Silver - What Better Investment?

When thinking about an investment, the best managers look for returns that beat what they perceive to be average. In the long run, wealth is a relative measure—today, even the poorest people are wealthier than the richest people five hundred years ago, though we’d still say that today’s poor are poor.

Investments work along the same lines, with the simple concept being that an investment must have performance that is preferable to your current financial trajectory, and it must have a return that beats holding money in cash, as well as the negative returns incited by inflation.

Whether or not you are a current silver holder or not, ask yourself one simple question: what price would it take for you to sell your metals or buy government debt? At what rate would it be favorable for you to invest your money in stocks, bonds or any other investment?

Now, take that number, which is likely quite high, and compare it to past performance of all the markets out there. You can compare it to stocks, bonds, and commodities, and see simply which asset type has produced returns that you would see favorable. It would be a safe bet to see that the returns and performance that you want out of your investment portfolio haven’t been found in stocks nor bonds for the past twenty years.

Silver Bubble is Not

For the individual investor, an exercise that looks into what he or she wants in an investment isn’t a daily happening, though it is for the institutional investor. The markets measure just like wealth—you can do well, as long as the other guy doesn’t do as well as you do.

So when the hysteria of a bubble emerges, investors should ask bubble promoters where they should go from silver. Should they buy stocks, which are priced as many as twenty years into the future? Should silver investors pile into fixed-income investments and take home 4-5 percent per year?

It is here that we reach the end of such an argument. Not only are the opportunities present in stocks and bonds weak, but they’re also offering returns that aren’t consistent with their risk profiles. So why would you hold silver, if you wouldn’t own cash flowing stocks, bonds, or an assortment of mutual funds? Because silver is the new cash.

Investors who have amassed massive positions in the metals markets are telling the market that the options aren’t exciting. If you’ve only a small selection of underperforming bonds, underperforming and expensive stocks, or negative-return generating cash, is it really much surprise that you want an alternative? Traditional investments have a best possible outcome of returns equal to a few percent per year, after inflation, and cash has a best possible outcome of negative returns each year.

The bubble isn’t in silver ownership, but in low rates and indebted economic institutions. When investors hold commodities, they’re holding the new cash, and they are insulated from risk to a degree that everyone should appreciate. Silver is “in a bubble” because the remaining opportunities are stuck in a rut. At what point would silver investors swap their holdings for paper assets? You might have to bring back Volcker to make that happen.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick
CLICK ADS BELOW FOR FREE DISCOUNT!

Who Would Sell Silver & Gold Now?

The majority of people who hold precious metals as a hedge against a falling dollar won't sell at market price until they see a resolution of the debts of western nations. Mainstream media, the majority of the public and value investors all believe that the precious metals are in a bubble. But that is because they do not understand the foundations underpinning a move into hard assets.

In this regard there are two camps:

1. The camp who believes that we live in a grand new world where governments can centrally plan economies better than the free market itself and where acceptance of government-sponsored, unbacked fiat paper monies is just a normal, unquestioned part of life.

2. The camp who sees central banks as being artificial and dangerous and who are quite surprised that this era of unbacked fiat currencies has lasted this long (nearly 40 years since the “Nixon Shock” on August 15, 1971).

Those in Camp #1 will never buy precious metals until it is already too late and the fiat currencies have all collapsed.

Those in Camp #2 will never sell their precious metals until they see an indication that the unpayable debts and deficits of the majority of western nations have reached a resolution – either by default (bankruptcy of the nations) or by hyperinflation (bankruptcy of the currency).

Which brings about an interesting state of affairs. Unlike any and every other bubble in the history of mankind, the holders of precious metals will not sell their holdings for fiat currency, at any price.

They may sell their precious metals to buy another asset which they deem as being undervalued in terms of gold or silver – which may mean they sell their precious metals, briefly, for fiat currency but then quickly sell that fiat currency in favor of another asset.

But for those who own precious metals for safety and/or profit against the assured demise of the global financial system there is no price at which they would sell their precious metals in favor of fiat currency.

Of course if someone offered you $10,000 per ounce today for your gold you would be crazy not to accept it. However, most holders of gold would sell at $10,000 and then immediately sell the fiat currency and repurchase the gold at the current market price near $1,400 to buy even more gold.

The majority of people who hold precious metals as a hedge against a falling dollar won’t sell at market price until they see a resolution of the debts of western nations.

