Guest Post: Hi Ho Silver: Making the Case For This Precious Metal
Submitted by Jeff Clark via Casey Research,
Even though the newsletter I write for Casey Research is focused primarily on gold, our metals investments cover all the precious metals, and when warranted, some base-metals plays too. And with the markets in the state they are, I want to say something about silver..
My talk at the Vancouver Resource Investment Conference in January was titled Is D-Day for Silver Approaching?, and highlighted the delicate balance between supply and demand. I concluded that there would be insufficient metal to meet a major spike in investment demand if it were to occur, leading to all kinds of negative consequences for those who don't own silver (and lots of wonderful rewards for those who do).
I had plenty of compelling charts and convincing data. But here's the rub: I don't believe that what's ahead for the price of silver (and gold) will have anything to do with that data. After all, there are articles from researchers and analysts that use similar data to paint a bearish outlook for the metal.
Instead, my reasoning is based on psychology. Here's a good example…
At a recent outpatient hospital visit, the nurse ran through the usual background questions, one of which was what I do for a living. I told her, and this was her response:
- "Oh, gold. That's exciting. But it's too expensive for me. I can't afford it."
Now, this is an RN in a hospital – someone who earns a good living and can afford to take a vacation and eat at the occasional fancy restaurant. She has money to buy birthday presents for her kids and probably contributes to a retirement account.
But when the value of money begins to erode more seriously and inflation makes front-page headlines, and my nurse turns to precious metals to gain some semblance of lifestyle protection, what is she going to buy? If she can't "afford" gold now, it won't be any "cheaper" later.
She'll buy silver. And so will a lot of other panicked investors who don't think they can "afford" gold and are watching their purchasing power relentlessly decline. It will drive prices higher. Perhaps wildly so.
The effect on the availability of bullion is obvious and will be all negative – high premiums, delayed delivery, and mandatory rationing. For those of you who've followed our lead and purchased bullion, consider this: you'll be paid above spot for any ounces you sell during this time.
The message is crystal clear: if you don't have a meaningful amount of silver bullion, buy more now.
This is why I'm not worried that the silver price continues to be range bound. Precious metals will be pursued by an alarmed and increasingly angry citizenry as their money loses more and more value. And just like my nurse, many will find silver more affordable. The result is that silver's percentage gain will almost certainly be much greater than gold's.
Meanwhile, the ramifications for silver producers are all positive. Revenue will jump. Earnings will rise. Dividends will increase. Stock prices will soar. And given the small number of stocks of primary silver producers trading in the industry, the rise in their share prices could be breathtaking.
This may seem like a distant scenario. And there will be retreats along the way, based on the false appearance of economic recovery – but these will just be last-gasp buying opportunities. Don't worry about the timing. Whatever happens in the near term, global economies cannot avoid the fallout from currency abuse indefinitely. History has repeatedly shown this. We don't know if the shift to price inflation will be sudden, occur in fits and jolts, or appear in a slow dawning, but escape it we will not.
Make sure you own some silver bullion, my friends. And then buy the grossly undervalued miners.
Buying physical gold and silver is obviously prudent, but to really capitalize you need exposure to quality producers – they historically outperform the metals themselves.
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I like silver.
In other news...
http://english.yonhapnews.co.kr/news/2013/03/08/0200000000AEN20130308006...
N. Korean general says Pyongyang has nuke-tipped ICBMs on standby
A North Korean general said Thursday that the country has placed long-range missiles armed with nuclear warheads on standby, as Pyongyang said it will not bow to the United Nations resolution condemning its latest atomic weapons test.
Bullish... Krugman is probably furiously fapping right now over this news.
If so than the Krugs just came (on my twitter feed 3 minutes ago):
The Market Speaks by P. Krugs
http://www.nytimes.com/2013/03/08/opinion/krugman-the-market-speaks.html...
North Korean official newspaper : "War with South Korea is inevitable"
This is an honest question, not a troll:
Why would someone own silver when high quality fractional gold coins are widely available?
I'm asking because gold has always been the ultimate money. Silver, platinum and palladium are valuable and rare but have been secondary to gold as money throughout history.
I am tired tonight, so here is the short answer... As pms trade more for monetary reasons the gold/silver ratio will compress... At least to 16:1, likely 10:1, possilbly to 5:1...
hoarding metals is a sure way to attract a lot of government attention.
