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SilverAndGoldShop.com - News
Jim Cook Interview with Ted Butler


September 5 , 2010

Issue 77


Jim Cook Interview with Ted Butler
August 4, 2010

Cook: I want to limit this interview to a discussion of why someone would switch gold into silver. You advocate that right?

Butler: Yes.

Cook: What's the main reason?

Butler: Because those who switch will make a lot more money than those who don't switch.

Cook: Don't you think gold will go higher in price?

Butler: I think it will, but silver is poised to go much higher relative to gold.

Cook: Most people believe gold has done better than silver up until now. What do you say to that?

Butler: An objective analysis would suggest otherwise.

Cook: Give us the objective analysis.

Butler: If you bought gold at the extreme lows of $250 or silver at $4, your returns would be roughly equal.

Cook: People have an emotional attachment to their gold. It's hard to part with. What do you say to them?

Butler: That emotional attachment could cost people a lot of money.

Cook: What do you mean?

Butler: I believe that the emotional attachment is to the idea of gold, not to gold itself. People want an asset that is immune from the conventional financial system and government control. Gold has traditionally been that asset. I understand and accept that. However, due to changes in the world over the past 100 years, silver has become better than gold.

Cook: Better than gold?

Butler: Yes, better. I believe silver is the new gold.

Cook: What could make you say that?

Butler: The fact that we have used up so much silver over the past 50 years. Now silver is rarer than gold in world bullion inventories. Only a handful of investors realize that.

Cook: What is the status of gold and silver inventories?
Butler: World silver inventories are at their lowest point in 200 years while gold inventories are at their highest.

Cook: Do you know how much egg you will have on your face if gold goes up and silver doesn't?

Butler: I don't worry about that. Do I have egg on my face for informing the world that silver was manipulated, or rarer than gold, or that JPMorgan was the big silver short?

Cook: Frankly, I own some gold and I don't think I have it in me to make the switch.

Butler: In all due respect, your emotional attachment is showing. I don't deny that's a powerful force, just that investment analysis is different. I'm not suggesting people sell their gold and call it a day. I'm suggesting a conversion of gold into silver. This way, you keep the emotional attachment and greatly boost your investment returns.


Announcing New Launch!

My Trading Post (.org) has been created to facilitate trade between owners of precious metals who wish to barter for goods / services, and sellers who wish to trade their goods and services for precious metals.

MTP is a FREE barter classified service, newly launched this Labor Day weekend. So spread the word to your networks… and help build this resource for the benefit of everyone. Please drop in and place an ad.


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Quote of the Week

"The most fundamental fact about the ideas of the political left is that they do not work. Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive."

- Thomas Sowell


This Week's Audio

Jason Hommel Interview

 

Have a great
Labor Day!

 

 

Cook: I think it's a good time to switch rare coins into silver. What do you say to that?

Butler: I think it's a good time to switch anything possible into silver, including rare coins.

Cook: If a person only owns gold and no silver what about shifting a percentage of it into silver?

Butler: It's important to get as much silver as you can.

Cook: Can you give us an illustration by using the prices we could see in the future?

 

Butler: Sure. Let's say silver goes up 300% to $50 an ounce. To equal that gold would have to go to $3,600. With silver at $100 an ounce, gold would need to be $7,200.

Cook: You think it's more likely that silver will reach those levels?

Butler: More likely? I can't see how silver won't reach those levels in almost every possible future scenario. On the other hand, it will have to be a very ugly world for gold to hit those numbers.

Cook: What about the gold to silver ratio?

Butler: For hundreds of years it was 16 to 1. Gold was priced 16 times higher than silver, now gold is 64 times higher.

Cook: How much gold and silver does our government hold?

Butler: They ran out of silver. The U.S. Mint has to buy millions of ounces of silver every year for its coin programs. U.S. gold inventories are in the billions. It means the government can't manipulate the silver price. They don't have any to sell.

Cook: You've called silver "the single greatest profit opportunity of our time." Are you sticking with that?

Butler: Absolutely. I believe they will be writing about the coming price events in silver for centuries. If you don't have silver but you own gold a switch makes a lot of sense to me.

