market.

Rob was the founder and former Chairman and CEO of Goldcorp Inc. (Stock Profile: TSX:G & NYSE:GG), which is by market capitalization, the largest gold producer in the world. Today, he is the top guy at the company that bears his name – McEwen Mining (Stock Profile – NYSE:MUX & TSX:MUX).

Rob, you and the team there at McEwen Mining recently announced a change of game plan in terms of development and production growth for the company in response to the extremely challenging conditions we’re seeing in the mining sector today.

Can you explain the thrust of that announcement and what it means from a strategic standpoint?

Well, we wanted to inform our shareholders and the market that the decline in metal prices did have an impact on us and wanted to keep them informed. So at the beginning of the year, we were projecting production growth going from about 100,000 gold eq. oz. to 130,000 oz. this year, and then 280,000 oz to 290,000 oz. on an annualized basis by the end of 2015.

The bulk of that growth was coming from our second project in Mexico called El Gallo 2, which had a capital cost of about $180 million. At the beginning of the year, we looked at it and thought well, based on the prices of silver and gold at that time and our cash holdings–for that $180 million, we should get about a third of it from our cash and cash flow, a third from capital leases, and the balance we thought we would be able to cover with the proceeds from the sale of our Los Azules copper project.

What we found was that the metal prices dropped, and our projected cash flow shrank considerably. Los Azules we put up for sale at the beginning of the year and had expectations that it would bring in several hundred million dollars—but we found there was no market for mega copper projects and Los Azules is a large copper project in Argentina. We further found there was no appetite for Argentinean assets amongst investors, and so the result was no sale.

So when we looked at it, we saw our cash flow was down, part of our funding for El Gallo 2 hadn’t materialized, and the access to equity and debt markets as we progressed through the year– became effectively closed to junior producers, exploration companies, and for that matter, most of the market.

Even for the producers in the market, it’s closed. Investors have said this isn’t the place they want to be. They would rather be in the broad market, and gold prices are still falling.

So that made us start looking into the alternatives. We found one in that we were having good exploration success around our El Gallo 1 mine which started commercialized production beginning this year. So we were having good exploration results and we thought maybe we could increase our production there.

The more we looked at it, we saw that we could expand our pads, crushing circuit, processing plant, and for a small amount of capital, $5 million—we could more than double our production and lower our operating costs.

So that was a positive.

Then we looked at our El Gallo 2. El Gallo 1 is gold and El Gallo 2, which is located some five miles away from El Gallo 1, is a silver deposit and we were going to process it with a mill. When we looked it, we realized we had already done some studies to see how much we could recover if we did a heap leach operation, and we were getting recoveries between 45 and 65 percent of the silver by means of a heap leach method.

So we looked at it and saw the capital cost of a heap leach is about 20% of the cost of a mill. So rather than spending $180 million, we’re looking at a cost of about $20 million, which is about 10% of the cost of the mill. We wouldn’t be producing the 90% silver that we were projecting…but we would be getting 60% by spending 20% of the money. Getting only 60% of the metal would be a good trade-off–it would improve our internal rate of return, reduce our capital requirements and should allow us to fund most of it internally. In this market, the ability to fund all of your production growth internally without accessing the debt or equity markets is a great advantage.

So we’re going through further metallurgical testing at El Gallo 2 and looking at a bulk sample, and if it proves viable with recoveries greater than 50%, we’ll be looking to expand our facilities at El Gallo 1 to accommodate ore that would be trucked from El Gallo 2. We’ll be using a common production base.

Now if you look at the net effect, we were [originally] looking at producing on an annualized basis, 290,000 ounces of gold and gold equivalent, converting the silver to gold.

[By] increasing the production in El Gallo 1 and altering the method of El Gallo 2…we would be producing 280,000 ounces of gold and gold equivalent. So it’s only about 10,000 ounces less than the original projection and we would be able to finance that internally rather than having to access the debt and equity markets. So I think that’s positive and in the interim we’re continuing exploring on the Mexican property which has been giving us some pleasant returns.

The last time we spoke you mentioned a bit of surprise and frustration when you stepped into mining from the finance industry in terms of realizing how slow things moved. You said it was like putting your feet into a bucket of quick dry cement.

And as you point out, by using 10% to 20% of the initially intended capital at El Gallo 2, and achieving about 60% of the initially intended production, the IRR would be much greater. What advantage does a higher speed of return offer in this market?

Being able to get up and running faster improves your return and reduces your risk, whether it’s geopolitical, operational, etc. The ground is moving very rapidly in terms of government regulations, taxations, expectations, etc., so I think if you can go in and get your money back, and then start getting a return on your investment…the sooner you do that, the better off you are. So it definitely reduces your risk as opposed to say a big project.

