Gold & Silver Coins are real money.
Do you have some as a hedge against inflation?
The U.S. Constitution dictates that "The Congress shall have Power…"
"To coin Money, regulate the Value thereof," (Article I, Sec. 8) and "No State shall…"
"make any Thing but gold and silver Coin a Tender in Payment of Debts;" (Article I, Sec. 10.)
1888 Morgan Silver Dollar.
Here is a nice example of a collectible coin made from Silver.
A bit of trivia: the woman who posed for the sculpting of this design was a school teacher,
and lost her job when the coin was released in the latter half of the 1800's.
Apparently, the image was so true, that she was immediately recognized.
It was against the rules of decency in those days for a woman to pose for an artist.
Silver was once $50/oz. A few years ago, it was barely more than $4/oz.
SIXTY-SIX SPECTACULAR SPECIFICS ABOUT
WHY SILVER IS SET TO SOAR!!
Gold has the "glitter," but Silver is the "sleeper!"
You have undoubtedly read numerous articles about the new bull market in gold during the past two years, but few articles have been written about the potential for a massive rise in the price of silver. You may have even invested into gold coins, and you're going to be glad that you did, but this article gives you 66 specific reasons why you need to give serious thought to placing a substantial portion of your serious savings into silver coins.
I was a stockbroker for 27 years, specializing in gold mining stocks for 19 of those years. For the past 32 years I've been helping clients invest into gold and silver coins. I've been an individual investor in gold and silver coins since 1960 and saved silver dimes and quarters out of circulation since the Treasury stopped minting them in 1964. I've "been-there-done-that" and therefore I probably have a track record that can help provide you with an excellent return in silver coins during the next few years.
Built into the current price for silver (just over $5/oz at the time of this writing) are numerous factors, but the following list is about future forces that will contribute to a MUCH higher price. How much higher? No one, including yours truly, has any way to know. All I do know is that I began telling people they needed to get into gold (it was $35/oz in 1966) because it was going to $100 in the near future. But, very honestly, I had no idea that it would soar to $700 before I'd tell them to sell and take profits. And, although my target for a final top in the price of silver is high, it's probably not high enough!
It's my opinion that the current situation in silver is many times more explosive than gold was in the late '60's when I entered that market, expecting to triple my money - and ended up making over 20 times my investments. But, what I do know is that since 1945, the U.S. government has been selling the ENTIRE silver stockpile - which was the largest stockpile of silver in the entire history of the world! In other words, during the past 59 years, our government has dumped a total of over 6 billion ounces of silver at dirt cheap prices, and as of late 2002, the entire U.S. strategic stockpile is now officially GONE!
The logical conclusion of this analysis is that ANY MARKET that has undergone this degree of distortion (of selling pressure versus buying pressure) for this long, has lost all contact with the reality of supply and demand, and that will ultimately result in a much higher price, now that virtually all above-ground supply is gone. And this leads to an interesting fact - when gold is mined (taken from the ground) the vast majority of it goes right back into the ground (in vaults). When silver is mined, the vast majority of it is CONSUMED! And with the previous government supplies gone, there is not even the potential for any dumping of silver onto the market like there is (and has been done for decades) from the Central Bank's or other gold hoards, including CHINA.
Therefore, with these thoughts in mind, if you hold any significant savings that you would like to see increase in value, I urge you to carefully consider the following specific factors which unquestionably lead any thinking investor to logically conclude that -- an investment into silver coins at this time is uniquely appropriate.
SIXTY-SIX SPECTACULAR SPECIFICS
1. Because of the ongoing silver supply deficit (every year since 1990), known silver stockpiles are extremely low and are well on their way to zero. Between now and "zero-stockpile day", SOMEONE-SOMEWHERE WILL ATTEMPT TO BUY AS MUCH AS POSSIBLE OF THE REMAINING PHYSICAL STOCK. Wealthy individuals, hedge funds, political entities and un-named countries are all possible candidates. At $5 silver, the 120 million-ounce COMEX stock could be had for $600 million. This "accident waiting to happen" will come unannounced and as a surprise to nearly all investors, but especially "gold-bugs."
