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
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Is Silver Getting Bubbly?

Silver's rising prices as measured in US government fiat dollars (alias paper funny money) spawns new articles on a daily basis predicting that surely now silver is in a bubble (a price that is irrationally higher than the intrinsic value of the product or investment). I suspect that as the "tears of the moon" metal approaches the 1980 high of $50 per ounce, the uninformed scare-mongering will only increase in volume. But is silver really in a bubble just because its worth as measured in rapidly devaluing 2011 US dollars is nearing the former 1980 peak?

Firstly, let's make sure we're comparing apples to apples, or at least dollars to dollars. Based on the CPI, you'd need $134.29 today in 2011 to purchase the same products you bought in 1980 for $50. So, while we can talk about the NOMINAL high of $50 for silver per ounce, the real figure we should be eyeing for bubbly signs is a lot closer to the $134 mark in inflation adjusted dollars.

Secondly, exact information as to what price point constitutes pricing above an item's "intrinsic value" is always a little sketchy, to say the very least. However, I'd like to tentatively submit the inflation-adjusted high for silver of $134 as that point, since the 1979-1980 bull market is the best and only historical comparison to today's market.

Next, I think a "real world" comparison of actual buying power of one ounce of silver for the years 1980 and 2011, may aid us in our search for buying power equivalency, and perhaps the actual 2011 point at which we may be entering bubbly territory. Therefore, I've collected the economic information below:

1980 $ Price - Price in Silver Oz. @ $50 per ounce

Avg. New Home $76,400 - 1528 oz.

Median Household Income $17,710 - 354 oz.

First Class Stamp $0.15 - 0.003 oz.

Gallon Regular Gas $1.25 - 0.025 oz.

Dozen Eggs $0.91 - 0.018 oz.

Loaf White Bread $0.50 - 0.01 oz.

Next, we'll look at the 2011 - Silver @ $41 per ounce

Avg. New Home $202,100 - 4,929 oz.

Median Household Income $52,029 - 1,269 oz.

First Class Stamp $0.44 - 0.01 oz.

Gallon Regular Gas $3.75 - 0.09 oz.

Dozen Eggs $3.00 - 0.07 oz.

Loaf White Bread $2.78 - 0.07 oz.

It's easy to see from these two pricing tables that you need a lot more silver to buy everyday items in 2011 than was required to purchase the same products at the peak of the 1980 silver bubble. For example, you could purchase an average new home in 1980 for only 1528 ounces of silver, but you'll need 4929 ounces to close on that same house today!

Finally, I'd like to see how high silver would have to rise in price before it could buy the same amount of products it did in 1980. To determine the 2011 dollar adjusted figures I'll divide the current 2011 dollar product costs by the number of silver ounces required in the 1980 peak. See below:

Avg. New Home - $132 per ounce silver

Median Household Income - $147 oz.

First Class Stamp - $147 oz.

Gallon Regular Gas - $150 oz.

Dozen Eggs - $167 oz.

Loaf White Bread - $278 oz!

The incredible numbers above show that silver will have to rise to between $132 to $167 per ounce to arrive at pricing levels in 2011 dollars that proved to be overheated or bubble-ridden in 1980! In addition, if you want to eat bread again like we did in 1980, you're going to need silver at $278 per ounce! So, our tentative figure of $134 per ounce for a silver top is pretty right on the money.

Given all the information above, I'd say we have quite aways to go with silver at about $41 an ounce before we reach any frothy action! For my part, don't even wake me until silver has exceeded $100 per ounce!

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!

National Collector's Mint SCAM WTC Coin!

Well it seems that the carrion bottom feeders at the National Collector's Mint are plumbing new depths in an effort to make money off an American tragedy. Numerous commercials running on TV are hawking a new bronze coin clad in a "whole" 14 mg of both silver and gold allegedly recovered from the site of the 9/11 New York World Trade Center. Yes, for only $29.95 + 6.00 shipping you can own this virtually worthless (gold content of the slug is worth $0.60 cents and the silver a few pennies), tasteless, and gaudy abomination!

The commercial goes on to say that a percent of the proceeds will be offered to the World Trade Center Memorial Foundation. What they don't mention of course during the TV spot, is that the WTC Foundation flatly refused to receive any funds or indeed to have any connection with the NC Mint. In fact, the directors of the Foundation consider the whole sordid business nothing but an exercise in profit taken from blood money.

I advise every American to flush their $36 down the toilet before even considering giving one red cent to these filthy vultures at the NC Mint seeking to make a buck off the honored dead of this great country. At least your hard earned money has an infinitely greater chance to find more noble recipients swimming about in your local sewer, than in the clutches of the NCM grave robbers!

PS. A "gentleman" named Avram C. Freeberg owns the the National Collector's Mint. He has quite the colorful background. Apparently, he was forced to pay a fine of $600,000 in 1988 for peddling smut in order to avoid jail time. He sounds like a real model citizen, doesn't he? I tell you what, if you're driving on a lonely country road one night and Avram pops up in you headlights - just do what you have to do. I have a feeling that if I'm walking nearby I'll most definitely be looking the other way (wink, wink)!

I think the above is what they call cleaning up Mother Earth. Now that's environmentalism everyone can agree on!

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 (below):

Rick

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