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Guest Post: The 2010 Silver Buying Guide

Tyler Durden's picture





 

From Jeff Clark of Casey's Gold And Resource Guide

Guest Post: The 2010 Silver Buying Guide

Silver has been sizzling and causing lots of buzz in the industry. Investors are excited.

Part of the hubbub is due to its current run. Since its February 8 low,
silver has roared ahead 22.4% (through June 21) and has doubled from
its November 2008 low.

This excitement has spilled over into greater investment demand –
especially so for coins. The U.S. Mint sold more Silver Eagles in the
first quarter of this year – just over nine million – than any prior
quarter in its history. The Royal Canadian Mint produced 9.7 million
silver maple leafs in 2009, also a record.

Take a look at the jump in U.S. Mint coin sales since 2007.

Silver bullion ETFs are growing, too, experiencing a five-fold increase in metal holdings since 2006.

There’s plenty we could talk about with silver, but our goal is to make
money. So let’s focus on answering just two questions: Is today’s price
expensive or cheap? And, what are the best silver coins, ETFs, and
stocks to own? 

We have all the answers straight ahead, including lots of actionable info, so let’s jump right in...

Why Should I Buy Silver?

There are several reasons to own silver in addition to gold.

First, it’s cheaper! Known as the poor man’s gold, those with limited
budgets will find it easier to purchase. You might hesitate plunking
down $1,200 for an ounce of gold, but you can pick up 32 ounces of
silver for half that amount.

Second, silver has wide industrial use and this component can help or
hinder its price. As its consumption increases across a growing number
of industries, this should help place a floor under demand. And because
of its unique properties, new uses continue to be discovered.

Third, silver is money and has served this role more than any other
material on earth, save gold. Due to its historical role, silver will
always have monetary value and offer similar protection as gold to the
ongoing global currency devaluations, and will definitely benefit from
the inflation hurricane we see as inevitable.

Silver is more practical as a currency used for everyday purchases.
When the time comes, you can sell the requisite number of silver coins
to cover a specific need, as opposed to being forced to liquidate a
high-dollar-value gold holding. Silver is perfect when smaller amounts
of cash are required.

Fourth and last, silver could possibly outperform gold before this bull
market is over. The market capitalization of silver (and silver stocks)
is much smaller, making its price more susceptible to demand spikes
than gold.

In the latter part of the 1970s precious metals bull market, gold
gained over 700% – but silver soared over 1,400%. If you’ve got a bit
of Gordon Gekko in you, we recommend investing a portion of your
dollars in silver.

Caution - Hot!

Like all things, silver has its drawbacks, two in particular.

First, the price is volatile. Over the past 12 months, silver has seen
gains of 53.8% and 22.9% and drops of 21.9% and 19.6%, all within a
period of months or even weeks.

If you’re going to own silver, you must be prepared for big price
gyrations. The best way to do that: buy it and forget about it. And...

?Make price volatility your friend. Big price swings present the opportunity to snag silver at a big discount. We give some guidance on prices below.

Second is the storage issue. As your pile grows, the advantage to
storing gold will become self-evident. At $1,200 gold and $18.50
silver, $10,000 will get you eight gold eagles that will fit nicely in
the credit card slots of your wallet; however, it will buy 540 silver
eagles, weigh nearly 34 pounds, and fill a small bank safe deposit box.

?How to store physical silver. There are several ways to solve the storage dilemma, even if you plan to buy like the Hunt brothers.

  1. Spread your holdings around.
    Not only is it wise to avoid keeping all your physical silver in one
    place, diversifying your storage arrangements allows you to buy more.
    Hide some at home in several locations (no cookie jars, though), and
    obviously tell only one trusted person. Store some in a bank safe
    deposit box and use more than one bank as your holdings grow.
  2. Buy bars.
    Silver bars take up less space than a pile of coins of the same weight.
    We wouldn’t start out with nor have all our holdings in bars, because
    you want the advantage coins offer. But the larger your holdings, the
    easier it will be to store some of it in bar form.
  3. Use pool accounts and unallocated storage.
    With a pool or unallocated account, you’re essentially getting free
    storage no matter how big your stash. That’s hard to beat. You’ll pay
    fabrication and delivery charges if/when you convert your holdings and
    take delivery, but in the meantime, you save on storage costs. Great
    value for the large holder.
  4. Private storage.
    Store your silver with a private vaulting company. The advantage is
    that it’s outside the banking system; the disadvantage is that it’s
    usually expensive, though it can be cost effective for large holdings.
    Do your own due diligence if you go this route because we can’t vouch
    for any facility, but you could start by checking out
    delawaredepository.com. Keep in mind that using a vaulting facility
    beyond a reasonable driving distance will mean added shipping/insurance
    costs and restrict quick access.

Is Now a Good Time to Buy?

With the gains we’ve seen in silver, would we buy right now?

Let’s first look at the big picture. The following chart shows how far
silver is below its inflation-adjusted peak reached in 1980.