WHAT'S THE REST OF THE STORY?
2. For eons, the US GOVERNMENT has been a silver seller. They announced that beginning in 2002, they became a buyer due to exhausted supplies; providing an effective double whammy for the silver bull market just ahead -especially if they intend to continue minting the Silver American Eagle coins.
3. In a rapidly rising price environment, the process of metal coming to market will SLOW. Why? DELAYED SHIPMENTS will stand an excellent chance of being worth even more!
4. The historically common practice of stockpiling silver by the big money crowd is not currently in vogue. WORLDWIDE REBUILDING of government STRATEGIC STOCKPILES, central banker VAULTS and Swiss custodial BANK ACCOUNTS will come back into fashion by "The Powers That Be."
5. Due to such a long period of low prices, there has been a decrease in silver SUBSTITUTION research than would otherwise have been the case.
6. Since silver cannot be created, it can only originate from three sources: 1. above ground supplies, 2. re-cycled silver, and 3. mine production. Above ground supplies are nearing exhaustion, leaving only two remaining sources. Simple math: 3 - 1 leaves us with only 2 sources.
7. Silver MINES open and silver mines close. More primary silver mines are CLOSING than opening (usually due to depletion). A report from silver expert David Morgan showed a loss of 50 million ounces of production in 2001.
8. History reveals that year-by-year silver production has increased for as far back as one can see. A new era began in 2002 as YEAR-BY-YEAR SILVER PRODUCTION BEGAN DECREASING. This production decrease is aggravating the current supply/demand imbalance.
9. Because silver has been priced below its production cost for so long, silver EXPLORATION has practically ceased. The net result is that there are almost no silver projects in the pipeline to activate. Rather than just re-opening shuttered mines to meet demand, the industry will have to start their exploration from ground zero for all intents and purposes. While there are multiple gold mining exploration projects in the works, true silver projects are in the extreme minority. During this next 2 to 3 year period, demand for silver could cause the price to skyrocket!
10. And, even if a discovery is made, a mining project must advance through a series of pre-production steps (in-fill drilling, feasibility studies, permitting, project financing, infrastructure construction and the like) before a mine is opened. Because silver has been priced below its production cost for a so long, DEVELOPMENT and ADVANCEMENT phases of silver projects has practically ceased.
11. Because silver has been profitless for so long, when the price of silver rises and the mining companies do decide to gear up, one of their 'discoveries' will be that there is a SHORTAGE OF EXPERIENCED WORKERS. Who will be available that still has the technical knowledge, experience and gumption to get the job done?
12. About 75% of mined silver originates as a by-product of base metal mining. A deepening RECESSION, particularly in manufacturing, will dampen the demand for base metals (such as copper and lead), resulting in decreased silver production.
13. Any ANXIETY BASED CRISIS that comes along will boost demand. Stock market, holy war, oil shock, civil unrest, default, currency crisis etc. are all likely possibilities.
14. Presently, the PAPER CURRENCY PRICE is determining the physical silver price. A price jolt will occur when prices begin to be set by physical silver availability - or lack thereof.
15. Large quantities of silver have been LEASED into the world market. Leasing is generally only productive in a falling price environment. During this process, silver that is BORROWED (leased) is actually SOLD into the physical market, depressing prices. As falling prices reverse or the supply of lease silver evaporates, this prevailing negative counterforce will nearly evaporate. Leasing is like holding your hand in a fire.
16. In most cases, there will be a legal and/or contractual obligation to RETURN LEASED SILVER to the lenders (not paper). This force will add to the demand side of the equation. (Some bankers may have leased material in their safekeeping without the knowledge or approval of the actual owners).
17. A historically huge PAPER SHORT POSITION has depressed prices. When prices begin to rise in earnest, most short sellers will switch to becoming buyers (some will default). To close out a short position, the short must deliver physical silver or buy out their contracts, IF such will be allowed.
