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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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no one needs to make a case for me, i'm trading all my bennybux as fast as I can for Ag.
the trade of a generation.
The only missing ingredinet for people like the RN though, is a financial education whereby they understand the need to hold metals for preserving their net worth. 99.99% of the investing(and non investing) public think that metals are like stocks, you buy them to go up. This mentality, along with the same set of people thinking silver is already too high in their perception will make most all wait till the last financial bomb drops, or not buy it at all.
Silver is the poor man's gold. Problem is, when the dollar crashes, poor people won't be buying silver, they'll be selling Grandma's silverware for food and fuel. I want the rich man's gold, because rich people are better able to hold on to money, and lower velocity equals higher value.
http://www.zerohedge.com/article/fofoa-golds-focal-point-or-silver-money...
On a more serious note, the entire Casey Research thesis is burdened by the kind of legacy thinking which deserves a whole section in the Smithsonian.
Not only is the price of gold\silver currently not determined by factors such as supply&demand, investor confidence, economic yardsticks, etc. etc., but there is no case for supposing that conditions in the West will even allow for the return of 'market' influence upon them...
until the whole system has long since crashed n burned...and an entire new chapter in humanity's Long March Outta Afreaka has begun. It 's amazing that the same set of people who bemoan manipulated markets and phony accounting can't seem to see the forest for the trees...
there is no retail investment potential for silver in the forthcoming future...as wealth bleeds out of the West at ever-hastening speed, incomes(as in, the lack of) will disallow any such movement towards pm's...whether motivated or not.
Behind the scenes, a whole new system of trade and currency settling is being hatched...exclusive, as Big Jim Willie continues to point out, to the legacy economies of the Euromerikan Zog satrapies whose engagement with the Third World is imminent.
Silver will be re-monetized, and once again resume it's proper role as a guardian against the moneychangers' monopoly of gold, by which the world has been held hostage for too long. Unfortunately, very few in the formerly first world will be able to enjoy that new era. The millenialist madmen intend to take the whole thing down with them.
+1 for mentioning WILLIE on ZH
Yup...
at the end of the day, Jimbo will be the one guy everybody needed to have readed and heeded...
but didn't.
I used to read Jim Willie thinking that his rants and rhetoric were extreme, utterly hyperbolic, and frequently right off the deep end .... until reality eventually, and repeatedly, caught up with them.
... and until then, it's the zero lower range bound Chicago Plan for the West. If you demand genuine price discovery, prepare to buy Bitcoin, otherwise hurry up and wait for the war on paper currency to kill anonymity.
www.tradewithdave.com
re ballasted the boat
nov 2008
sails much better
into the wind ..
that nurse shall have her chance to buy the precious and it's lessor cousin gold in both paper or take proper possession at discounted prices for the gyrations have yet to commence. the jekyll isle cartel done made a fine bottle neck by forcing those with a pot to piss in, buy supernational common stock above all other wealth preservatives. this to shall pass.
two = one, two, three
to = go to the library and read a dictionary
too = as well
This may help : http://grammarist.com/usage/to-too/
Oh, and sentences start with capital letters too.
(Have I just become a grammar nazi?)
Might I add:
It's — Contraction of "it is."
Its — Possessive, "The dog wags its tail."
And, to be an asshole:
You're — Contraction of "you are."
Your — Possesive, "Is this your ball?"
Oh, the "You're" vs "Your" is so cringe-worthy -- especially when it's in a tattoo. But to be fair this mistake was not made - was it?
My all time pet peeve is when people say "somethink" instead of "something", but perhaps that's just here in good old Oz.
The mistake was not made; I just felt like pointing it out, in case he posts again. Yeah, the verbal errors get me, too—especially slow and syllibated speech—which are becoming ingrained in modern speaking.
Newspeak, bitchez!! :)
Too bad they ain't no money in grammar. Ain't nobody got time fo dat!
Ditto. And "there is people that", instead of "there are people who". Drives me nuts. You see and increasing number of people doing this -- even some supposedly well-educated people. After that, how are you supposed to take seriously, if they don't have the education or brains to speak basic grammar correctly? It becomes a credibility issue (why should I listen to this hack!?), pure and simple.
and,
"lose" like something is lost.
"loose" a hooker's p***y.
'
'
'
'
Yis. You is!
•?•
V-V
Silver is the poor man's (or woman's) Gold.
The author has a point. If inflation and currency debasement continue and even a modicum of household's decide it might be prudent to put 5%-10% of their assets into Silver - it could boost the price considerably.
Not to mention the industrial applications. The supply needed for film has been obsolesced - demand now is firmly entreched in the electronics/semi-conductor/industrial camps.
Hummmm....
N. Korean general says Pyongyang has nuke-tipped ICBMs on standby:
http://english.yonhapnews.co.kr/news/2013/03/08/0200000000AEN20130308006...
Resulting in assured destruction if they launch. It's all attention seeking. NK is not a nuclear threat...nor is Iran.
If anyone is dreaming of some crazy spike in the price of either silver or gold, take a deep breath and hold your horses. It ain't going to happen. Insurance policies will not enrich you beyond your wildest dreams. They will simply protect you against your most feared nightmares of crazy inflation or total collapse.
There is a loose correlation between gold and BASE money supply, which may continue, eventually putting gold at around $2,800/oz. However, we do live in Bizarro World, and prices could plummet...