Cook: What about selling half your gold to buy silver?

Butler: Fine. Whatever you have to do to get silver get it done. I believe the time is growing short before the things I have written about begin to unfold.

Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
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Silver `Looking Cheap' Lures Investors, Prompting Decline in Ratio to Gold ~ Bloomberg

August 28 , 2010

Issue 76


SGS Notes:
Thursday, Aug. 26th was the expiration date this month for Options…traditionally, gold and silver prices DROP on this day every month... The day began with silver priced just around $19/oz… price ROSE to almost $19.20 then closed the day at $18.92… some forecasters were watching this with interest as a sign that the long manipulation of precious metals is coming to a close.

Silver `Looking Cheap' Lures Investors, Prompting Decline in Ratio to Gold
Glenis Sim, Bloomberg
August 26, 2010

The ratio of gold to silver dropped to a three-week low after gold's rally to the highest level in eight weeks prompted some investors to buy the white metal.
An ounce of gold bought as little as 64.96 ounces of silver today, the lowest amount since Aug. 5, according to Bloomberg calculations. Silver has outperformed the yellow metal since Aug. 23, gaining 6 percent compared with gold's 1.4 percent gain, as investors bought the white metal because of its relative cheapness to gold.

"Silver is unique in that it is a precious metal and an industrial metal," Wallace Ng, executive director of commodities at ABN Amro Bank NV in Hong Kong, said today. "Gold is traditionally viewed as a safe haven but silver is never far behind as a second choice."

Silver for immediate delivery rose as much as 1.1 percent to $19.11 an ounce, the highest price since June 28, and last traded at $19.0525 at 3:33 p.m. in Singapore. Gold was little changed today after climbing as high as $1,241.50 an ounce yesterday, the highest price in eight weeks.

Holdings in the iShares Silver Trust, the biggest exchange- traded fund backed by silver, increased on Aug. 24 for the first time in six weeks. The metal doubles as a store of value for investors concerned about the economy and as a raw material. Industrial applications including electrical conductors and batteries account for about half of demand.

'Looking Cheap'

"Silver is looking cheap and we're seeing strong investment demand for small ingots, as well as good industrial demand from solar-panel makers," Dick Poon, Hong Kong-based manager of precious metals trading at Heraeus Ltd., said today. The solar industry will consume up to 1,500 metric tons (48 million ounces) this year, Poon estimates.

"Even if investors are expecting another downturn, there will always be demand for alternative sources of energy," said Poon. "We could see prices back up above $20 very soon." Silver last traded at more than $20 in March 2008.
Silver lagged behind gold this month through Aug. 23, losing 0.1 percent compared with the yellow metal's 3.8 percent gain in the period, as investors turned to bullion to preserve wealth on concerns that the global economic recovery was weakening.

"We're bullish on both silver and gold," said ABN's Ng. "Even though we've see more festival demand from India in the past few years because of higher gold prices, silver can never replace gold in that market. They may buy less, but they will still buy gold and that should keep prices supported."

The wedding season in India, the world's largest gold consumer, runs from November to December and from late March through early May.


Sale Continues at SGS!
The Prospector Round
1 Troy oz. 999 Fine Silver


Special Pricing through August 31
$.75 below other Rounds


Other Articles of Interest

Mr. Obvious Hands a Blind Squirrel a Nut

Bullion As An Alternative
To Shorting - 1 of 3 part series

 


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Quote of the Week

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered . . . I believe that banking institutions are more dangerous to our liberties than standing armies . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

- Thomas Jefferson
 


This Week's Video

 David Morgan:  Time To Buy Silver!

 

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All That Glitters ~ Aden Sisters

Issue 75

 All That Glitters
Mary Anne & Pamela Aden
The Aden Sisters, from www.adenforecast.com
August 13, 2010

 

It was another action packed month. The volatility never seems to end, at least that's the way it's been for many months now… actually, for the past few years.
The markets have essentially been reacting to the news of the day for what seems like ages. When the news is good, they rise. When it's bad, or perceived to be bad, the markets get nervous, they become vulnerable and they decline. And investors simply don't know what to do. They're still edgy and uncertain. And as long as this continues, the entire outcome could go either way….