18. The same PROFESSIONAL DEALERS and INSIDERS that have made so much money and done so much structural damage on the downside will surely be positioned to capitalize on the upside. At the very least, their personal accounts will somehow be properly positioned. (For example, as recently as the summer of 2002, these insiders had been short more than 350 million ounces of silver when the entire COMEX warehouse only holds about 120 million ounces.) These people are just too big, powerful, smart and well connected to let this stellar opportunity pass them by. Their activities are not simply analogous to holding a lifejacket underwater but rather like holding a helium filled balloon underwater. It doesn't want to just float to the surface --it wants to soar to the moon.
Special Note: As you can see from the following chart, silver has been "underwater" for the better part of the past 14 years. You can have total confidence that the professionals know this chart by heart and are simply waiting for the inevitable silver price explosion through the downtrend line near $6/oz. When (not if) that over-head resistance is penetrated, the price of silver is going to explode, and those of us who are properly positioned, will reap a financial bonanza! We hope you will soon join the hundreds of our clients who have already taken such positions.
19. During the formation stage of new bull markets, ASTUTE INVESTORS do not try to pick bottoms. Rather, the preferred technique is to wait until an apparent bottom can be observed before large positions are initiated. With silver fundamentals as well known as they are, you can be assured that there are huge amounts of INFORMED investment money poised to enter this arena once a technical turnaround is apparent. We believe that will become very apparent when silver moves over the $6/oz level.
20. At this point in the silver cycle, "Joe-six-pack" has placed a higher value on accumulating ever-depreciating piles of paper promises rather than on the accumulation of real, tangible wealth itself. Consequently, on a historical basis, SILVER INVESTMENT DEMAND is vastly under-represented compared to its other uses. When this "blonde moment" passes and history repeats itself, "Joe" will again discover why all history books refer to the beautiful, white metal as a PRECIOUS METAL. Accumulating INVESTMENT SILVER COINS will once again become popular - at much higher prices, unfortunately for most folks.
Special note to the above: Because physical silver is so scarce, this is likely to be one of the few times in history when "waiting for the big breakout" may completely fail the investor. The market may resemble the game of musical chairs with only one major rule change. This time when the music stops, there will only one empty chair for each ONE HUNDRED players. Therefore, prudent silver coin purchases should be made NOW!
21. When supplies are exhausted and prices skyrocket, GOVERNMENT will be expected to "do something." The usual, counterproductive political answer is to interfere and regulate. In economic circles, it is a well-established fact that when anything is regulated, you get less of it. (We would not be surprised if they seized all available supplies and rationed them "according to need.") This could happen with all visible COMEX stocks no matter who the supposed legal owner is. A similar situation recently happened to energy suppliers to California.
22. A percentage of FORWARD SELLING MINERS will repay their metal loans with physical silver thus removing those ounces from the grasp of the marketplace and thus increasing the shortage in the marketplace.
23. A percentage of UNDERWATER, HEDGED MINERS may slow production, close down, or go bankrupt. Because they will owe so much while being denied the profit from higher prices, they will have little remaining incentive to produce their product.
24. LEGAL attacks and LAWSUITS by a wide range of parties will be launched that will effectively curtail some production. Lawsuits by two or more of the following parties will be commonplace: auditors, bankers, bullion banks, central bankers, commodity houses, counter parties, depositors, employees, government agencies, hedge funds, individuals, insurance companies, lessees, lessors, management, mining companies, regulators, shareholders, speculators, third parties, and users.
25. As the US dollar continues its downward plunge, as is expected, it will take more dollars to buy the equivalent amount of silver.
26. The RULES, under which the COMEX and Commodity Futures Trading Commission (CFTC) presently operate, could be described as being ignored and have contributed greatly to the depressed metal prices. More rigid enforcement should be anticipated.
27. In a free market, INFLATIONARY FORCES are unevenly manifest in different economic sectors. One day it's Nevada land prices. The next day it's the price of milk. The price of silver has gone nowhere for years, which seems to indicate in part, that ongoing price inflation has not yet been properly priced into this commodity.
28. When INFLATIONARY FORCES once again sweep the land, SILVER and other precious metals will again shine. Why? Because they have always been one of the vehicles of choice by astute investors during inflationary periods.
