Buying Silver, Protect your savings

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Buying Silver, Protect your savings

Post by hawkiye on Mon 05 May 2008, 10:52 pm

http://news.silverseek.com/TedButler/1207680184.php

Believing Your Own Eyes

By: Theodore Butler and Israel Friedman




From the beginning, I have steadfastly maintained that a silver commitment
should be made for the long term, after one has done sufficient
investigation into the facts surrounding the commodity. Now, more than
ever, I believe that to be the correct approach.
Over
the past few years, the price of silver has climbed impressively,
enriching many and validating the bullish case. However, that doesnít
mean you should accept only what you want to hear or read. You canít
profit on that which has already occurred. Profit accrues on what
happens in the future and how you are positioned to take advantage.
Even
if you were fortunate enough to initially invest at much lower than
current prices, you should be on guard for changing supply and demand
circumstances that might dictate that the silver price is no longer
undervalued. After all, the time to consider selling is when you feel
the price becomes overvalued compared to the fundamentals.
A
long-term holding is much like a long journey, a travel that will
occupy a good portion of your life. Sometimes the journey will be
successful and bring financial and intellectual rewards, other times
not. Long-term investment journeys, like other life paths, can be
adhered to or changed, depending on your readings of the mile markers
and signposts along the way. Obviously, if you start getting signs that
danger lies ahead, a change may be in order. Likewise, confirmation
that you are on the right path should encourage you to stay the
long-term course.


Ending a silver investment based upon the many periodic short-term price
sell-offs has been generally a mistake, even though those sell-offs can
be unnerving. So what signs, aside from price action, should you look
at along the way, to reinforce you are on the correct long-term path?
What and how seem pretty straight-forward to me. You look at the facts
and you rely on your common sense to observe and interpret those facts
compared to your original motivation for buying silver. Do the facts,
as you see them, confirm or undermine your original decision for buying
silver?


The first thing I see is a current retail investment tightness or shortage
in silver for the first time in history. I also see that the US Mint
has run out Silver Eagles, for the first time ever, amid record retail
demand. I donít know if this tightness or shortage will continue. I
just know it has occurred for the very first time in my, or anyone
elseís, lifetime. I donít know if this retail tightness will lead to a
wholesale tightness, but my common sense suggest to me that it easily
could.


The next thing I see is that, also for the first time, there was no
liquidation in the metal holdings of the silver ETF in the face of a
fairly sharp sell-off. In fact, there has been a significant increase
in those holdings very recently, which is also unprecedented. This
suggests to me that deep and strong hands of the wholesale variety are
interested in buying and holding silver, in spite of temporary price
weakness.


Next,I see evidence that the retail shortage is unique to silver. I am aware
of no reports of retail gold shortages. I also see no signs that the US
Mint is having trouble keeping up with gold coin demand, or that gold
coin sales are anywhere near a record high. If anything, Gold Eagle
sales are very much closer to record lows, not highs. This is not a
knock on gold. It could be that things will change and gold retail
sales will suddenly soar like silver sales, but this exercise is about
observing facts and signposts.


Further, I see many credible reports of the widespread melting of gold by the
public in response to the higher prices and tough economic times. A
recent prominent story in the NY Times enlightened me to jewelry
parties (much like Tupperware parties) where women came together in a
social setting, with a gold-buying representative present, to weigh and
evaluate old gold jewelry to be melted and write a check out on the
spot. I am aware of and have read no such stories of unusual silver
melting or silver parties.


Take a moment and try to transport yourself back a few years ago, when
silver was in the sub $5 price range (and gold around $300). If someone
suggested that silver would be in the $17 to $20 price range at this
time, most observers would have sworn that would bring silver for
melting out of the woodwork, causing a glut of metal. Few would have
suggested a surge in gold melting at current prices. Even fewer would
have predicted a surge in silver investment demand. Here we have a
five-fold increase in the price of silver, and instead of a glut of
household silver available for melt, we face an unprecedented tightness
and record demand.