STAY WITH GOLD
So what's an investor to do? Stay in gold. Despite its recent volatility, it's the one investment that benefits during times of uncertainty. As you've seen, it does well during good times and bad. That's been true throughout history, and it still is.

The numbers back this up. Gold, silver and metals related investments have by far been our top performing sector since we first recommended them over the past decade. This year has not been an exception. Again, they've been the top performing group.

So where does that leave us? We're planning to keep most of our metals related investments for the long haul. Considering what's happening behind the scenes, we currently don't see a better alternative. That's especially the case for gold. Why?

There's an old saying that goes…. watch what they're doing, not what they're saying. So we're not being blind gold bugs because again, the numbers show what they're doing…

A SAD TALE...

Even though we've talked about this for years and we don't mean to sound like a broken record, but something very important is happening that you should be aware of…

This year, for instance, the U.S. national debt has already reached 87.5% of GDP. It's expected to hit 93% this year and over 100% of GDP within five years, a far steeper increase than almost any other country, says the IMF. And the aging baby boom population, along with their future needs, pretty much guarantees this.

The rule of the thumb is that over 90% of GDP a country stagnates and it doesn't move ahead. But the U.S. is not alone.

Italy and Japan are already over 100% and we know what's happened in Japan over the past couple of decades. Zimbabwe is an extreme case, at 240% and we know that terrible story too. Other countries, while still well below the U.S. number, are moving up too. It's a trend, most prominent in the developed countries.

This tells us that hard times are coming. If so, then what we've seen in recent years has been an intro to the years ahead. Yes, there will be ups and downs. There always are but things will be different. Stagflation, unemployment, inflation, global power shifts, recessions, higher taxes and lots of other repercussions will be the likely effects. As our dear friend Harry Schultz notes... Biflation - a simultaneous inflation and deflation - is yet another possibility.
This doesn't necessarily mean the end of the world is coming as some are suggesting. And here too, Japan and Italy provide examples.

Sure they've had serious problems but they're basically still plugging along, despite their repercussions. But again, things will be different and those who've been hoping for a return to the good ol' boom days will be sorely disappointed.
Considering that the U.S. is issuing new debt this year that's nearly equal to the rest of the world combined, the picture remains pretty dismal. So we need to be prepared for what's to come.

For now, central banks are buying more gold. And even some Wall Street types, who have traditionally shunned gold, are now starting to take note. This will continue as this new era, as we call it, intensifies.

HIGHER DEMAND

Gold is showing the world how it reacts to difficult times. Better said, it's showing how people and governments react during times of uncertainty.
Russia increased its gold reserves in May in the biggest one month increase ever, while Saudi Arabia is now saying they have twice as much gold as last reported.

Central banks were net buyers of gold in 2009, which is very powerful because it means they do not want to sell their gold like before.

You may remember the Central Bank Gold Agreement under which central banks were allowed to sell 400 tonnes of gold each year. Sales went on, but by 2008 sales were way down. In 2009 central banks were buying more than they were selling and 2010 will surely be similar, as we've been seeing.

Gold demand is building but gold fever is nowhere near. You will recognize it when it comes because there's no fever like gold fever.


Sale Continues at SGS!
The Prospector Round
1 Troy oz. 999 Fine Silver


Special Pricing through August 31
$.75 below other Rounds


Other Articles of Interest

Golds: Time Has Come
To Go For The Bubble


Gold & Deflation
Frank Holmes

The Golden Decade
Peter Schiff

Bubblemania: Part I
Defining a 'Bubble'

Jeff Nielsen


 


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Quote of the Week

"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."

Elgin Groseclose
 


This Week's Video

Federal Reserve Debt
Monitization Explained

National Inflation Association

 


Well, maybe the tech fever in the late 1990s was close. Keep in mind though, the gold market is small compared to stocks and bonds, which means it could easily spike up once the fever hits.

The 1970s saw gold rise tenfold. Today gold has only risen about 400% in nine years. This good solid, steady and consistent growth provides a very bullish backdrop for a further rise in gold.