29. INVESTMENT DEMAND -- JAPAN -- A SPECIAL CASE: DESIRE and NEED are not the true forces that move markets. The potential consumer/investor must also have the FINANCIAL ABILITY to meet his desires and needs. Many third world people have a desire and need for refrigerators & air conditioners. But, they lack the financial means to follow through. Enter -- the JAPANESE SILVER INVESTMENT DEMAND -- a special case scenario. The world's most successful SAVERS (financial ability) are being pushed to the edge of a financial cliff. Precious metals investments represent their only viable means of both escape & PROFIT. With an average family nest egg of $115,000 and $5 silver, 5,217 Japanese families could theoretically buy the entire 120 million-ounce silver COMEX stockpile. DESIRE, NEED AND ABILITY are all in place for this GIGANTIC TSUNAMI to begin.
30. The prophecy that "China is a sleeping giant" is certainly proving to be true. As a group, CHINESE PEOPLE are not only extremely hard-working but they also RANK NEAR THE TOP AS SAVERS. Furthermore, they have more experience with the pitfalls of paper currency than any other nation. The combination of the above factors clearly suggests a future, high level of precious metals demand. Shanghai, 12/5/03 "In the past 50 years, the gold market was under a government monopoly with gold consumption focused on jewelry or industrial use in China. Total consumption is at a low level as compared with other nations. In 2002, per capita consumption in China was only .16 grams, far lower than the world average f .7 grams, or the US of 1.42…trading gold is expected to become a crucial investment arena for Chinese individuals. Experts predict that nearly 7.5 million investors will try gold…calculating that each one will invest 10,000 yuan (1,200 US dollars), or a total of about 9 billion US dollars." We believe that the Chinese will invest into silver even more heavily than gold, especially at the current price of $5/oz, compared to $400 gold.
31. A certain percentage of investors will be attracted to silver for only one reason -- BECAUSE IT'S GOING UP! Like a moth attracted to light, these momentum investors will want to jump on the bandwagon as they begin to see a rising price pattern develop.
32. Due to the INTERNET etc., the world will quickly be alerted to what is happening and why. They will want their piece of the action.
33. The total silver market IS TINY compared to the stock and bond markets. It would only take about $6 billion dollars to buy all the remaining physical silver in the world at today's price. Just a few dollars moving into this market will have the resultant force of a tsunami.
34. Mutual funds and other institutional players are grossly underrepresented in ownership of precious metals stocks and bullion. If and when these investors simply RE-BALANCE their PORTFOLIOS to include silver, it will result in a tidal wave of demand for this tiny market.
35. If GOLD FUND MANAGERS only agree that silver will make appreciably larger percentage moves than gold, then we can conclude that even the GOLD FUNDS (who can own silver shares and physical), ARE UNDERWEIGHTED in silver. Once they begin listing multiple silver mining companies among their "largest holdings", we will know that they finally got the proper message.
36. Virtually every US and world citizen already has a WORKING KNOWLEDGE of what silver is. We're not talking brain surgery, semiconductors, megabytes, export quotas, or quasars, where the learning curve is extreme. When silver begins to get world attention, this residual, in-place knowledge will grease the skids for the novice silver investment demand.
37. In the coming economic environment, precious metals may be one of the few investment areas making established up trends. Individuals, businesses, mutual funds, pension funds and hedge funds that WOULD NOT NORMALLY CONSIDER INVESTING IN METALS TODAY, may have few other choices then.
38. NEW USES are constantly being discovered in a very immense range of applications. It now appears that SILVER may be the most versatile metal of all.
39. NEW USES -- Special case. SUPERCONDUCTIVITY technology as applied to electricity transmission efficiency will increase silver demand. (On one hand this is just a repeat of "new uses for silver being discovered." However the amount of silver that this area may use is so relatively high, that it merits its own place on this list.)
40. NEW USES -- Special case. Increased use in battery manufacture as automobiles evolve into ELECTRIC-GAS HYBRIDS for greater fuel efficiency.
41. NEW USES -- Special case. Traditional SOLDERING MATERIALS have primarily contained a TIN-LEAD alloy. In Japan, environmental concerns have prompted regulations calling for the complete phasing out of lead in consumer and electronics products sold there by 2005. A TIN-SILVER alloy containing about 3.5% silver has proven to be the best of the alternative alloys.