So you're saying the chance of snow is somewhere between 0 and 100%?
Pretty much... Following markets these days is akin to being a weather man.
Okay, so who are the quality (miner) producers?
Anyone care to weigh in on this since the author left out this tidbit of valuable information.
He mentioned the ones without counterparty risk and the ones that could never see their in-situ value nationalized.
Silver I like. Stocks of silver miners - not at all. Just another form of paper. Never any dividends, stock hustlers like Casey sell a lot of newsletters, management pays themselves very well, but never anything left for the muppet shareholders. Only hope is for greater fool muppets to buy your stock later on. If governments haven't nationalized the mine and/or forced conversion of your brokerage account to Treasuries at 2% for 10 years.
Any stock is just more paper in the financial world Ponzi scheme. Silver colored lipstick on the pig does not change the fact that it is still a pig. The Casey boys are still drinking the mining stock KoolAid. If it was such a great idea, they would shut up and buy it themselves. Just another pump and dump.
Yes well what if when inflation perception control can no longer be managed financial policy makers decide to begin to allow some of the debt ponzi to collapse. And maybe they don't because it's all one string of dominos... but what if. Maybe they start with some factions of the financial sector that hasn't been as complicit and prop the rest and so on. Massive deflation and economic organic healing restructuring would already be underway had they not intervened. Maybe all they gotta do is ease up pressure at one end of balloon end watch air come rushing out. Just saying maybe we gotta plan for one thing but be prepared for totally the opposite. Oye.
I can see the silver market spiking. Because little by little the everage joe Knows something is wrong. I agree they don't have the $$ for gold
so they will buy silver. Look at the track record so far for this year. Jan and Feb New rords for Traesury Silver Eagle sales. I think thatSAYS
something. The late comer/average joe is wanting to buy silver. Investers that have been in this market for 2 or more years would not buy at
the rediculous prices the Treasury is selling at, would they? And now the lastest data from silver ETF"s. An increase in shares......All pointing to:
BOOM......Silver Bitches
1.This wealth allocation strategy has worked for centuries for the rich & powerful -- come rain or shine, peace or war: 1/3 Primary wealth assets, 1/3 Secondary wealth assets, 1/3 Tertiary wealth assets. Make sure you diversify within each category by type, size and geography. If you don't know what these are... 'Oh boy, are you uninformed and open to exploitation!', is all I can say! Study up.
2. Treat speculation (hopes of large gains) like going to a casino: Gamble only what you can afford to lose (few percent on average, and <10% of total wealth under ANY circumstance). Else you deserve everything you get -- including the proverb: "A fool and his money are soon parted".
3. No post-game quarterbacking! By definition: A successful buy or sell is one that has met you preordained target values for buy or sell, i.e. where both your dollar or % return goals have been met. Larger potential gains are irrelevant, as you will also have avoided the risk of potential losses, or in having overshot your profit target if having waited too long because of a dose of Hopium (hope for even bigger gains). For example, if you goal was to gain 15%, then sell 1/2 when you've reached 15%, and the other half when you've reached 20%. Who cares if it goes higher! It could have gone down (and it WILL), when you weren't watching. Stick to your stop-loss plan/goals; better to lose a little than a lot. Case in point... how many (incompetent or self-serving) brokers and advisers told you to "stay in" in 2008/2009? Almost ALL! They probably gave you some cock & bull story (shown on a 1-page power point), about how markets recover quickly and that these recoveries typically happen only in a few but totally unpredictable days of the year. So you "stay in", because after having missed the "sell" window, you hope that he's right. You took a hit from that Hopium bong he gave you (over a steak dinner, if you had a 6-figure account or more).
If that's the case, it took 4 years to recover the 2009-2013 stock index. That's 4 years of lost growth potential (1.x^4). While they still collected their fees and commissions in the 2009-2013 period. Again: "Success" is -- by definition! -- when you've reached the exact goal you have set out, and not some "moving goal", or somebody else's goal.
4. People usually lose money because they either did not do proper diligence up front, or got high on Hopium and the reptile brain takes over for the smart brain. They sometimes (though rarely) also lose money because of incompetence and/or fraud by the investment house etc, but these are far less frequent than the losses due to own errors and weaknesses. In spite of the more dramatic MSM headlines they make. BTW, if one has a sizable portfolio of 2ndary and tertiary wealth invested in the markets, I would not use just one investment house anyway, no matter what their snake oil salesmen say. The choice to use two or more (depending on portfolio size) is made on the basis of mitigating 3rd party risk, where the exposure is far greater than the 1/4% in fees. Insurance policies and safety gear (life jacket, parachute) are cheap investments.
5. Trouble and disasters happen when people act dumb or too emotional; when the emotional mid-brain or the reptilian hind-brain takes over. If you stick to the 1/3, 1/3, 1/3 allocation and additional diversification rules, if you had done your due diligence and you stuck to your preordained success targets, then the odds are truly in your favor, and everything else are just (necessary) interim fluctuations. It is noise and dust in the wind. You and your loved ones will sleep better; come rain or shine, peace or war.
In the context of this article on investment advice -- or any such article -- simply treat it in making prudent asset allocations in the above context. No more, no less.
http://fofoa.blogspot.com/
Gold.
Silver.
Keep it secret.