My expectation was that there was less above ground silver than gold.
Furthermore, there was less silver in the world every day, due to
silverĎs industrial consumption. I always knew that silver offered more
relative value than gold, no matter what the current price of each was.
I thought there would be a shortage in silver, while it would be
impossible for there to be a gold shortage.


This has been a signature issue of mine from the very beginning. I hope and
expect that gold continues to increase in price, but I donít have to
hope silver will outperform gold, as the facts demand that
out-performance. Gold investors are doing themselves a disservice by
not over-weighting their metal exposure to silver. Make the switch now,
based upon the clear evidence right in front of you. Donít wait until
silverís price performance has made itself clear. It will be much more
costly to switch later, after the majority see the real facts.
If
and when the time comes when it appears the silver journey is reaching
its final destination, amid credible evidence of serious surplus and
net selling and the resolution of the concentrated short position,
prudence will dictate a reevaluation. I know of no such current
evidence.


What is most important is how you reconcile what you see with your own
silver journey. This is you and your familyís financial future at
stake. It is your own journey. Do you see any signposts that undermine
your original decision to buy silver for the long term? Even more to
the point, ask yourself this question - in light of what you see with
your own eyes, do you have enough silver?

Simple Questions

There continues to be a running discussion on pool and unallocated silver
programs. Those who issue or sell such accounts continue to insist that
real silver backs every dollar deposited by investors. But all that has
been forthcoming has been words, not proof. As I have previously
written, it is important to "trust, but verify."
Unfortunately,
I am aware of no issuer that has actually verified that real silver
backs any pool or unallocated account. And to do so would be a snap.
Just list the serial numbers and weights of the 1000 oz bars backing
these programs. If Barclays can do it for the 184 million ounces in
their silver ETF, why canít the issuers of the pool and unallocated
accounts do so as well?


Here are some simple questions for investors and potential investors in pool
or unallocated silver programs. Whatís in it for the issuers of such
accounts? How do they make money if they actually buy real silver,
store it for you, and donít charge storage fees? Are they in business
to do you a favor at no profit to themselves? Would you do that if you
were them? If you canít answer these simple questions, and lacking the
published serial numbers, a reasonable person would have to conclude
that there canít be real silver backing these programs.


Coming To America - Great Silver Wealth

By Israel Freidman(Israel Friedman is a friend and mentor to Theodore Butler. He has followed silver for many decades.)

There must be 50,000 to 100,000 small investors or more who are in love with
silver. As a result, they cleaned most of the shelves in retail stores,
of Silver Eagles and bullion investment products, excluding the 1000 oz
bars.


This shortage in the retail sales of silver is the first sign that their
reason to buy is correct and every thing that Mr. Butler and I said
about silver is starting to come to reality.


It's very interesting that nothing on CNBC or other TV stations, or big
newspaper mentioned the retail shortage of silver. I can tell you if it
was a retail shortage in gold, you would hear about it 24/7. And
probably the prices would double in a week, not like in silver where
the prices went down in the face of a shortage.
Contrary
to Mr. Butlerís argument that he would like to see the naked shorts be
punished, and is fighting for the integrity of the silver market in
COMEX, I say it was good luck for us that the naked shorts controlled
the market and unintentionally produced the opportunity for us to buy
at garage sale prices.

In my eyes the naked shorts, are dead fish, and in time they will forced
to cover and buy back their position. For the time being we will have
controlled markets. But we must look ahead, and if there is not enough
silver for the retail investor, what will happen when the users will
need silver? In my opinion, it's only a question of time when we will
run out of 1000-ounce bars.


The biggest wealth is coming to USA. Small retail investors are grabbing
all the silver they can and today, in my opinion, we have 70-80% of all
the free silver in the world, in private hands in the USA. I am getting
excited that there will be so many future millionaires in our country.
I still see Silver Eagles as the best buy but don't ignore bullion in
any size.


You saw lately the sell off in COMEX. It is too speculative for most people
to play this game, only buy a contract if you intend to take delivery.
Even then, remember the delivery doors can close down with no advance
notice - just like in the retail market.


