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Buy Silver…Now!
The Daily Reckoning ^ | 12-8-2011 | Matt Badiali

Posted on 12/08/2011 3:34:18 PM PST by blam

Buy Silver…Now!

By Matt Badiali

12/08/11 Silver is an amazing metal…which is why it’s likely to soar over the coming years…

You see, silver has more than 10,000 uses. It’s one of the world’s best conductors of heat and electricity. Inventors filed more patents on silver uses than any other precious metal in the world. And when silver is used for most industrial and technological purposes, it is used up forever… It simply costs too much to try to recycle the tiny bit of silver from every cell phone or casino chip.

I’m not saying industry is going to use up all the world’s silver. That simply can’t happen. But scarcity is a real issue.

Our rapid consumption of silver leaves very little to meet any uptick in demand from investors. A spike in interest will send prices spiraling higher…

Here’s a breakdown of the silver market. The table below shows the percentage of the total amount of silver consumed by each category over the past four years…

As you can see from the table above, only 12% of the silver supplied to the market made it to bullion in 2010. That means only a little more than 100 million ounces of silver became bullion for the entire investing world.

That’s a tiny fraction to sop up all the investment interest in the world.

Of that silver, about 43 million ounces went to exchange-traded funds like the iShares Silver Trust (SLV) and the Sprott Physical Silver Trust (PSLV).

That means you could buy all the extra silver bullion for about $2 billion. We could buy all the surplus silver bullion from the last four years for about $10 billion.

That’s the same as the market value of the iShares Silver Trust today. If you wanted to build another silver fund, you couldn’t. There just isn’t enough silver bullion out there to fill the order.

Even trying to amass that much physical silver would send the silver price soaring. It’s a simple market fact… When there is more demand than supply, it drives the price up.

And the economic problems confronting Europe and the United States have increased interest in precious metals… Silver gained a colossal 174% from August 2010 to April 2011.

In May 2011, however, the price collapsed 31% in just four weeks. The bull market simply ran up too far, too fast… and the decline wiped out many highly leveraged silver traders.

The big money is tiptoeing back into silver.

Last month, commodity trading advisors, pool operators, and hedge funds — the “big money” — weren’t interested in silver AT ALL…

But as they move back into the market, silver prices could soar. Let me show you what I’m talking about…

Jason Goepfert created SentimenTrader, a service that tracks investor sentiment toward various asset classes. According to Jason, silver just bounced off its most pessimistic reading in four years.

The so-called “commitment of non-commercial traders” hit 10,352. That’s incredibly low. The last time sentiment numbers were that low was in August 2007. Six months later, the price of silver was 59% higher. It rose from $12 per ounce to $19 per ounce.

I went all the way back to 2002 and found that silver sentiment bottomed near 10,000 six times… On average, the price of silver rose 33% in the next six months and 54% over the next year. This chart shows the last four times it bottomed…

Here’s how the silver price performed after each of the last four times silver sentiment bottomed out…

The best return came after Bottom No. 2, which coincided with the US banking/credit crisis. Silver soared an eye-popping 405%, including its parabolic rise in 2010.

As those numbers indicate, silver is one of the most volatile assets in the world. Over the last year, silver has seen massive price swings, including an 81% rally and two 30% drops. That forced many traders to liquidate their silver holdings in order to meet emergency short-term requirements. (Plus, the debacle at commodity broker MF Global has scared many folks out of the market.)

But the long-term drivers of gold and silver’s uptrends are still in place. Enormous and growing Asian economies like China and India are getting richer…and they have deep cultural affinities for precious metals. Plus, the Western world has lived way beyond its means for a long time…the debts and liabilities it has taken on can only be paid back with devalued, debased money. This is bullish for “real money” assets like gold and silver.

With sentiment so negative toward silver (and just beginning to turn back up), it’s a great time to take a position in this long-term bull market.

If gold and silver prices are nearly certain to rise over the next few years (and probably rise dramatically), the simplest way to play that trend is to buy bullion…real, hold-in-your-hand silver coins.

And I recommend everyone do just that… Buy some silver and store it away.