Another clue some investors watch is the gold/silver ratio (gold price divided by silver price) shown below

Since our current bull market in precious metals began in 2001, the
ratio, while fluctuating wildly, has never gone below 45. And yet look
where it went during the precious metals peak in 1980: it bottomed at
17. Even though gold was soaring at the time, silver outran it.

The ratio might show relative strength between gold and silver, but
it’s not a good buying indicator. A falling ratio could mean silver is
rising faster than gold, like it is currently, or it could mean silver
is falling slower. As a result, we’d use the ratio to determine
silver’s upside potential but not necessarily when to place an order.

These big-picture signals tell us silver is undervalued and, at the
moment, a better bargain than gold. And given the currency crisis we’re
convinced is in the cards, we wouldn’t want to be caught without any.
If you have a long-term mindset, silver is a buy today.

Would we wait for a better price?

If you do not own any, and plan on holding what you buy until a mania
develops, then we wouldn’t wait. The risk of buying silver at current
prices is lower than owning none at all.

If you do own some but want to add to your holdings, we’d probably wait
for a drop in price, in part because silver could more easily fall when
the economy is found to be more fragile than what many believe. And
with industrial uses comprising approximately half of silver’s demand,
it would be more susceptible to sell-offs than gold if our research is
correct about global economies. 

Further, summer usually brings pullbacks in prices, and this can be
especially true for silver stocks. This is the tendency, though we
can’t be sure if this summer will follow past trends. Still, our best
guess is to anticipate another leg down this year. If you already own
silver, we’d look for a correction to add to your holdings.

In our opinion, owning no silver in this bull market would be a
mistake. And your first (and biggest) investment in silver should be in
a physical form.

How much physical silver should you have? There’s no right answer and
one size will not fit all. But we do recommend holding more gold than
silver. Our suggestion for your precious metal holdings is roughly 80%
gold and 20% silver.

Like gold, silver comes in different forms. We’d start with the more
popular one-ounce coins and then branch out into other types as your
holdings grow.

 


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Wed, 06/16/2010 - 17:24 | Link to Comment mikhail kalashnikov
mikhail kalashnikov's picture

maybe we should use my buying guide, free of charge to ZH members

BUY ALL YOU CAN!

remember, in one tomahawk, there are 1400 OZ of silver...never to be seen again.

Wed, 06/16/2010 - 17:57 | Link to Comment Hephasteus
Hephasteus's picture

I seriously doubt there is 43 kilograms of silver in a tomahawk. That just doesn't make ANY sense.

Wed, 06/16/2010 - 18:06 | Link to Comment mikhail kalashnikov
mikhail kalashnikov's picture

there are 1400 oz in one. silver connections, wiring and solder. remember that a tomahawk is about the size of a school bus.

Wed, 06/16/2010 - 19:31 | Link to Comment Hephasteus
Hephasteus's picture

1440 kilograms. 450 of that is warhead. For 42 kilograms of silver to be in it there would have to be about 52kg of solder. Which would build basically an electronics package about 6 or 8 feet wide and up to the 8 ft cieling and a couple feet deep. A huge set of server racks.

Now unless you want to say 1400 grams which is 45 ounces. I'm going to say nu uh. Cause my guess is that it's got about 600 kg of engine and couple hundred kg of housing. Leaving not much left over for goodies. And weapons systems always uses best material within reason for a specific task. Unless there was something that needed silvers heat conducting properties .... still going to say no.

Be careful what you pick up at kitcom. Some people don't remember what they read very well.

Wed, 06/16/2010 - 20:01 | Link to Comment mikhail kalashnikov
mikhail kalashnikov's picture

however you break it down, it is still silver that will never be recovered, and about 3/4 of a million down the drain. or into a cave or mud hut or whatever. the point is that silver is used in manufacturing, never to be reclaimed. that means it is worth something.  if i was off on my numbers, i am sorry.

Wed, 06/16/2010 - 21:24 | Link to Comment Hephasteus
Hephasteus's picture

Oh no worries. It's still a bunch of silver.

Wed, 06/16/2010 - 19:40 | Link to Comment Real Estate Geek
Real Estate Geek's picture

remember that a tomahawk is about the size of a school bus.

No, it's much smaller.  Tomahawk cruise missles were developed so that the Navy could fire them out of submarines.  In fact, I believe that they're fired through the torpedo tubes.  As such, they're much smaller than a school bus.

(FWIW, Wikipedia says its diameter is 0.52 meters, and its weight is 3,200 lbs.)

Perhaps you're thinking of a Trident II ICBM?  Those are pretty big, and can carry up to 12 hydrogen bomb warheads.

Wed, 06/16/2010 - 20:44 | Link to Comment A Nanny Moose
A Nanny Moose's picture

short bus perhaps.

Thu, 06/17/2010 - 09:16 | Link to Comment Hephasteus
Hephasteus's picture

I think he's thinking of the tomohawk submarine which uses a buttload of silver in silver nitride batteries. But unless they sink the batteries can be recycled.

Wed, 06/16/2010 - 20:11 | Link to Comment RichardENixon
RichardENixon's picture

Damn, I've never even seen an axe that big.

Thu, 06/17/2010 - 09:16 | Link to Comment RockyRacoon
RockyRacoon's picture

We think alike... scary thought there. 