The conclusion from the retail shortage is: Don't believe the enemies of
silver who say thereís a glut of silver in many places. What places?
Sadly, I think there are many people and commentators who wish silver
will not rise in price, as that will threaten their dream that gold
will save the world somehow. The empty shelves of silver and the full
shelves of gold tells you that silver has more value then gold, if not
in todayís price, then in the future.

I hope that the accumulation of silver here in USA will continue, and
that it will create much real wealth for our fellow citizens for the
betterment of our country. And don't forget that this retail shortage,
even if it is only temporary, is still very significant and pinpoints
how tiny available stocks of silver really are and how fragile are the
supply lines. Just wait until the people in China and India wake up to
the silver shortage in America - they will take silver for any price.


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Re: Buying Silver, Protect your savings

Post by dc9 on Tue 06 May 2008, 1:32 am

And while reading that, I had to reach into my desk and pull out a roll of 92 silver eagles and lift the cap just to look at that wonderful sheen on the coins.

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Re: Buying Silver, Protect your savings

Post by hawkiye on Tue 06 May 2008, 6:04 pm

Yeah real money even looks better...
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Re: Buying Silver, Protect your savings

Post by Kunzang on Thu 08 May 2008, 1:05 pm

Nice post - thanks. I've always believed that silver would out-perform gold. While gold may double, silver will certainly triple. I convert whatever surplus FRNs I have into 1 ounce silver rounds or pre '64 coins, and only keep enough cash in the checking account to cover immediate expenses.

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Re: Buying Silver, Protect your savings

Post by radicalgma on Sat 05 Jul 2008, 11:45 am

So where do we buy silver?

Also.. does anyone know if there is any value in mining stock? We have quite a few shares of gold stock that just suddenly became of value a couple of years ago. It was silver stock that my husband's father, a mining engiineer now deceased, gave the boys many years ago. And it has laid in a drawer, valueless for many years. Then the company was bought by a gold speculator..and changed to gold stock. The company goes around and checks out places to mine gold.

We were going to sell it..but the price dropped from .50 a share to now under .10, so we have been holding on to it hoping it will go up.
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Re: Buying Silver, Protect your savings

Post by hawkiye on Sat 05 Jul 2008, 11:55 am

radicalgma wrote:So where do we buy silver?

Also.. does anyone know if there is any value in mining stock? We have quite a few shares of gold stock that just suddenly became of value a couple of years ago. It was silver stock that my husband's father, a mining engiineer now deceased, gave the boys many years ago. And it has laid in a drawer, valueless for many years. Then the company was bought by a gold speculator..and changed to gold stock. The company goes around and checks out places to mine gold.

We were going to sell it..but the price dropped from .50 a share to now under .10, so we have been holding on to it hoping it will go up.

Get in your phone book and call several local coin dealers and get prices. First go to Kitco.com and check the daily spot price of silver. Then ask the dealers what they are selling for over spot price. They will be anywhere from 70 cents to 3 dollars over spot. So shop around. If you buy US minted silver eagles they will be on the high side over spot. If you buy Sunshine minted or eagles or other minted rounds they can be as low 70 cents over spot. I tend to buy these because I am buying for silver content. they are all .999 silver one Troy ounce. US minted Silver Eagles tend to have some collector value and or sentimental value and they charge more for them. Junk silver (pre 1964 dimes, quarters, and half dollars at 90% silver) also tend to be a better buy for less over spot and they are also better for using as trade since the are in smaller divisions. Again ask lots of questions and shop around. Sometimes pawn shops will also have both junk silver and or eagles.

You can buy online however I don't recommend it as I don't like waiting for it to be shipped and there is a paper trail of where it's going. Most coin dealers will take cash no questions asked and there are a lot of John and Jane smiths in the phone book Laughing However some people swear by it.

As for mining stocks. I would hang on to them since they aren't really worth much right now. Who knows they might make a big strike and then they will spike up and you can make some good money.
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