42. The PERCENTAGE OF SILVER BULLS in the newsletter business is now at historically low levels. This number and their newsletter readership can only go up.
43. The more our taxes rise (the overall trend has always gone up - and will do so big-time after the 2004 elections), the more people will seek ways to keep the government out of their pockets. Silver coins are one of the few remaining alternatives available to AVOID SOME TAXATION.
44. In a growing environment of litigation, envy & financial distress, the NON-REPORTABILITY advantages of silver coins will enhance their demand.
45. Due to a growing need for ever increasing government revenues and mass computerization, a rapid DETERIORATION OF PERSONAL FREEDOM & PRIVACY is underway. Many will conclude that rather than opening an offshore trust, secret (?) Swiss account or the like, most of the same benefits can be had by simply trading those pieces of paper dollars locally for non-counterfeitable and non-confiscable assets like gold and silver coins. These holdings represent pure freedom & privacy -- and you don't need to be a real good swimmer (it's a long way to Europe) to use them. Assuming that they are properly concealed, they are pure wealth that can never ever be taken away from you, taxed or litigated away.
46. If a mineral is found in great abundance in the earth's crust, depletion will never be a real issue. But a silver occurrence is an extremely rare event. Therefore, every day that a silver mine is in production makes it one day closer to its inevitable closing date, due to TOTAL DEPLETION of all the silver ore. "They ain't making any more of it."
47. In broad geologic terms, the deeper you go in a gold mine, the richer the ore deposit becomes. Silver is the opposite. The deeper you go in a silver mine, the lower are the concentrations of silver. To state this PERCENTAGE DEPLETION another way, because silver deposits are found near surface, nearly all have already been found and mined out.
48. At this point in the business cycle, there is a very high level of confidence in paper (or fiat) currency, especially the US dollar. This cycle can be expected to change. The result will be INCREASED TRANSFER OF PAPER WEALTH to PRECIOUS METALS.
49. Presently, there are NO currencies in the world that are fully backed by any precious metals. Yet, the history of currency shows us that EVERY paper currency has eventually crashed. The U.S. dollar has already lasted longer than any other unbacked paper currency, and when (not if) it loses its status as the world's "reserve currency," it too will crash. Some authorities believe that time is very near. A gold and/or SILVER BACKED CURRENCY is just a matter of time. The discussion phase has already begun in some quarters.
50. For many reasons, WE HAVE NOT HAD A PURE OR FREE MARKET IN WORLD SILVER since the US government began supporting the price of silver in the late 1800's. Also, they have been selling silver nonstop since the end of WWII. This LONG-STANDING, ARTIFICIAL INTERVENTION (selling the U.S. strategic silver stockpile) is finally coming to an end and eventually (sooner rather than later) the market just won't know how to act rationally. It will be like turning a 50-year-old elephant loose in your community that has been held captive in a zoo all its life. Both silver and the elephant would be expected to produce considerable chaos as they adjust to their newly found freedom.
51. In world markets, virtually all commodities go from being under priced to being overpriced and back again. There is no reason to believe that the price of silver will stop rising when it reaches its equilibrium price. Like gold in 1980, it will go far ABOVE equilibrium before stabilizing. We will want to take profits before the stabilization phase occurs.
52. As a civilization advances, the per capita usage of silver increases by a disproportionately wider margin. Much of the third world population, particularly in Asia, is rapidly advancing toward the ranks of the "developed world". This APPROACHING MASS OF HUMANITY will want to take their share of family pictures and connect their new refrigerators, TV's, washing machines, cell phones and air conditioners to the electric/electronic silver-consuming grid, just as you and I have.
53. Considered all by itself, the industrial demand for silver significantly exceeds the supply from mines and recycling. When above ground inventories run out, mines and recycling will not be able to gear up to fill all of the demand. SOME SILVER USERS MUST NECESSARILY BE DENIED the SILVER they need to stay in business. Who will they be? If the macro users (jewelry, flatware & coin makers) were the biggest buyers, rising prices could shut them out of the market and price equilibrium would be quickly reached. However, this is not the case. It is the micro users (companies that use the tiny amounts of silver per product - and therefore are not price sensitive) that are the largest silver consumers. The point is that equilibrium will occur, but only at prices that are extreme.