I wonder if that weight included the feathers and beads?

Wed, 06/16/2010 - 18:27 | Link to Comment goldfreak
goldfreak's picture

i like your guide MK, been using it for years

Wed, 06/16/2010 - 18:41 | Link to Comment mikhail kalashnikov
mikhail kalashnikov's picture

my buying guide is available in handy PDF format, too.

Thu, 06/17/2010 - 06:32 | Link to Comment unwashedmass
unwashedmass's picture

a little fuel for the silver buying fire.....from Harvey Organ's blog....

 

In silver we have had 2 big delivery months of March and May. If you include the options exercised the precious months and add them to the delivery months,

the total of silver standing is represented by 22 million oz and 24 million oz respectively.

There has been 18 million oz of SLV leave London but it did not enter the comex which is the rule. I cannot see the comex settling with paper SLV but I may be wrong.

I have not seen any appreciable silver enter the dealer inventories for these past 3 months.

In gold, the amount that is standing and will eventually stand is an astounding 2.33 million oz. (we included the 204,000 oz of options exercised in May).

We are now past the half way mark and still no activity into the gold dealer inventory.

As for the movement btw HSBC and Scotia, I guess Scotia is the supplier of the metal and has none so it must get it somewhere.

There has been massive withdrawals of silver from the customer inventory as these owners are afraid of comingling and thus do not want to take a chance on keeping their metal at these registered comex vaults.

Adrian and I both smell smoke and where there is smoke, there is fire.

Thu, 06/17/2010 - 06:38 | Link to Comment unwashedmass
unwashedmass's picture

 

given the CTFC, the "regulatory" body charged with "regulating" the Comex steadily averts its eyes from whatever the large shorts do in an effort to control the price......no matter HOW outrageously corrupt.........

given the apparent smoke billowing out the sides of the Comex now as the peasantry is demanding that contracts be honored and metals delivered....

it would not be at all unusual to see Comex gold and silver -- regardless of market fundamentals, actual demand, prices in the real world, inventories, and ... reality -- take a 20% haircut in the next couple of days in an effort to short circuit the pending explosion of gold and silver prices.

The buying opportunity this will present is self explanatory.

The corruption, well.......whatever, we lost free fair and transparent markets here a long time ago.....

And whatever happens, rest assured, that the CTFC will continue to parrot the mantra, "there is NO manipulation" of gold and silver; there is no manipulation of gold and silver....

and then, two months or even two weeks from now, after all this dust settles with gold over 2k and silver in the 20s, the Comex and the CTFC will wonder why no one wants to trade with them any more.....

and why this entire market has moved out and overseas......

 

Wed, 06/16/2010 - 17:26 | Link to Comment Gully Foyle
Gully Foyle's picture

Buy Silver after the Bullets and Bandaids, or so I have read.

Wed, 06/16/2010 - 17:29 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Holding both silver and gold is right.  Depending on your wealth, goals, etc., it would make sense to hold more than 80% in gold.  But, if you want to speculate (or bottom fish for long term holding) then owning more silver is just fine too.

Diversification...

Wed, 06/16/2010 - 19:25 | Link to Comment Shameful
Shameful's picture

True, but other factors come into play.  Things people might not normally think of in investments like weight.  I like silver, a lot, however I'm likely not to be buying much more.  I don't like the idea of hauling a big pack of silver around with me if I have to relocate a little faster then I would like.  That and I might look a little funny trying to fly with a bag of silver as carry on "No Mr. TSA, this is my good luck silver.  I can't fly without it!"  :)

Gold on the other hand, well I can put my limited wealth in a pocket and not have to much fuss. 

Wed, 06/16/2010 - 23:13 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ $1230

Or would that be:

+ $18.40

If it comes to the point where the TSA becomes involved, yessir, I would convert my Ag to Au before I got to the airport, LOL...

Thu, 06/17/2010 - 00:26 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

At some point the wheel will come off in this game. Then it will be interesting to watch. Like someone trying to grasp sand. The tighter they grip it, the more it all falls away.

Thu, 06/17/2010 - 00:52 | Link to Comment StychoKiller
StychoKiller's picture

Also, gold and silver cannot trip ferrous metal detectors.

Fri, 06/18/2010 - 04:00 | Link to Comment Anton LaVey
Anton LaVey's picture

Are you absolutely sure of that "stychokiller"?

Thu, 06/17/2010 - 06:37 | Link to Comment Anton LaVey
Anton LaVey's picture

I can put all of my "wealth insurance" (Silver and Gold) in the smallest backpack I have at home, with room to spare. And I could carry it around with no problem.

Most of my Gold could fit in my pocket, but I guess it would be a bit uncomfortable...

Wed, 06/16/2010 - 17:28 | Link to Comment unwashedmass
unwashedmass's picture

 

and there's the other "half" of the story...about JPM and why silver is so incredibly "volatile"....

JPM runs the Comex, and sets the prices....and tell the "regulators" what to regulate.....

and, purportedly, JPM is -- in order to keep silver prices "in line" -- short almost a third of the WORLD"S ANNUAL PRODUCTION.