If you look at Barrick’s Pascua Llama (Stock Profile: NYSE:ABX & TSX:ABX), it was coming in at just under $3 billion originally, and now they’re forecasting it can be as high as $8.5 billion dollars, and for environmental reasons, they had to delay the project, and I think they’re into it right now for $4.5-$5 billion. They were hoping to get it up and running by 2014 and now, they have to clear some environmental hurdles and they won’t get those out of the way until mid-2016.

So when you’re building a mine of that size in the High Andes, you got a huge workforce and everybody is coordinated. Those delays are going to move the costs up considerably, because you have to [most likely] reassemble teams, as you’re not going to keep certain people going for two years while you’re waiting for a permit.

Has this market been a tougher competitor (or opponent) than the markets you’ve faced in the past especially during your time with Goldcorp? I know there were some very tough years that you’ve spoken about in the past.

Well, there have been a number of corrections in the market that I observed during my career. They all come very suddenly, and they all vary in severity. With this one, you start to remember that government-induced hurdles get thrown into the mix every once in a while. You tend to forget about those when you’re running along.

But with the benefit of looking back, you can say, “Oh, yeah, they did that before.” More taxes, more royalties and maybe a little bit of nationalization taking place. So the industry is not without that risk and that goes back to your earlier question about timing. If you can shorten it, hopefully you have a little more time to get your money back and get a profit.

What’s different in today’s market is the existence of the ETFs. ETFs really started taking off for both gold bullion and gold mining shares (NYSE:GLD). I think it was in 2003 and 2004 that the gold bullion ETFs started appearing. After that, the mining share ETF appeared.

So in the hands of the very few, you have large holdings of bullion and [mining] shares, much larger that what you’ve seen before. When the market swings, there’s a lot more pressure now as those holdings and funds sell. I think they’ve had a much bigger impact on the run-up because there was more demand to carry [them]; but also on the way down when it feels like the world is ‘getting better’ and you don’t need gold anymore–which I don’t think is the case. But it exaggerates the move from the up and the downside.

You’ve also spoken about the non-existent interest rates accelerating the stock market, and as being sort of a theft from savers, from the builders of society, the conservative element.

The recent pick-up that we’re seeing in interest rates over the past month or so–is this a sign of health returning or is it a sign of potential danger in your opinion?

Well, higher interest rates definitely help savers. They might slow down the economy because I think right now there’s a misallocation of capital. Investors in general would like to assume that all the problems are behind us and that the economy is going to pick up.

[Rising stock markets have] disguised the fact that debt levels around the world by governments are continuing to increase, that the trillions of dollars that have been pumped into the system are having a small impact on reducing unemployment levels, and that there’s problems in the European common market, particularly with the members from the south around the Mediterranean. Demand in China has also been fluctuating, and causing some hesitation in people’s views of what is going to happen to commodities. So it’s not a time to be complacent and I think interest rates will start to move up, and as they do, there’s going to be some concerns about how we sustain ourselves with higher interest rates.

If you look at the US gross national debt, it’s just under $17 trillion. One way the Federal Reserve and other central banks around the world are able to take out all this debt is because the interest rates are so low. Those rates go up. We’re going to see a very different situation and I think as people perceive risk in the right light, they will demand more for the money than what they currently receive.

As the readers probably know, you own 25% of McEwen Mining. Are you adding to your position here?

I haven’t yet because we keep putting out news. But I’m thinking this is a time to be looking at opportunities, and it may be opportunities that we can put into McEwen Mining by acquiring another asset. I would be inclined to do that.

In terms of my investment, I own 25%, and my cost basis in McEwen Mining is $125 million, so I have a keen investment interest in the company.

On the Dow to gold ratio as of late – do you have any thoughts there?

We’re at twelve ounces to buy the Dow and not too long ago, we were as low as seven ounces to buy the Dow. It looks something akin to what happened in the ‘74 through ‘78 period where gold went from $200 an ounce, down to the mid-$90s per ounce, then back up to $200 before it moved on to $850 an ounce.

So it feels like we’re entering the second half of this cycle, and that ratio number maybe will go to thirteen, but then it’s going to go back down towards seven and ultimately below that considerably.

Winding down, are there any items that we may have missed about any aspect of the conversation so far?

From a McEwen Mining perspective, we have cash in the bank about $40 million right now. We don’t have any debt so we don’t have to service or repay it. We have projects we can fund without accessing the outside markets, and to me that’s a much better position than a company that is halfway through a build and finds it’s having to raise more money, or a company that has a project to build to which the cost of building is bigger than the market cap.

So I like the position we’re in right now and I think we would be looking outside to join forces possibly with other companies to build a stronger company that can take advantage of this opportunity.

For the readers, if they’re looking for gold exposure, we are best described as a speculative investment because we’re a junior producer.

