Mazda Motor Corp T , owned one-third by Ford Motor Co F. N , has achieved a similar feat using single-nanotechnology, which will allow it to slash platinum and palladium use by up to 90 percent. Mazda has not said when the technology would be put to use. Honda Motor Co T Chief Executive Takeo Fukui said technology, though not yet perfect, also existed to replace precious metals altogether.
Honda used a class of minerals called perovskites in an earlier version of the Step Wgn, a minivan sold mainly in Japan, but ditched it due to problems with durability. Other promising alternatives are on the horizon. Japan's Mitsui Mining and Smelting Co Further ahead, Daihatsu Motor Co T , Toyota's minivehicle unit, could develop a platinum-free fuel-cell vehicle after it said last year it had found a way to use less costly metals such as cobalt or nickel.
Hydrogen fuel-cell cars in development today use an estimated grams of platinum, costing thousands of dollars, to separate protons from electrons in hydrogen atoms. The spread of hybrid cars could also reduce usage of PGMs. Takeshi Uchiyamada, an executive vice president at Toyota and father of the Prius hybrid, said such gasoline-electric cars use less platinum than vehicles that run solely on gasoline because they give off fewer emissions to begin with.
Harmful exhaust gases are emitted most during acceleration in gasoline cars, while hybrids use or get assistance from an electric motor during the process. TGR: This performance you're describing can't be based primarily on manufacturing demand.
How much do you anticipate in the way of investment demand? ES: There are two parts to the silver story. One is industrial demand and one is investment demand. Industrial demand has been quite strong, but the thing that's been very unusual in the last year or two has been the marked increase in investment demand.
There are many ways of viewing investment demand, and it's obvious we're going to experience some serious growth here. Judging from the data points that we look at, and as Larisa would mention, when we look at our sales of gold and silver bullion, we're actually selling about five times more dollars of silver than we are dollars of gold.
That means we're selling times more silver bullion than gold bullion. The U. Mint is selling as many dollars of silver coins as dollars of gold coins. I want to emphasize that we're dealing with the flow of money here. The price difference is ; but with that kind of money flowing into this commodity versus that commodity, you also have to look at the availability of one versus the other.
The number of coins is explosively larger than the dollar figure. Something has to give when you have the same amount of money going into two products that are priced TGR: Perhaps Larisa could tell us a little bit about what's happening with Sprott Money, including a comparison to other precious metal investment alternatives.
Larisa Sprott: Sprott Money buys and sells gold and silver bullion, which includes coins, bars and wafers. We either physically deliver it or store it. Our storage depository is located in the State of Delaware. Within the next 6—12 months, we will be opening a facility in Canada. Precious metal investment alternatives include exchange traded funds ETFs , certificates and trusts; for instance, iShares is listed on an exchange—you get a piece of paper saying you own the commodity, but you don't have access to it.
As my father mentioned, GoldMoney offers gold holdings, whereas Sprott Money allows you product choice and physical delivery of the gold and silver. TGR: If you choose to have it delivered. They store it in a bank vault or at home—they have the peace of mind of knowing where it is. TGR: And you're thinking about adding a storage facility in Canada, so there would be a choice? The impression I get is that they fear that what happened back in , when the U.
So, clients might feel safer or more confident storing in Canada. TGR: Would an additional value to an American investor storing bullion in Canada be the ability to convert it into Canadian dollars? LS: Yes, and that's a good point. Anything we sell to clients, we will buy back. ES: We can deal in either Canadian or U.
TGR: Regardless of where these metals are stored, the common view is to hold them in your portfolio as insurance against economic or currency crisis. Because that proportion seems higher than what's appropriate for insurance purposes, to what extent do you look at precious metals as investments versus insurance?
ES: It's a bit of a semantic argument in a way, but I guess I would start with the view that I have a large distrust of the financial system. I really worry that we could have some kind of collapse. It sounds extreme to say, but we nearly had one in '08 and we nearly had one Europe last year.
We still live in a very over-levered financial system. The banking issues just don't seem to go away. We bail out Iceland or Ireland or Greece, and now we've got to bail out Egypt or Tunisia or wherever else is going to have some fiscal difficulties. Ultimately, I just don't think there's enough tangible support for these systems when people want to extricate themselves and take their money out of the banks. Unfortunately, bankers can't get rid of the asset on the other side of their balance sheet.
So I think people will realize sooner or later that having their assets in physical metal is better than a bank deposit. I say that on a universal basis. To get back to whether it's insurance or an investment, I certainly can look at it as insurance because it's the one asset that should maintain its purchasing power. In some kind of financial collapse, all assets other than real assets will go down in value, so in that sense it's insurance.
It's also relatively proven to be an aggressive investment. I think it's all due to the debasement of the currencies and it's relative to the currencies. So I think it's both. We've had a very high weighting in those areas for a long time.
Of course, it has been the right place to be—and I think it will continue to be the right place to be. TGR: The silver market is so small it lends itself to being held down artificially. What measures might free up the market movement? In that situation, quite frankly, I was the most surprised and disappointed person in the world to see that in the middle of a financial collapse, the price of silver—and even gold—didn't rally.
It seemed so unlikely that that should've happened. In my mind, that consequentially suggested forces might have been at work that weren't normal in those markets. But the manipulation will end, if there was manipulation. I'll explain why. On commodity exchanges, the majority of transactions never settle in physical delivery. Just as an example, of the million ounces Moz. Well, obviously, nobody is settling this stuff because you can't have an Moz.
These are just people pressing buttons on computers—you know with their algorithms or whatever—but they're not taking physical delivery. Manipulation takes place when a person who has more money than another person can drive the price of a product up or down, and it's easy to manipulate a market wherein all you need is fiat currency.
Manipulation will end when enough people say, "You know what? I'll take delivery of that product. More and more people are taking delivery. The dealers who are short something like — Moz. Our organization alone owns more than 42 million ounces. That's not a lot of silver to cover a short bet of — million ounces. With every delivery period, those inventories keep going down. They're going to go down to the point where everyone realizes there is no silver left.
As a matter of fact, for all intents and purposes, I think there might be no silver available today, as some mints are no longer taking silver coin orders because they just can't provide them. So, it's obvious to me that this supposed silver inventory doesn't exist anymore and that ends the manipulation.
LS: Speaking of inventories, I'd like to rewind a bit and make a point. There are so many competitors out there, but what sets Sprott Money apart from all of them is that our business model is a lot different in that we don't sell what we don't have in stock. I've heard stories from clients who say they've placed orders with our competitors and had to wait six months for delivery.
Sprott Money has reserves and a lot in stock. TGR: Currently, the aboveground silver remaining is somewhere around one billion ounces. That seems so concentrated that these entities could manipulate the price, as the Hunt Brothers did back in the '70s. ES: Most of those entities represent an agglomeration of individuals' interests; for example, I don't know how many accounts GoldMoney has, but it would all be in individual accounts.
I don't know how many shareholders it has, but it trades millions and millions and millions of shares a day. So, really none of these entities are organizations doing anything—they are groups of investors acting through various vehicles.
I don't think anybody's tried to corner the market here. TGR: So, we have far more investors in the silver sector than in previous decades.
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