Yes....a spike in price could be a body blow to JPM...and of course, to the peasant taxpayers who would ultimately pay the bill for this ...."loss".....

and yes, this is risk beyond insanity, but ...its with peasant money, so who cares?

and they run the exchange....so....when it becomes difficult to actually deliver on futures contracts (like now)....JPM might just turn to the regulators and tell them to change the rules to force the uppity little investors to take paper instead of actual metal for their paper.

and that's the whole story. JPM seems to be sitting atop a volcano....but ...who cares? No one....CTFC seems to be in porn reading contest with SEC....

Wed, 06/16/2010 - 17:39 | Link to Comment Chupacabra
Chupacabra's picture

Unlimited naked shorting.  Gotta love it.  Where do I sign up?

Wed, 06/16/2010 - 17:51 | Link to Comment unwashedmass
unwashedmass's picture

 

unlimited naked shorting with privatized profits, completely socialized losses.....

Wed, 06/16/2010 - 19:01 | Link to Comment JohnG
JohnG's picture

Sorta makes one feel sick.

Wed, 06/16/2010 - 19:53 | Link to Comment unwashedmass
unwashedmass's picture

kenneth.h.nydam@jpmorgan.com

kennie boy works in futures and options, the americas ... at JPM.....

he's probably a really good person to ask when they plan to close out their gloriously humungous silver short and let silver trade freely....

what else could we ask kennie boy? ah, might be interesting to know exactly how they control the CTFC so thoroughly, given that most of the CTFC is GS - alum......

ah well, we should all write and let kennie boy know that we're waiting and it would be nice if he tipped us -- along with all his relatives -- as to when they are going to close the galactic-sized short so we can ....and yes, i know we're peasants and should not get a dime of this,,,,,but we are peasants who know what is going on, so we are "special" like JPM is "special" ..... rules don't apply to us.....

so we can benefit from the doubling or tripling of the silver price that results from letting silver trade freely for the first time in almost a decade.....

Wed, 06/16/2010 - 19:53 | Link to Comment unwashedmass
unwashedmass's picture

kenneth.h.nydam@jpmorgan.com

kennie boy works in futures and options, the americas ... at JPM.....

he's probably a really good person to ask when they plan to close out their gloriously humungous silver short and let silver trade freely....

what else could we ask kennie boy? ah, might be interesting to know exactly how they control the CTFC so thoroughly, given that most of the CTFC is GS - alum......

ah well, we should all write and let kennie boy know that we're waiting and it would be nice if he tipped us -- along with all his relatives -- as to when they are going to close the galactic-sized short so we can ....and yes, i know we're peasants and should not get a dime of this,,,,,but we are peasants who know what is going on, so we are "special" like JPM is "special" ..... rules don't apply to us.....

so we can benefit from the doubling or tripling of the silver price that results from letting silver trade freely for the first time in almost a decade.....

Wed, 06/16/2010 - 21:30 | Link to Comment hamurobby
hamurobby's picture

30,000 out of the money slv options I carry, like a load of sulfur on my back, down the mountain, waiting for the day a frog becomes a prince....:-)

 

Wed, 06/16/2010 - 17:34 | Link to Comment cyclemadman
cyclemadman's picture

When the Federal Reserve Notes turn into toilet paper it won't take people long to remember/learn what real money is again. Don't forget your bags of junk silver.

Wed, 06/16/2010 - 18:15 | Link to Comment Rebel
Rebel's picture

If one is purchasing silver with the idea that it will literally become money, as in, used in barter, junk silver is the best way to go. Large poured bars would be accepted by few people, and would likely need to be assayed. Silver quarters and dimes would be universally recognized, and would quickly be recognized and accepted as money.

Wed, 06/16/2010 - 19:15 | Link to Comment ColonelCooper
ColonelCooper's picture

+100.  In dimes and Walking Liberty Halves.  When I first started buying silver, it was mainly junk coin.  I agree 100% with the recognizability factor.  Some old farmer that I want to buy a half a beef from would probably tell me to shove my handful of 5 oz. Apmex bars up my ass, but would immediately liken to a roll of Morgans.

Plus, the premium on junk dimes and halves was next to nothing until recently.  Now, the premiums aren't hardly worth it compared to Eagles and Maples. (IMHO)

I still buy mostly Eagles and Maples, but also have started buying 5 oz. Bars.  The premium is lower, and if one is using it for a major purchase or sale, you're probably going to have to have an assayer anyway.

I am probably a bit heavy on silver.  I have been buying and holding probably 60% gold, 40% silver.  My main reasoning is that since it is pretty much insurance, I plan to SPEND my PM's, not sell them.  I would rather try to buy a bag of seed oats with a Peace Dollar than try to convince the guy down the road that my 2 peso coin is real.... Then bite off a quarter of it and try to give it to him.

We'll see if I end up a winner or a loser in my thinking.

 

 

Wed, 06/16/2010 - 19:45 | Link to Comment lucyvp
lucyvp's picture

agree,

I buy old silver coins at estate sales, flea markets etc.   I often pass up silverware, candle sticks, commererative silver coins etc, because you can't be sure of the purity and unless you bring a little scale you don't know the weight.