54. For both the big and the little people in the distant corners of the world, squirreling away US dollars has been one of the preferred methods of saving. It is estimated that two-thirds of the US currency in existence is in circulation in other countries. The "USS Titanic" has already struck a few icebergs but still larger, unavoidable ones are directly ahead. Once it finally becomes apparent that the paper Titanic is hopelessly waterlogged and headed for the ocean bottom, those foreigners WILL SHED what they consider to be DOLLAR BILL "LIFEJACKETS" and SUCCESSFULLY ESCAPE in the SEAWORTHY GOLD and SILVER "LIFEBOATS."
55. Unlike real estate, farmers, bankers, doctors, labor unions, and even the homeless, silver has NO POLITICAL ADVOCATES and enjoys NO LEGALIZED PRIVILEDGES that everyone else seems to enjoy. Silver presently gets "no respect" and it shares the doghouse with only gold, uranium and tobacco. (It even earns negative respect from the Silver Users Association whose mission seems to be to depress silver prices for their own benefit). Once stockpiles go to zero, an immense appreciation for the unloved metal will emerge and special financial favors will follow.
56. Gold is ACCUMULATED, but silver is LOST due to micro-usage-depletion. Consequently, silver has less total quantity in existence every single day. As hard as this is to believe, reliable estimates indicate that there is currently 10 times more ounces of gold than silver in above ground stocks! While this phenomenon has been going on for some time and is not a new force, THIS OBSCURE STATISTIC IS NOT WIDELY KNOWN and clearly has NOT been factored into the current price of silver.
57. For eons, top brokerage houses, astute financial advisors and professional money managers have RECOMMENDED a baseline 5-10% PORTFOLIO DIVERSIFICATION into precious metals. Partly due to the lengthy, worldwide bull market in equities and the extended bear market in precious metals, this sage advice has largely been ignored in recent years. A return to this prudent guideline will equate to an increase in demand for precious metals.
58. "A true investor looks for "REVERSE BUBBLES" (the exact opposite of BUBBLES or MANIAS) where everything that can possibly go wrong over an extended period of time (at least several years) HAS, and the bear has fed upon itself to a point of hyper-pessimism. That still viable investment will be on sale for 90% off, or more!" All competing market forces are ultimately reflected in one single measurement: the price. The primary evidence of a reverse bubble in silver is that it has been priced below its worldwide cost of production on a multi-year basis, and at $5.20, is 90% below its 1980 high of $52/oz. Therefore, SILVER EASILY QUALIFIES AS A REVERSE BUBBLE.
59. By all CONTRARIAN AND PSYCHOLOGICAL MEASURES, the outlook for AN IMMINENT SILVER BULL MARKET just couldn't be any better. This essential ingredient of all modern societies is thoroughly un-loved, un-wanted, un-appreciated and un-heard of by the mainstream. (Who can name more than one silver mining company?) Its stellar investment merits are un-popular and completely un-recognized in the investment community at large to a point that nobody cares and nobody wants to know. Profound, unwarranted pessimism is at the heart of all historically important bear market bottoms.
60. Both gold and silver appear to be "joined at the hip" and have historically moved together in price. And, gold appears to be in the early stages of a strong bull market that is supported by excellent fundamentals. DUE TO THE INTERRELATIONSHIP OF THESE TWO PRECIOUS METALS, A MAJOR MOVE IN GOLD (which just started two years ago) WILL AUTOMATICALLY FUEL A CORRESPONDING BUYING INTEREST IN SISTER SILVER.