...and having a 401k or IRA isn't?
So is having a job.
Then pull a China and buy it covertly.
Gold is the 'money' of kings.
Silver is the 'money' of gentlemen.
Barter is the 'money' of peasants.
Debt is the 'money' of slaves.
Silver has historically been the metal for actively used money. The value of silver is better suited for that. It would not be very easy to use gold for normal trade. One ounce would be worth 1600 dollars, and even 1/10 ounce, about 160. Silver on the other hand about 30 and 3.
One reason for silver not being as actually used for parking wealth is space, and the fact that silver in a lot of places attracts VAT, gold does not.
I have a feeling that the value in dollars will be strictly temporary, but the purchasing power stable.
We are about to see prices in paper exploding.
"But when the value of money begins to erode more seriously and inflation makes front-page headlines..."
All of these bullish projections for gold and silver are based on screaming inflation or a collapse in the global economy. Doesn't look like that's going to happen any time soon.
And when it looks like it's going to happen anytime soon, it will be too late.
Take away the lies and fradulent statistics and I believe that would be NOW. Forgive me for not rehashing stats widely known, just consider food stamp use and labor participation rate.
I'll add that silver would be very handy for transactions of lesser amounts. One might not want to wave around even a tenth ounce gold Eagle where a few silver Eagles would do the job. Besides, I might wanna make change! Junk silver would fill that need.
The nurse in the article actually sees gold as unnecessary. Any price would be too high in that respect. When gold as seen as a requirement for self-preservation (preservation of wealth) then no price is out of range. It has infinite marginal utility. There is always room for one more ounce...
Silver, on the other hand, has a measurable marginal utility, which is determined individually. I know how much I'd need to make my way in a world devoid of the USD "trust" that is necessary for the USD to maintain purchasing power. Just enough to keep me from having to sell/trade any of the gold stash. It's the gold that allows one to weather the storm and come out sound on the other side. Silver is just the vehicle for making the trip.
well said Rock. Dorothy walked the yellow brick road with silver slippers.
'There is always room for one more ounce...'
...or gram
http://www.apmex.com/Product/19041/1_gram_Pamp_Suisse_Gold_Bar_9999_Fine...
I never buy junk silver. Considering that only 1-2% of westeners are stacking, and are even aware of what junk silver is, those future, panicked hoards of newbie stackers are going to be buying pure silver coins, rounds and bars. They want to see there phyzz marked with slogans such as ".9999 Fine Silver 1oz. Argent Pur", "1 Unze Feinsilber", or "1 Onze Plata Pur". And so do I. Lets say I'm selling a bottle of booze for one ounce of silver. Joe comes over and slaps a nice 2012 Maple Leaf down on the table. Jack on the other hand, pulls out a sack of dirty 40 % silver nickels and starts pushing a pile of this stuff towards me. Guess what. Joe is going to have a nice comfortable buzz later on and Jack is going to be filtering river water with his Katadyn. Yes, I know those nickels are 40%, but I have to check every damn one to make sure it is what it is. Then, not only do I have to push them onto someone else, I may have to prove to an uninformed vendor just what these nickles even are, all the while still having to compete against Joe and his Maples. It's not worth the hassle. I'll stick with the pure stuff.
Silver might become the first element to become "extinct" in the sense that there's no more of it. Silver, unlike gold and pgms, is consumed/ used, and the production of new silver is not keeping pace with the demand for it. A single wealthy buyer could purchase all the world's physical silver, and then there'd be none left for anything else.
We have no doubt in France about silver as a money as we use the same word "argent" both for money and silver
It's similar in German language; 'das Geld' means money ('das Gold' is gold).
That reminds me of a story when I was a little boy in the 1970s: after some efforts lasting many weeks, I had finally managed to extract, unnoticed by my parents, a lovely 50 Francs Silver coin (90% pure silver) from my piggybank (about $10 value in those days for the equivalent fiat note).
With it in my hand, I headed straight to the local shop to buy my 2 favourite items at the time: comics & chocolate. I had no idea if my coin would be accepted or not (it was a first-time effort) and the old man at the till looked surprised when I handed my payment ... but he took it and here comes the crunch: I will always remember that he went to his pocket/wallet to give me back my change (in fiat of course) rather than to the till!