Is is .999, sterling, coin silver, 50%.  If I see a morgan, I know the weight and the purity.

 

Wed, 06/16/2010 - 20:56 | Link to Comment hamurobby
hamurobby's picture

.900 for American coins, im surprised Mr. Raccoon has not jumped on that. I like coins for their immediate recognisably and small denomination :-)

Thu, 06/17/2010 - 09:28 | Link to Comment RockyRacoon
RockyRacoon's picture

You conjured up the Coon?  Here I be.

There are some things that are just too minor to comment upon.   .999 vs .900 is a small mistake and its source is probably the .999 gold parallel.  I'm sure the difference will be important some day -- but this ain't it.  I tend to be a bit heavy on the silver side as many have indicated, but that is because I plan to spend it when the time comes.

Happy hunting! 

Wed, 06/16/2010 - 22:27 | Link to Comment Hephasteus
Hephasteus's picture

Switch to buffalo and eagles and other numastic coins. I won't touch a morgan because it's named after an asshole.

Thu, 06/17/2010 - 00:24 | Link to Comment JLee2027
JLee2027's picture

LOL. What?  Who?  Seriously who?  I've been collecting Morgans since the 1970's and never heard that.

Thu, 06/17/2010 - 00:31 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

He either doesn't like the guy who created the Morgan or he is anti JP Morgan. LOL.

Thu, 06/17/2010 - 00:43 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

What's the beef with George T. Morgan?

Thu, 06/17/2010 - 09:16 | Link to Comment Hephasteus
Hephasteus's picture

He was born with a bad last name. LOL

Thu, 06/17/2010 - 11:28 | Link to Comment RockyRacoon
RockyRacoon's picture

Are you trying to back out of being misinformed?

George T. Morgan

Besides, "numastic" coins have a collector premium and don't fit the bill.  Numismatic coins are always priced above their value as a hedge against anarchy.  In a sane world, where civility reigns and inflation is "tame", numismatic coins can return a hefty investment premium however.

Thu, 06/17/2010 - 18:59 | Link to Comment lucyvp
lucyvp's picture

many morgans and peace dollars can be purchased for near spot price of the metal.

usually found at private sales, antique malls etc.  dealers don't often go in and reprice their stuff every day or week for that matter.

I don't buy coins that have numastic value.

I do consider if I buy through a dealer, i'm going to pay over spot for bullion coins, and maybe shipping and insurance too.

Fri, 06/18/2010 - 02:25 | Link to Comment Hephasteus
Hephasteus's picture

Nope. He came on after the FED was enacted in 1913. I don't like the guy still. LOL

Wed, 06/16/2010 - 17:43 | Link to Comment Blues Traveler
Blues Traveler's picture

in the words of Tom Petty, the waiting is the hardest part

Wed, 06/16/2010 - 17:45 | Link to Comment papaswamp
papaswamp's picture

SHHSSHSSSSSHHHHHHHHHHHHHHHH!!!!  Don't tell everyone!

Wed, 06/16/2010 - 17:52 | Link to Comment Sudden Debt
Sudden Debt's picture

Tyler, in a deflationairy market Gold and Silver will crash. And like in your other post about housing, we'll get just that.

I wouldn't buy it, all overpriced.

Either gold and silver are overvalued or everything else Is undervalued

Wed, 06/16/2010 - 18:04 | Link to Comment spyware-free
spyware-free's picture

Long term, monetary inflation will take over deflation. PM's may be overvalued short term but let's talk after the debt crisis finally hits our shores. So, you are correct that PM's will experience a pullback short term due to deflationary pressures but that just equates to a buying opportunity.

Wed, 06/16/2010 - 18:27 | Link to Comment Rebel
Rebel's picture

This is really a hard one to predict. When the debt crisis hits our shores, there well could be deflationary pressure, lowering PM prices, but at the same time, there could be a flight to quality, which could put upward pressures on prices.

Wed, 06/16/2010 - 19:28 | Link to Comment PhattyBuoy
PhattyBuoy's picture

The Euro was under pressure recently ... and the Euro flight was to Gold. Gold appreciated to an all time high against a devaluing Euro.

In a fiatsco (paper) race to the bottom, Gold wins.

 

Wed, 06/16/2010 - 22:35 | Link to Comment Scarlo
Scarlo's picture

Buy the physical now.  When the deflationary pressures hit, the market will crash more than PM, and that means cheap PM stocks.  Keep dry powder to scoop these up.  In this way you get value when value is due, and you are safe with barter coin in case things go seriously awry during the transition.

Wed, 06/16/2010 - 18:18 | Link to Comment DosZap
DosZap's picture

SD,

 IMHO

Past indicators are not applicable to future events..........

IOW,throw the charts, and past history out the window.

This will not be like '08........It will be far worse.............

Even if it is, where was the mkt then, and where is it now.

If, WHEN the dollar folds like a tent, and loses 50-80% of it's value, Gld/Slvr, will be off the wall.