61. A precious metals INVESTOR is an individual who buys precious metals today with the expectation of selling in the future for a profit. There are generally three classes of precious metals investor's that will emerge: 1) the un-informed-wealthy, 2) the smart-wealthy, and 3) Joe-six-pack-amateur-investor. When the inevitable wave of precious metals investment buying begins, the un-informed-wealthy will buy gold because it's going up -- that's why they always buy. The smart-wealthy will buy a higher proportion of silver over gold because SILVER WILL OFFER the POTENTIAL OF A HIGHER PERCENTAGE RETURN. When Joe-six-pack-amateur-investor starts his investment buying, he will choose silver over gold because he GETS "MORE" FOR HIS MONEY. Conclusion: By all accounts, SILVER WILL WIN the precious metals INVESTMENT POPULARITY CONTEST. Evidence that this scenario is occurring will be observed by the inevitable narrowing of the gold-silver price ratio - which currently stands at 75:1 (396/5.27). Throughout recorded history, that ratio has normally been closer to 15:1. So, either gold is considerably over-priced, or silver is way under-priced. Perhaps this essay will help convince you that it is the latter. In fact, we are convinced that both metals are drastically under-priced and both are on the verge of major bull markets - far surpassing the moves they made in the '70's.
62. The present public perception says:" BECAUSE SILVER IS SO CHEAP, IT CAN'T BE VALUABLE!" A Ted Butler essay said it this way, "PEOPLE DON'T LIKE SILVER BECAUSE YOU GET TOO MUCH FOR YOUR MONEY." What can we conclude? After silver becomes high priced, people will then recognize that silver IS VALUABLE and then they will want it…adding greatly to the demand.
63. Many entering the precious metals investment arena will be correctly armed with the simple truth that $5 SILVER CAN MORE EASILY TRIPLE THAN $400 GOLD!!
64. In the approaching economic climate we face, the long established cycle of a "preference for cash" will very likely be replaced at the precious metals producer level with "holding onto the commodity they produce" as a MONEY SUBSTITUTE. One major gold producer already appears to be doing this.
65. Present and future silver mines are and will continue to be located in multiple countries and political jurisdictions around the world. In the current low silver price environment, the miners are accepted and welcomed. IN A HIGH PRICE ENVIRONMENT, ENVY, GREED AND "THE LAW OF THE JUNGLE" WILL ENTER THE EQUATION. Increased political interference will surface and run the gamut from increased taxation and bribes to nationalization and outright confiscation of "our national treasures." All interference will ultimately result in higher silver prices to the silver end-user and those individuals who hold physical silver.
66. And last, but far from least is this comment from Richard Russell, who is undoubtedly the premier "gold-bug" of our generation:
"I believe gold (and very probably silver) will make fortunes for those who
now take major positions in the precious metals. For myself, I want roughly
one-third of my assets in gold with some silver." Published in Richard
Russell's Dow Theory Letters on 11/25/03. Mr. Russell has authored his
newsletter for nearly 50 years and written numerous articles for Barron's and
the Wall Street Journal, and has been quoted extensively by every major
financial publication here and abroad. We consider this recent concession of
including silver with gold by Mr. Russell to be very significant.
You have just read 66 specifics as to why
SILVER IS ABOUT TO EXPLODE IN PRICE! However, it would not
be fair to only present one side of the silver story for your consideration. So
the question is; what forces might keep the silver price in the $4.40 to $5.40
price range indefinitely? Here are the only ones we can foresee and they are
truly insignificant compared to the positive factors shown above.
1. In a high price range, some jewelry, tableware, silver coins
and the like will come out of hiding and be sold to into the market. But, it's
most likely that most of that silver is long gone. As of 1980, most people
don't have any more sterling to sell and many have never seen a real silver
2. In a very high price environment, STERLING SILVERWARE and TABLE
ITEMS will be too costly and many potential buyers will be priced out of this
market. However, this is a relatively small market compared to industrial
3. Sales of silver JEWELERY that is now being sold at your local
shopping mall and flea markets will practically vanish. However, investment
demand can be expected to more than take its place.
4. High prices will
cause end users to attempt to MINIMIZE USAGE by any means available. If an
electronics manufacturer can get by with using just a little bit less silver
solder, it will. But, in a $1,000 computer, the present cost of the silver
used is probably less than $5. Even at $50/oz, it's still a minor factor in
the total cost of a finished product.
5. A RECESSION or DEPRESSION will
result in less industrial silver demand. This factor is more than likely to be
offset by decreased by-product mining.