But some of the seniors might also be considered speculative because of the levels of debt on their balance sheets. There have been more than fifteen CEOs removed from intermediate and senior producers in the last eighteen months, and their boards are probably feeling a little vulnerable right now because they backed the people they fired and so they’re telling the new CEO, “Don’t go out and buy anything new, fix up what’s not working, don’t think about developing new projects and cut all discretionary costs…start improving the operating margins and maybe think about increasing the dividends…and maybe even think about doing a share buyback.”

You’ll probably see large write-downs this quarter, but over the next couple of quarters, operating margins [will improve] because they’ve written down their costs, so that might be one area for someone [to look] who’s risk-averse if they want exposure to gold.

The difference between the performance in gold and gold stocks is enormous right now and therefore on a relative value basis, you can get a yield with some of the senior gold stocks, and they have been badly beaten up. So it’s not a bad time to enter.

If readers are looking for something more speculative (maybe a higher beta), then you look to intermediate and junior producers and then to the exploration companies, that are just crawling along the ground right now in terms of price… [but] I do think we are close to the bottom.

So there’s a low cost of entry, good relative value. We seem to be near the bottom of this correction, and I think there is more to be made on the upside than lost on the downside right now.

For all of its monetary and investment history, silver is by far an industrial metal today. The industrial sector consumed close to 466 million ounces of silver in 2012 according to the Silver Institute. Add what’s left of photographic demand, and you get to 524 million ounces, some 52% of total production (1,048.3 million ounces in 2012).

We already discussed what happened to photographic demand in Part 1 and we looked at photovoltaic (PV) silver consumption in Part 2 of this series. There we saw how PV demand remains a long way from filling the gap left by the collapse of photography.

So who does buy silver in bulk? Well, silver is also used in electronics and catalysts. And a fast-growing industry that consumes silver is the production of ethylene oxide.

Ethylene oxide (EO) is used in the production of antifreeze, polyester, heat transfer liquids, gas dehydration, and solvents. It is also used in cosmetics, pharmaceuticals, lubricants, paint solvents, soaps, detergents, gas purification, emulsifiers and dispersants. Because of the wonderful properties of this reactive chemical, its growth has benefited the silver market as well. Because the precious metal is used as a catalyst in EO production.

Some 90% of silver’s total catalyst demand comes from EO production. The EO market has enjoyed a 30-year continued growth cycle, according to consultancy Metals Focus Ltd. In 2002 it consumed 100 million ounces of silver, and it is projected by 2017 to reach 225 million ounces per annum. This rivals the historical high of the photographic industry. However, the EO market will not continue to grow at this pace. Because consumers are able to recover the silver from the catalyst. This means that at some point its demand will stabilize and perhaps decrease.

By geographical area, the United States is the largest consumer of silver. It is also the largest consumer of silver jewelry. Over the last couple of years demand to buy silver as jewelry has remained strong, as gold remained at high prices, leading consumers to substitute. But now, with the recent decline in the gold price, there’s good reason to think silver will have a bigger struggle to keep its share of the market.What of that other major consumer of silver – investment? This is not a primary user. We are talking about the investor, who can substitute at will. As of this writing, the SLV (which is the call sign for the largest exchange-traded silver trust fund or ETF) is holding 320 million ounces of silver. This number represents 31% of annual world silver supply using 2012’s statistics.

That’s a significant overhang if it comes back to the market. But overall silver investment has grown significantly in both the ETF market and coins and medals. Since 2002 sales of coins and medals grew close to 250% worldwide.  Yes, that only represents only half of the type of consumption we see for jewelry. But adding the ETF and other physical investment products together, it becomes larger than the jewelry by 28%.

What are the concerns then for an investor? What happens if the silver comes back into the market that is in the hands of investors? What happens if the price goes down? Finally what happens if the price goes up?

The funny thing with silver is that when the price goes down demand from the industrial sector and jewelry sector will rise and it will be consumed. It may take some time but it will happen. At the same time if the price is low then there will be less mining because of profitability. Eventually the fundamentals will drive the price higher.

If the price makes new highs we usually see large liquidations of metal either from scrap recovery or investors. This will force market prices to correct to a level that will sustain the available material. Of course if silver were to be demanded as forms of currency, then all bets are off. The price of silver would then reach unknown heights.

Fundamentally silver remains an indispensable metal. It is one that mankind cannot do without. There will always be uses and demand for silver. Its beauty and its relevance as a store of value – added along with its physical and chemical properties – make it an important part of anyone’s portfolio. Just like gold, it remains a good thing to own.

Miguel Perez-Santalla, Guest Contributor to MiningFeeds.com

About the author: Miguel Perez-Santalla is vice president of business development for BullionVault, the physical gold and silver exchange founded a decade ago and now the world’s #1 provider of physical bullion ownership online.