Wed, 06/16/2010 - 19:35 | Link to Comment Calculated_Risk
Calculated_Risk's picture

Deflation or inflation. Price may change, but value remains the same.

 

Wed, 06/16/2010 - 20:53 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Precisely. That 1964 quarter still pretty much buys a loaf of bread, or a gallon of gas.

Wed, 06/16/2010 - 19:37 | Link to Comment SilverIsKing
SilverIsKing's picture

Deflation is countered with money printing.  It can become feverish.  Hyperinflation is a currency event.  When the govt prints too much and people flee FRNs, deflation won't matter.  People will want PMs.  Won't be a straight line up for sure.

Wed, 06/16/2010 - 20:59 | Link to Comment hamurobby
hamurobby's picture

Deflation is not the friend of banks, in the words of Jim Sinclair, QE to infinity ;-)

Thu, 06/17/2010 - 14:32 | Link to Comment reave the sheeple
reave the sheeple's picture

You state that as fact, but is it fact? Or just an opinion?

Roy Jastram's "The Golden Constant" found an entirely different result: gold did better, in real commodity terms, under deflationary conditions in the UK and US over the last 400 years.  Under inflationary terms, it underperformed against the same commodity indexes.

Even if what you say comes to pass, and gold/silver "CRASHES" (as in loses 10-30% dollar/euro/pound/whatever exchange value), guess what, so did everything else.  That chunk of gold or silver is probably gonna buy the same amount of useless shit or basic living essentials as it did before the crash.

Don't confuse purchasing power with nominal prices.

Wed, 06/16/2010 - 17:54 | Link to Comment speculator
speculator's picture

Here's a list of silver stocks filtered by the following criteria:

- Their silver resource is more valuable than any other mineral in their portfolio (ie, they are silver companies).

- Producing, not exploring or developing.

- Positive operating cash flow. 

- Ratio of enterprise value / gross value of resources is less than 0.5. This is more comprehensive than the old standby, market cap per ounce, since it takes into account the balance sheet and the value of other minerals (often gold, zinc, lead).

http://miningalmanac.com/U.S._Silver_Corp_USA/

http://miningalmanac.com/Scorpio_Mining_Corp_SPM/

http://miningalmanac.com/First_Majestic_Silver_Corp_FR/

http://miningalmanac.com/Coeur_dAlene_Mines_Corp_CDE/

http://miningalmanac.com/Pan_American_Silver_Corp_PAA/

http://miningalmanac.com/Hecla_Mining_Company_HL/

http://miningalmanac.com/Silver_Wheaton_Corp_SLW/

http://miningalmanac.com/Endeavour_Silver_Corp_EDR/

You can play around with the criteria here, since there are a lot more silver stocks out there than this, including tons of explorers: http://miningalmanac.com

 

Thu, 06/17/2010 - 00:34 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

I know I have said this before and I will say it again. Thank you for creating that site! :)

Thu, 06/17/2010 - 08:43 | Link to Comment speculator
speculator's picture

Glad to help - really means a lot that people get what we're doing. My main worry is that the site is too geeky to be popular, which means we need to capture all the geek traffic. 

BTW, we may be down for maintenance for a little while today, June 17. We're in beta, so we're still adding things and working out bugs, though the screener is in great shape.

 

Wed, 06/16/2010 - 18:02 | Link to Comment Dimeboy
Dimeboy's picture

Like I said before, I will eventually get my gold from people who need to change it into my silver coin so they can actually buy something modest, like food, ammo, sex, etc.  Who's going to give a whore a Gold Maple when the SHTF and you need to de-stress?...  You wanna get laid and have a drink, not buy the whole cathouse.

"Gold is the money of Kings and Governments.  Silver is the money of men."

Wed, 06/16/2010 - 19:18 | Link to Comment ColonelCooper
ColonelCooper's picture

Excellent post.  It has been the basis of my thinking also.

Wed, 06/16/2010 - 19:49 | Link to Comment SilverIsKing
SilverIsKing's picture

That depends on what she looks like and what she's willing to do.

The whole cathouse is definitely worth a gold maple or two.

Wed, 06/16/2010 - 20:15 | Link to Comment Dimeboy
Dimeboy's picture

I'll give you 20 ozt Ag for your 1 ozt Au when the time comes to try the merchandise and you can decide.  That will be the natural trade ratio, as per the British Empire historical standard.

I can also do the 20 silver schillings if you have the gold Soveriegn. (ahhh,  The Queen would approve.)

Thu, 06/17/2010 - 00:40 | Link to Comment TheGoodDoctor
TheGoodDoctor's picture

Sounds like you are at the wrong whorehouse. One for dudes if The Queen would approve! :P

Wed, 06/16/2010 - 18:22 | Link to Comment dryam
dryam's picture

Going down the pathway of a complete debasement of the fiat currency, what value is silver?  In theory silver will go sky high.  Seems like it would be much better to have a lot of cigarettes, alcohol, tampons, toilet paper, and the like to use as currency.  Those things have "real" value when the monetary system breaks down.  Think primal.

Going down the pathway of a complete deflationary collapse tomorrow, silver will get killed.