6. DIGITAL CAMERAS - The nail-gun and hammer is a good working analogy that suggests
co-existence of digital and analogue cameras, but not replacement.
HOW HIGH COULD THE PRICE OF SILVER GO?
Silver photo usage has recently slowed but this is mostly attributed to the huge downturn in the Japanese economy, not digital inroads.
Silver photographic usage is grossly overstated in the minds of most market participants. When recycling is taken into account, only 96 million ounces are actually consumed and not the much larger 256 million-ounce figure widely believed.
Scrap silver objects (198 million ounces) that one would normally think would count for so much, don't amount to a hill of beanie babies compared to the 160 million ounces of that figure that are recycled from mostly color photography which has more than an 80% silver recovery rate.
The refusal of the CFTC to reign in the mega-money Wall Street silver (futures) market manipulation, which has thus far kept a cap on the silver price through huge "short sales," that are largely unbacked.
Digital usage often incorporates silver at various points in the production/storage process.
When all costs are considered, of the two processes, digital is the more costly and complicated.
Digital growth has been fueled from WITHIN the larger, historical credit and consumption bubbles. Much smaller digital sales would have taken place had it not been for these bubbles. Due to much larger and more powerful economic considerations, the biggest percentage gains in digital may soon be behind us.
Total Annual Demand for Silver
THE EVER GROWING DIGITAL PHOTOGRAPHY MARKET WILL HAVE LITTLE OVERALL EFFECT ON SILVER DEMAND. For the silver investor, "the coast is very clear."
Basically, making investment price projections is a real waste of time because few are ever right. However, virtually all investment decisions are exercises in price prediction. We only buy when we expect a price increase and sell only when anticipating a general price decline. Short-term, medium-term and long-term predictions all have their place.
In projecting the future prices of gold and silver, we believe that the foregoing factors have given us the basis for anticipating that between 2005 and 2010, the price of silver could very possibly exceed the price of gold. This is not an idle wish, but a carefully calculated "staking-our-reputation" conclusion, based upon the foregoing factors. We hope this essay has helped you to make a beneficial financial decision - to GET SOME SILVER!
Does this mean that those who have invested a major portion of their savings into gold should sell and buy silver? Not in our opinion. The two should be held for different reasons. We hold gold for the ultimate store of value that history has shown is valid. At this incredibly fortuitous time however, it is our opinion that silver offers an unbelievable price appreciation potential. Therefore, we believe that it makes sense to have a significant portion of one's assets in silver coins - in your hands. Is this inconvenient? Yes, but it will be well worth the trouble. As one example, we can currently provide Silver American Eagles for about $8. If silver only rises half as much as we anticipate, by 2010 those coins could be worth many times today's price. Meanwhile, we believe that any minimal expense or inconvenience in holding them will be well worth it to you. Incidentally, there are other silver coins that we believe will do even better.
You are undoubtedly a thinking individual, or you wouldn't have read this far. And, you may disagree with some of the 66 reasons for a soaring silver price in the next few years, but even if you only agree with half of them, you still end up with a HUGE number of reasons that show you why silver is just in the beginning stage of a MAJOR BULL MARKET. The evidence is overwhelming and we hope you will let us help you benefit from it.
WHEN MIGHT IT BE WISE TO SELL SILVER?
During the final days of 1979, I decided that since the price of gold
was rising more per day than the total price ($35/oz) was when I began buying it, that that performance would not
last long. In fact, I also stated that: "straight up moves are normally followed by straight down moves."
(On 1/21/80, gold hit the inter-day high of $875 - the next day it closed at $670!)
Therefore, on January 2, 1980, I sent letters to every client suggesting that it was time to take profits by
selling our gold holdings. Fortunately, every one of my several hundred clients called me and we sold out all
our positions while gold was between $700 and $850. It's my opinion that such a day will present itself again
during the next six years, in both gold and silver. But, since I don't have a crystal ball and am not omniscient,
I don't know for sure what the exact timing will be. However, as the weeks and months pass, we will see many,
if not all, of the 66 factors shown above come to fruition. All we need to do is check them off as they occur,
and when they are nearly all so marked, we will be close to the end of this opportunity.
Thank you for your interest!