TOPICS: News/Current Events
KEYWORDS: commodities; inflation; silver

1 posted on 12/08/2011 3:34:24 PM PST by blam
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To: blam

I have found this website to be a very useful source of information on the economy, gold, and silver.

http://goldismoney.info/forums/


2 posted on 12/08/2011 3:35:58 PM PST by Silver Sabre
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To: blam

3 posted on 12/08/2011 3:39:19 PM PST by woofie (It takes three villages and a forest of woodland creatures to raise a child in Obamaville)
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To: blam

Betting long I assume... Might actually work if you can get enough people to buy...


4 posted on 12/08/2011 3:43:45 PM PST by Deagle
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To: blam
After investing in government I have no funds free to invest in anything else.

Government is my silver and gold by force whether I like it or not.

5 posted on 12/08/2011 3:47:05 PM PST by EGPWS (Trust in God, question everyone else)
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To: blam

Silver is in a massive long term downtrend.

If you look at a 500 year chart Silver has been a very very very bad investment.

http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/silver_500_years.gif

http://bigpicture.typepad.com/comments/2006/01/500_year_chart_.html


6 posted on 12/08/2011 3:49:29 PM PST by CGalen
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To: woofie
“Silver” is dead, what “triggered” it is unknown, however there is a “flika” of a chance that a horsetrader named “Ed” may have given a “velvet” platform to a “Black stallion” of an investment however this is just horsetrading gossip.
7 posted on 12/08/2011 3:55:59 PM PST by EGPWS (Trust in God, question everyone else)
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To: CGalen

The chart you posted ends with the 1998 price, around $6.00 per ounce.


8 posted on 12/08/2011 3:57:26 PM PST by ScottfromNJ
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To: woofie

:O) thats about 1500 pounds of silver......


9 posted on 12/08/2011 4:01:09 PM PST by goat granny (.)
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To: blam

Does jewelry count?


10 posted on 12/08/2011 4:01:37 PM PST by nuconvert ( Khomeini promised change too // Hail, Chairman O)
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To: blam

Rounds @ 99 cents over spot & free freight to new customers here...

http://meritfinancial.com/?cpao=111&cpca=merit+name+spellings&cpag=merit&gclid=CI2186HW86wCFQVwhwod7HdrQg

not affiliated with them, never bot from them.


11 posted on 12/08/2011 4:04:33 PM PST by Attention Surplus Disorder (Gun store gift certificate. An idea whose time has come.)
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To: Silver Sabre

lot of uber Ron Paul lunatic libertarians on that forum. NONE the less gold is real money and as gold gets monetized the gold/silver ratio will decrease. Silver coinage has always been used for “commoner” transactions. Gold more for large transactions plus bank to bank settlements and business to business settlements.

Fiat money of the USD dollar and Euro kind lose credibility every day. Guess what will fills this vacuum

*********Nobel Laureate economist Milton Friedman: “The major monetary metal in history is silver, not gold.” (I remember it well because the statement struck Jim so strongly that he had it printed up on a sticker and inserted it on the flyleaf of the original 8-1/2 by 11 version.) Friedman was right, of course. For most of mankind throughout most of history, silver has been the much more important monetary metal, familiar as the metal of daily commerce. Gold was used only for very, very large payments, which most people make only rarely, if ever.


12 posted on 12/08/2011 4:06:30 PM PST by dennisw (A nation of sheep breeds a government of Democrat wolves!)
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To: CGalen

If you look at a 500 year chart Silver has been a very very very bad investment.


So... buy low!

Also, there just might have been a few teensy-weensy fundamental economic changes since Conquistadors, the Comstock, and its adoption and abandonment as coinage.


13 posted on 12/08/2011 4:08:21 PM PST by Atlas Sneezed (Author of BullionBible.com - Makes You a Precious Metal Expert, Guaranteed.)
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To: blam

What is the best way to buy silver without paying a huge premium?


14 posted on 12/08/2011 4:10:24 PM PST by Conservativegreatgrandma
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To: Attention Surplus Disorder

Merit might be a good deal, or it might be a come-on to get your email with a teaser price. Gainesvillecoins.com is a reliable seller that doesn’t play games, and has excellent prices in small (or large) quantities.