 

Wed, 06/16/2010 - 18:51 | Link to Comment BearOfNH
BearOfNH's picture

Don't forget aluminum foil. And ammo.

Actually stocking up on durables is a suitable anti-inflation strategy. Stuff in your stockpile won't go up in price (well, not the stuff you own, anyway) and you can't be taxed when you use it.

 

Thu, 06/17/2010 - 00:37 | Link to Comment WeeWilly
WeeWilly's picture

Dryam, I have read that in previous economic turbulence there are 4 commodities which hold value; sugar, salt, alcohol and coffee. I have a supply of those (plus the requisite gold, guns and ammo). I am curious about cigarettes. While I agree they could hold great value as barter, don't they go stale quickly? Is there a way to preserve freshness?

Thu, 06/17/2010 - 04:33 | Link to Comment lost in the usa
lost in the usa's picture

Cigarettes = tabacco all they need is humidity, just like cigars keep them moist and they can last for years.

Thu, 06/17/2010 - 01:12 | Link to Comment JLee2027
JLee2027's picture

We aren't going Mad Max when the SHTF.  And silver will be fine in a deflation.

Thu, 06/17/2010 - 02:13 | Link to Comment mcguire
mcguire's picture

yes, been thinking about buying some cases of cigarettes... and some jars of antibiotics...  never considered tampons though.  that would be strange... "ill trade you that loaf of bread for 3 tampons"..

Wed, 06/16/2010 - 18:12 | Link to Comment geopol
Wed, 06/16/2010 - 18:41 | Link to Comment nuinut
nuinut's picture

Absolute classic, Geo. 

Best movie too. (oh, wait, I'm looking a little biased perhaps?)

http://www.youtube.com/watch?v=jj4gx2a2810

You may appreciate this: http://www.zerohedge.com/forum/freegold 

 

Wed, 06/16/2010 - 18:45 | Link to Comment geopol
geopol's picture

The way things are going around here.. I appreciate YOU nulnut,,, my friend....

Wed, 06/16/2010 - 18:55 | Link to Comment nuinut
Wed, 06/16/2010 - 21:04 | Link to Comment A Nanny Moose
A Nanny Moose's picture

+200k in gold coins.

Thu, 06/17/2010 - 07:26 | Link to Comment speculator
speculator's picture

At $20 each, that's 10,000 double eagles, containing about 9,600 oz gold. At today's price, $11.8 million.

Wed, 06/16/2010 - 18:19 | Link to Comment nwskii
nwskii's picture

For Less than $300 I bought 12 Glass Bottles of Vodka and 12 Bottles of Whiskey. Just think how many silver eagles those will be worth, plus as an added bonus you can use  the empty bottles for Molotov cocktails. (assuming you can find some gas) I call that diversification of my silver and gold portfolio 

Wed, 06/16/2010 - 18:22 | Link to Comment geopol
geopol's picture

And what kind of Vodka was that??

Wed, 06/16/2010 - 18:35 | Link to Comment nwskii
nwskii's picture

Smirnoff (spelling)?? 

Wed, 06/16/2010 - 19:28 | Link to Comment ColonelCooper
ColonelCooper's picture

+ 4,000 on the alcohol angle.  Quite often when I go to the bottle shop, I pick up a 1.75 of Windsor, or Smirnoff.  These go on the rack in the cellar.  Several years ago, I started making my own wine.  If a cheap bottle of wine is worth $10 today, what will it be worth if the bottle shop is closed?  Last year was my best year, I made about 150 bottles.  $$$??? 

Wed, 06/16/2010 - 21:24 | Link to Comment chinaguy
chinaguy's picture

$15 of cow corn (75 lbs) & $10 of malted barley will yield 3 gallons of 180 proof "shine"...just saying...

In China they use sorghum...corn is tastier.

Wed, 06/16/2010 - 22:57 | Link to Comment Gen X Gen Y Hybrid
Gen X Gen Y Hybrid's picture

Buy some Absolut next time - will hold its value better - and taste better.

 

I'll go for the nice bottles of Scotch and Irish Whisky, The Glenlivet and Jameson.

Thu, 06/17/2010 - 00:41 | Link to Comment WeeWilly
WeeWilly's picture

I may be missing something, Gen. I've been buying straight grain alcohol, thinking when the SHTF folks will want the buzz, not the brand. Am I wrong here?

Thu, 06/17/2010 - 10:32 | Link to Comment RockyRacoon
RockyRacoon's picture

PGA is good in lanterns as well!

Thu, 06/17/2010 - 00:41 | Link to Comment kingwallop
kingwallop's picture

Absolut and Smirnoff? Really?

 

I'll have a double Kettle One on the rocks please.......

Thu, 06/17/2010 - 06:02 | Link to Comment ColonelCooper
ColonelCooper's picture

I did not say I was drinking it.  I said it was on a shelf in the cellar.  If it gets bad enough people want to barter/buy booze from my dumb ass,,, they won't give a shit what it is.

Wed, 06/16/2010 - 19:59 | Link to Comment Azwethinkweiz
Azwethinkweiz's picture

the alpha strategy at it's finest!