It seemed a little odd at the time but I didn't care as I had my goodies. Once my theft had been uncovered I was given a thorough kicking for my action with the explanation that a certain type of money was worth more than the other. Fast forward to today and the last 4 decades of currency debasement and my parents' anger at the time makes complete sense.
If your parents are still alive, you could assuage your gilt and give it back to them!?
http://weightoncoin.co.uk/index.php?main_page=product_info&cPath=7_59&pr...
Edit: guilt, not gilt.
as that buyer starts to corner the silver the price would shoot to incredible levels, so i doubt he could buy ALL the silver that's out there.
premium over spot is higher for fractional gold coins, better to just get silver.
also, when PMs go up, silver goes up faster (this is related to comment above about GSR compressing)
so if you're bullish on PMs, you should be in silver.
Think that through for a second. "Premium over spot is higher for fractional gold coins..." That is true. What you are not allowing for is that the premium remains with the coin. It doesn't disappear just because you bought it. The spread for the premium expands / contracts with spot as well. When time comes to sell you will recover that premium that you held so dear. It's all part of the value. Buying fractionals with higher premiums over spot is not bad; it just takes a level head to avoid paying excessively. Same with any transaction.
Some people say they don't want to buy silver eagles because they are so much over spot. But if you use a good dealer he'll also pay over spot for them because he has to pay that to get them from the wholesalers. A dealer I've used usually has a 50 cent spread (less for large quantities) between his buy and his sell prices.
i have thought it through before, believe it or not.
and my guess is (yes, this is merely a guess), that when PM prices explode at some point due to supply issues, that the premium won't expand at the same rate as the underlying metal.
this is why i avoid numismatics, collectibles, and high premium coins, i try to focus on maximizing the metal itself, by buying 100oz bars, for example, not coins.
i have a few coins, too, as they will be good for barter in a currency collapse situation, but that's not primarily what i save in.
That not true. People believe it because gold has always been the money of princes and states, and people fixate on that. (Still statists in their secret hearts?)
The money of real people has always been silver (and copper). And only silver, with a foot in both worlds of money and manufacturing, is magic. It has been the most viciously suppressed by the reptilian overlords who destroy our future and feast upon our children.
When the controls fail and our people (as many of them as survive) are free, silver will go to at least 1/3 gold and stay there for years while people frantically try to find new sources.
Gold is good. But because of its special suppression under the Perversion, silver is about twenty times better.
Perhaps - but when was the last time gold / silver traded at 15 to 1 - certainly not in the modern economic paradigm. Why do you believe that a ratio that was most dominant in the midlle ages (and artificial in construction) will come to hold sway again?
Gmak, what was the GSR in the 1960s and 70s. It certainly wasn't 60:1
Perhaps gmak does not know that the 15 to 1 ratio is also the proportional distribution of silver to gold in the earth's crust. If you mine the earth for your metals, you will average fifteen ounces of silver for every ounce of gold. That does not support a 50:1 price ratio, especially when you discount that silver is mostly consumed while gold is mostly vaulted.
The eighteen seventies is not the middle ages.
Presently, we have no idea what the metals are worth. After one hundred years of supression and confiscation, how would we know? We can look at items they used to purchase and see similarities, but even in the last five hundred years, the ratio was often dictated by governments , leading to Gresham's observations.
Unfortunately, the only way a free market could exist for metals or anything else, would be the elimination of the State as we know it and central banking. I would suggest we would see many items take on new values we never expected.
The reason to hold physical asset classes is simple: your currency has no real value. Your currency is manipulated to provide a transfer of wealth and depreciate your labor value. As long as you hold your wealth in currency, you are being robbed and thanking them for their services.
When you go to work each day, do you not want to retain as much of your earnings as possible? Do you want the value of those earnings to be dependent upon central banking officials? Do you want your wealth exposed to banker irregularities, leverage bets and derivatives? Why would you want to share the risk when you are not allowed to play in the game?
This is the reason silver and gold are valuable. They are money mechanisms outside the control of the State. When a State becomes more totalitarian by the day, you must protect your family and yourself from its' predatory behavior.
100+++ Magical words my friend.
Dominant in the Middle Ages?