However, the great majority of people who hold precious metals as a hedge against the destruction of the US dollar reserve based financial system will never sell their precious metals, at market price, until they see a resolution of the debts of the western nations.

GOLD/SILVER SHORTAGES

This amazing scenario is playing out as we speak.

Reports have been coming in from all corners of the world over the last few months stating shortages in physical gold and silver bullion.

The operating capacity of domestic gold refineries in India have reached very low levels due to scarcity of scrap. Currently domestic gold refineries are operating between 25-30% of their installed capacity as against 35-40% around the same time last year. According to Ajay Mitra of the India and Middle East office of the World Gold Council, “Used gold sales have declined steadily in the last one year as consumers are holding jewellery in anticipation of higher prices.”

They aren’t so much anticipating “higher prices” of gold & silver as they are anticipating “lower prices” in their fiat currency. Until there is any indication that the ongoing, systematic destruction of fiat currencies worldwide will cease then there is no reason for anyone to sell their precious metals in favor of holding the fiat currencies.

Canada’s biggest bullion bank, ScotiaMocatta “sold out” of all its silver coins and bars in January. They have apparently sourced some new supply of silver coins but as of the time of writing they still show 100 oz. Silver Bars as being “sold out”.

Eric Sprott, one of the smartest men in the precious metals business stated that he expects gold to hit $2,150 and silver to hit $50 this year citing extreme shortages and great challenges to secure 15 million ounces of silver for his fund. He stated that “no supply exists in volume except from the margin of immediate producer output”.

MOVE INTO BULLION AND PRODUCERS THIS YEAR

Up until this year it has been relatively safe to “play” in things such as gold/silver ETFs, futures and other “paper” assets. TDV believes that 2011 will be the last year in which it is still relatively easy to find and purchase gold/silver bullion and that those who have not yet begun to do so consider making this move immediately.

TDV issued a Special Report to subscribers entitled "How to Own Gold" on November 8, 2010 which includes more specific details on how and why to move into bullion products.

As well, as Eric Sprott pointed out above, one of the only liquid sources of gold and silver bullion now and in the future may be actual producers. The TDV Portfolio available to subscribers contains numerous large, mid and small cap producers. These equities may rise exponentially if it becomes clearer to the public that they are one of the only sources of accessible bullion available on the market.

Remember to diversify geographically to reduce political risk. We attempt to include miners from different parts of the world as part of this strategy. To date we have miners in Papua New Guinea, Ghana, Canada, Brazil, Nicaragua and more included in the TDV Portfolio. The above is an excerpt from the March Issue of The Dollar Vigilante (TDV).

ABOUT THE AUTHOR Jeff Berwick

Jeff Berwick was the founder of Stockhouse.com in 1994 and was the CEO of Stockhouse until 2002. After Stockhouse Jeff began writing The Dollar Vigilante, a free-market financial newsletter focused on covering all aspects of the ongoing financial collapse. The newsletter has news, information and analysis on investments for safety and for profit during the collapse including investments in gold, silver, energy and agriculture commodities and publicly traded stocks. As well, the newsletter covers other aspects including expatriation, both financially and physically and news and info on health, safety and other ways to survive the coming collapse of the US Dollar safely and comfortably. You can sign up to receive the FREE monthly newsletter, the Basic Newsletter ($15/month) or the Full Newsletter ($25/month) with specific stock recommendations and updates at the Subscriptions page of the website at DollarVigilante.com.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick
CLICK ADS BELOW FOR FREE DISCOUNT!

Is Gold In a Bubble?

Every time the price of gold goes down a few dollars all the empty talking heads start saying the gold "bubble" is about to burst. Let's get a quick reality check, please!

The fundamentals have not changed. They remain the same. If anything, getting worse with each passing day.

The amount of debt is worse and still growing - at ALL levels.
Inflation and value deflation continues to worsen.
Currency devaluation is ongoing and slowly worsening.
Underemployment remains unacceptably high.
Residential foreclosures have not even peaked yet!
Commercial real estate failures have yet to peak.
Financial malfeasance and accounting fraud abound.
The amount of political and moral ineptitude is astounding.
Monetary and fiscal policy will not change in the short term.

Gold in a bubble? I don't think so!

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

CLICK ADS BELOW FOR FREE DISCOUNT!