Wed, 06/16/2010 - 21:15 | Link to Comment chinaguy
chinaguy's picture

Case of 24 pint bottles of JD for about $220. Transported them across state lines though - Opps!

Wed, 06/16/2010 - 18:29 | Link to Comment e_goldstein
e_goldstein's picture

Silver's okay (I hold a couple of ounces or so). Only problem is that in higher quantities, it's not as portable as gold.

Wed, 06/16/2010 - 19:30 | Link to Comment ColonelCooper
ColonelCooper's picture

I agree, but if you are trying to be mobile, you probably want to be liquid. Gold WILL be more difficult to spend on day to day needs.

Wed, 06/16/2010 - 18:44 | Link to Comment Scout Itout
Scout Itout's picture

It depends on where you live when the SHTF. If you live in a densely populated area you might want to get the hell out of there and packing tampons and toilet paper won't be easy.

Better to have gold and silver in that scenario.

If you live in a more rural area that is relatively safe, then commodities along with PMs would be wise.

Wed, 06/16/2010 - 19:07 | Link to Comment Paigow
Paigow's picture

SLW is an interesting option.

They do no mining or exploration.

They buy silver production streams from other firms producing mines.

They buy production from gold & base metal miners that have some silver production coming from their mines.

They do no hedging, thus are a pure play on the price of silver.

Further, the price action has natural leverage similar silver miner,

so that typically SLW price moves more than silver ETF's such as SLV

Wed, 06/16/2010 - 19:38 | Link to Comment New World Chaos
New World Chaos's picture

My bank called and offered to top up my mortgage for "renovations".  Didn't even have to ask.  Think I'll get silver sub-flooring (for mold control).

Wed, 06/16/2010 - 19:51 | Link to Comment Dimeboy
Dimeboy's picture

+1000 Idea! 

I wonder how many Silver Maples (or Eagles if you don't mind a little copper) to the sq. ft?

You'd have to do your own work though.

Would the floor "ring" a little when it's walked on? 

Wed, 06/16/2010 - 21:10 | Link to Comment A Nanny Moose
A Nanny Moose's picture

I was in a store over Memorial Day. About 1K sq ft, all pennies covered in a clear coat. $4500

Not quite the same, but interesting store of value nonetheless.

Wed, 06/16/2010 - 19:44 | Link to Comment unwashedmass
unwashedmass's picture

ah, we should all write to JPM and ask them how their "silver positions" are, and when they anticipate complying with securities laws and closing them.....

so we can be in position to benefit from the skyrocket.....

kenneth.h.nydam@jpmorgan.com

ken works in futures and options, the americas ... at JPM.....

he's probably a really good person to ask when they plan to close out their gloriously humungous silver short and let silver trade freely....

Wed, 06/16/2010 - 20:22 | Link to Comment The Rock
The Rock's picture

"Store some in a bank safe deposit box and use more than one bank as your holdings grow."

No fucking way would my PMs go near a goddamn bank!

Thu, 06/17/2010 - 10:35 | Link to Comment RockyRacoon
RockyRacoon's picture

Yep. When they impound safety deposit boxes it will be a blanket operation, except for the little banks (small enough to fail) that get a weekly whipping.

Wed, 06/16/2010 - 20:38 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Plata Putas(z)!!

Wed, 06/16/2010 - 22:22 | Link to Comment ThisIsBob
ThisIsBob's picture

Put nothing, zero, nada in a bank box.

And toughen up your hands as tough hands will become quite necessary, the very day it is confirmed that the above advice was good.

Wed, 06/16/2010 - 23:45 | Link to Comment TheSettler
TheSettler's picture

Through June 21st? according to my Myan calender today is the 16th?

Thu, 06/17/2010 - 00:01 | Link to Comment Joe Sixpack
Thu, 06/17/2010 - 01:08 | Link to Comment palmereldritch
palmereldritch's picture

Me likey silver.

General rule (as discussed with me homeys) is if gold goes to $3000/oz. then liquidity shortages of physical delivery will dictate that PM's step sister Ag will step up to climb to 10% of the Au price viz. $300.00 per oz and will be the defacto true physical PM base for currency at $300.00 oz as base climbing from current 20.00 USD base.

Can any of the ZH brain trust dissect the following links of Buffet's role in silver's Barclay ETF way back in 2006?

http://www.gold-eagle.com/editorials_05/dross022806.html

https://www.kitcomm.com/showthread.php?t=19696

Can anyone comment on the current status of the potential Illuminist front on this PM and its potential impact on silver becoming a true and viable reserve commodity for currency post debacle/meltdown?

 

Cheers


Thu, 06/17/2010 - 07:34 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

EURO bullish warnings mentioned earlier, have strengthened today. Vice versa for the USD index of course.

I have detected EURO buying support for several weeks now.

XAUEUR daily chart gives bearish warnings as of today.

This could be an important development.

The proprietary indicators I use in my technical analysis can identify trend changes before they occur.

http://stockmarket618.wordpress.com

Do NOT follow this link or you will be banned from the site!