I’d suggest US pre-1965 coins to a beginning silver investor. Very low (negative) premium over spot, and recognized everywhere.


15 posted on 12/08/2011 4:14:22 PM PST by Atlas Sneezed (Author of BullionBible.com - Makes You a Precious Metal Expert, Guaranteed.)
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To: Conservativegreatgrandma

Typically buy at a local coin or metals dealer. Mine sells at spot and pays a few bucks below spot.


16 posted on 12/08/2011 4:15:01 PM PST by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
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To: woofie

Hi-ho, indeed. I’ve enjoyed silver’s up and down wild ride. Volatity can have its advantages.


17 posted on 12/08/2011 4:25:58 PM PST by pingman (Durn tootin'; I like Glock shootin'!)
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To: Conservativegreatgrandma

What is the best way to buy silver without paying a huge premium?


See post 15. Take that info to see if a local dealer can meet or beat it.

Also, I humbly suggest the course in my tagline. Money-back guarantee.


18 posted on 12/08/2011 4:26:33 PM PST by Atlas Sneezed (Author of BullionBible.com - Makes You a Precious Metal Expert, Guaranteed.)
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To: blam
You know what this means...

SELL! SELL! SELL!

19 posted on 12/08/2011 4:28:59 PM PST by E. Pluribus Unum (Holding our flawed politicians to higher standards than the enemyÂ’s politicians guarantees they win)
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To: Beelzebubba
Ha - I've been doing just that. And, higher (VF or above) grade German coinage from the States, Empire, Weimar, and Third Reich eras, as well. (Just picked up a sweet VF grade 1877 half mark piece for $7 - ha!) There's an art to it, but the small cache I've assembled is worth many times what I've invested in it. You just have to be slow, methodical, knowledgeable, and look for the right moment to commit to the deal, but not try to speculate for a quick kill. I also have quite a nice little portfolio of pre-1964 U.S. silver and other decent grade coinage stretching back to the mid-1800's.

"But know this, that in the last days perilous times will come: for men will be lovers of themselves, lovers of money, boasters, proud, blasphemers, disobedient to parents, unthankful, unholy, unloving, unforgiving, slanderers, without self-control, brutal, despisers of good, traitors, headstrong, haughty, lovers of pleasure rather than lovers of God, having a form of godliness but denying its power. And from such people turn away, for his name is Obama."

20 posted on 12/08/2011 4:40:01 PM PST by Viking2002 (Hippies smell.)
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To: Conservativegreatgrandma

Check with Franklin Sanders, www.the-moneychanger.com. My son and I have been doing business with him for about 5 years.


21 posted on 12/08/2011 5:07:24 PM PST by native texan (Hard work, faith, thrift and one more word..."honesty")
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To: CGalen
Silver has been a very very very bad investment.

Yes, but if you're looking for a hedge against catastrophe, like runaway inflation, it's probably a good idea. As a long-term investment, I agree with you.

22 posted on 12/08/2011 5:12:58 PM PST by JoeFromSidney (New book: RESISTANCE TO TYRANNY. A primer on armed revolt. Available form Amazon.)
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To: Conservativegreatgrandma
Hey, another way to buy without the huge premium is to open a Sprott Physical Silver trust acct. No premiums and you can buy, trade, or take possession.
23 posted on 12/08/2011 5:27:07 PM PST by native texan (Hard work, faith, thrift and one more word..."honesty")
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To: native texan

Thanks, I really appreciate the info.


24 posted on 12/08/2011 5:50:38 PM PST by Conservativegreatgrandma
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To: ScottfromNJ

“The chart you posted ends with the 1998 price, around $6.00 per ounce.”


It is my belief and my studies that silver has now reversed its 500 year long term down trend, and that silver will now be going UP!!! for the next 500 years.

I myself started buying silver a few years ago after I confirmed that the 500 year downtrend was completed.


25 posted on 12/08/2011 8:20:40 PM PST by CGalen
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To: Viking2002

So, with all that is happening in Europe, why isn’t their more of a premium on pre- and Imperial German silver coins?


26 posted on 12/08/2011 9:03:55 PM PST by DeaconBenjamin (A trillion here, a trillion there, soon you're NOT talking real money)
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