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Why Apple Is Not Experiencing A Silver Shortage

According to the infamous 'Blogosphere', Apple has announced a silver shortage!

As always, I like to get to the truth about things (I'm bullish on silver, but I prefer the truth, good or bad).

The source of this rumor appears to be www.silverdoctors.com/is-ted-butlers-silver-panic-imminent-apple-contractor-claims-new-imac-production-delayed-over-silver-shortage/ . In this article, an anonymous person who says he works as a sales contractor for a local independent Apple dealer speculates that a delay in the shipment of iMacs was because they use more silver and there is a silver shortage.

He states that "Our shelves are bare with lots of backorders. I've never seen this before." A fact, yes, which I suspect is true. But nothing about a silver shortage yet.

He also states that the new iMacs must use a lot more silver than previous ones, because there is no shortage of hard drives, CPUs, etc. Ask 1,000 people that aren't invested in silver, and I'd be surprised if even 1 suspected that silver is the reason given those facts.

He also claims that Apple raised the prices $100 because of the silver problem, and that Apple may lose money on the backorders. I'll get to his $3,000/oz silver prediction later.

Let's look at the facts. The Silver Institute's "The Outlook for Silver Industrial Demand, November 2012" states that laptops use about .3-.5g of silver, and televisions (mostly LCD) use about .05-.4g of silver. So let's say the iMac screen uses 4 times the average LCD television at .9g of silver. In the 4th quarter of 2012, Apple sold roughly 1 million less Macs than a year earlier. 1 million units times .9g is 900,000g, which is less than 30,000 ounces of silver (a bit under US$1M worth).

Now, if I ran Apple and got a phone call that there was a wholesale silver shortage and no way to get 30,000 ounces of silver, I would call Hannes Tulving (who deals with larger retail customers that occasionally place orders this size) and place an order for 300 100oz bars and wire him some money. No delay at all in shipping the iMacs. Or order from APMEX, or several other retail dealers who have that much in stock.

So if Apple really did have a problem getting silver, the shipment delay of Apples would have been due to incompetence.

And as far as the myth that Apple could lose money due to a rising silver price even with a $100 price increase, the price of silver could go to over $3,000/ounce ($96/gram) and Apple would still be ahead.

Isn't it funny that this contractor didn't write his prediction of $3,000 silver, but instead wrote that Apple would be losing money on a $100 price increase?

JG