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To: Spydergoo

Here are a few important thoughts:
You are right about silver having a greater potential than gold because
a) it is found in the ground at about a 1/10 ratio compared to gold and the current ratio is around 1/50, and not too long in the past it has been at 1/16 for long periods of time;
b) silver is USED in industry. Even though it is found 10 to 1 in the ground compared to gold, it is used in many industrial applications, and therefore, most of what has ever been produced is now in landfills. However, it is used in such small amounts in any particular application, that it is usually not cost effective to find a way to recycle it. This is the opposite of gold, almost all of the gold that has ever been mined is still above ground and is not gone. The result is that the silver market is very thin, and any disruption in supply is bound to make it extremely expensive.
c) At higher prices of gold, silver is the poor man’s gold.

Many experts in historical human behavior have opined that the long term destiny of all fiat currencies (those not backed by anything, such as what we’ve had since we went off the gold standards) is to return to their natural worth, which is how much BTU’s you could get from them when you burn them! This is consistent with natural politicians’ behavior: you get to a point in your taxing that the population revolts. Inflation through printing on the other hand, is usually a hidden tax that is much easier to impose as people are usually ignorant of what is going on with their money. This is why I believe that gold and silver are actually quite cheap: Our debt is such that there is no way that we will ever repay it using current dollars. The government will have to inflate the dollar while keeping interest rates low in order to have a net decrease in the value of the dollar, and try to repay the deficit with cheaper dollars.

One important aspect that you would need to investigate more is the concept of the “physical” and “paper” markets in gold and silver. This is where in the past gold and especially silver have been artificially kept low thanks to a real conspiracy between the COMEX, the banks (JPMorgan is in the middle of a major lawsuit about this), and maybe the government. The first part is that it is alleged that the major ETF’s such as the GLD and especially the SLV are NOT backed 100% by physical gold and silver (some of the physical quantities get “leased out”.). Here’s a hypothetical example of how the manipulation may have worked in the past: say silver blew the roof off and went to $50. JPMorgan overnight at a time when the market is at its thinnest enters huge naked short positions in the “paper” market, effectively clobbering the price single handedly. The next trading day, the COMEX, its co-conspirator, raises margin requirements on silver. All the traders who were “long” silver using margin get hit by a double whammy of seeing their long positions get killed, and their margin requirements raised, forcing them to liquidate many of their long positions, forcing the price to plummet further. JPMorgan comes in at that time when the price is even lower, and covers their short position at a very low price. Voila! Instant millions of dollars.
The price that you hear that gold and silver are at, is the price quoted at the COMEX for the “paper” market. If you want to take physical delivery of the metals, you would probably have to pay a hefty premium as the paper market is being manipulated. When people stop buying the ETF’s and start taking physical delivery of their gold and silver, the manipulation game will be over, and the price on the COMEX will be disregarded as there will be two prices, the paper price on the COMEX and the real physical price.

If you are investing, the gold and silver miners got absolutely clobbered last year even though gold and silver have been rampaging. These companies are literally printing money, and once people lose faith in the ETF’s, they will want to buy gold in the ground and silver in the ground, especially from companies that are increasing their production (only some of the smaller players are doing that-the largest players are having a tough time replacing their reserves).

I hope this was helpful. Do you have any questions?


18 posted on 01/22/2012 9:42:24 PM PST by winner3000 (ss)
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To: winner3000
What u said!...wonderful response!

I always like to throw this 1966 Greenspan article out when discussing PMs with people that are new to PMs’s
http://www.321gold.com/fed/greenspan/1966.html

21 posted on 01/22/2012 10:37:21 PM PST by M-cubed
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To: winner3000
What u said!...wonderful response!

I always like to throw this 1966 Greenspan article out when discussing PMs with people that are new to PMs’s
http://www.321gold.com/fed/greenspan/1966.html

22 posted on 01/22/2012 10:41:38 PM PST by M-cubed
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