Man, you're about to get a rude awakening. For most of recorded history, the Chinese have had about one quarter of the worlds' human population under their rule...and for much of that time, silver was their currency of choice. In fact, the Chinese were first to experiment with paper currencies...and when that didn't work out so good(apparently both the Yuan and Ming dynasties suffered from a plague known as 'paper printing')they returned to....
silver, which had a higher value than gold much of the time. The whole Venetian gambit which took Marco Polo off to Sian was based on the arbitrage trade which exchanged European silver for Chinese gold. And until they dreamed up the opium scam, Europe was pretty much stripped of it's silver to pay for the Chinese silks and luxury goods which were so valued there.
Now, put on your thinking cap(but take off the moose rack first!)and ask yourself bud...whose got the momentum of the moment tradewise...and where is the wealth flowin? You may think the Chinks are dumb as rocks...but that's just part of their act...silver will trade again as money...once the East has it all. And it won't be no 'artificial' ratio it trades at either. Just compare provable stocks of silver to gold and get that pocket calculator working.
The opportunity to get a piece of the silver action that will rule the future is already gone..."you just don't know it yet!"
+joyful
Fiat money is a weapon that has decimated many empires.
No King ever sat on pile of paper, always a golden throne
perhaps the better question is
why WOULDN'T you own silver ?
Fractional gold holds merit certainly but take a look at the following criteria
1. Fractional markups
2. Historical GSR
3. 2700 year silver trading history
4. They don't call it the pound sterling for nothing
5. Just because Silver isn't monetized now doens't mean it won't be in the future
so if you don't have a large income and don't own any gold then AU fractionals make a lot of sense.However, Retail markup on gold fractionals charge 11% ~13% while a 10oz silver bar checks in around 3%.
Finally I have found that many in the gold alone group fail to take into account the billions of future consumers in East and South Asia. Yes they can and do purchase gold but I think there is space in any stackers pile for at least a little silver. China's extensive historical use of silver as money is a confirming indicator that those who dismiss silver simply don't grasp the significance of AG as a medium of exchange.
Your premiums are way off the charts. Most I paid was for kinebars, at ~6.6%; Perth Mint w/ cert goes for a third that - both 1oz bars. Silver in Europe pays VAT.
http://comparegoldprices.com/
https://comparesilverprices.com/
http://www.coininvestdirect.com/
Because relative to the price of gold, silver is a bargain as measured in FRNs. Also, the uses of gold outside of a monetary asset and for jewelry are limited. Silver has numerous industrial uses. Gold does have some unique properties, but is so expensive that other cheaper substitutes are used instead. Finally, silver has been used as a monetary asset in the past and likely will be in the future. There just isn't enough gold out there for it to be the only one.
To use an analogy, have you ever noticed that everyone wants to date the prom queen? But her equally pretty and much nicer sister doesn't get many calls. She's willing to try harder. And in the long run is a much better find.
I wish I could get mine from where it sank.
How nice of you to sacrifice your stash, in order that we might have cleaner water.
http://news.stanford.edu/news/2010/august/nano-pure-water-083110.html
I need to win mine back at the poker table.
If anyones interested I'm selling a little bit to pay for a long needed vacation.
Generic 1 oz Silver Rounds $30 each
Roosevelt dimes $2.50 ea. or 50 coin roll $125
Washington quarters $6 ea. or 40 coin roll $240
Kennedy halves $12 ea. or 20 coin roll $240
I'm in Phoenix if you want to meet, or I can show you my ebay account with good reviews.
I bet you get inundated with people demanding to buy silver at a 1.2$ above spot price....
I bet you didn't know that tulving.com is buying mint boxes of silver eagles at $1.70 per ounce ABOVE spot. Right now. And selling them at spot + $2.49.
http://www.tulving.com/goldbull.html
Not selling eagles, they were lost in a boating accident.
I made a good bet so I can afforrd to give a good deal.this
Is left over from the bet.
Feel free to contact me at bluesektor@hotmail.com
Btw what fucknuts down arrow a post that's on topic. You people are turning into huffpo poster!
MY SISTER MAKES $5000 A MONTH FROM HOME IN HER SPARE TIME.
YOU CAN TOO. CALL ME NOW TO FIND OUT HOW 1-800-FUCKNUT
Ring...ring..ring, hey fucknut, show me the money.
It wasn't a get rich quick scheme.
Cached out of my 401k and instead of paying the taxes right away I dumped it
into pm's on the summer lows. Waited, waited, waited till tax season and seasonal highs
and dumped. Made enough to pay off my liability and then some.
Dickheads like you talking shit need to go back to your mommy's basement.