In fact, it's been almost two years now since we've seen a decent downward correction in gold. The March to November 2008 decline, when gold lost almost 30%, was the last great buying opportunity.

Gold's risen nearly 80% since that November low without more than a 14% decline. This super rise caused the bull market to move into a stronger phase last September when the gold price reached the first record high that was well above the $1000+ record highs of 2008-09 (see chart).

GOLD'S BIG PICTURE: VERY BULLISH
As you can see looking at gold's big picture since 1967, this rise since November 2008 came from a cyclical eight year low bottom that tends to precede good sized rises in gold. That's been another big plus in gold's favor, along with so many others.

The point is, despite normal ups and downs, gold remains very bullish. So again, stay with it… we strongly believe you'll be glad that you did.

 

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Monetizing Debt ~ Jim Sinclair Commentary

August 15 , 2010

Issue 74

 

Monetizing Debt
Jim Sinclair Commentary
August 12, 2010

Bloomberg announced the Fed is buying Treasuries on the open market today.
The process of a central bank buying the debt of the nation it represents is called "Debt Monetization."

The following is a reasonable review of what the process is and the results thereof. This time the form of the result will be "Currency Induced Cost Push Inflation."

Gold will trade at $1650 and above.

Monetizing debt

In many countries the government has assigned exclusive power to issue or print its national currency to independently operated central banks. For example, in the USA the independently owned and operated Federal Reserve banks do this.[1] Such governments thereby disavow the overly convenient 'slippery slope' option of paying their bills by printing new currency. They must instead pay with currency already in circulation, else finance deficits by issuing new bonds, and selling them to the public or to their central bank so as to acquire the necessary money. For the bonds to end up in the central bank it must conduct an open market purchase. This action increases the monetary base through the money creation process. This process of financing government spending is called monetizing the debt.[2] Monetizing debt is thus a two step process where the government issues debt to finance its spending and the central bank purchases the debt from the public. The public is left with an increased supply of high powered money.

Effects on inflation
When government deficits are financed through this method of debt monetization the outcome is an increase in the monetary base, or the money supply. If a budget deficit persists for a substantial period of time then the monetary base will also increase, shifting the aggregate demand curve to the right leading to a rise in the price level.[3]

To summarize: a deficit can be the source of sustained inflation only if it is persistent rather than temporary and if the government finances it by creating money (through monetizing the debt), rather than leaving bonds in the hands of the public.[4]

Examples
Monetizing the debt can be used as a component of quantitative easing strategies, which involve the creation of new currency by the central bank, which may be used to purchase government debt, or can be used in other ways.
However, there can be an insidious effect. As one observer noted:
When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a sovereign Ponzi scheme. Ponzi schemes have a way of ending unhappily. To get out of the Ponzi trap, governments will have to increase tax revenues, or cut spending, or monetize the debt-or most likely do some combination of all three. [5]

SGS Notes: This is what many of the experts (NIA and others) have been saying for a long time will happen. This monetization will spark hyper-inflation…


On Sale Now at SGS!
The Prospector Round
1 Troy oz. 999 Fine Silver


Special Pricing through August 31


Other Articles of Interest

What Do We Learn
From History?


Inflationary Recession
& Nightmare German
Inflation of 1923


Bullion As A Superior
Investment


3 Reasons You Should
Buy Gold Right Now


An Inflation Primer

from Mises.org

 


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Quote of the Week
The Tyranny of a prince in an oligarchy is not so dangerous
to the public welfare as the apathy of a citizen
in a democracy.

Montesquieu,
Spirit of the Laws


This Week's Video

UBS Advises Take Delivery of
PHYSICAL Gold & Silver

 

 

 

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Deflation Threats Are Best Contrarian Indicator ~ National Inflation Association
August 8 , 2010
Issue 73

SGS Notes: Follow-up Article to last week's article on gold & silver capitulation…

Deflation Threats Are Best Contrarian Indicator
National Inflation Association

The amount of deflation rhetoric in the mainstream media has been continuing to surge this week. Yesterday there was an article in the Wall Street Journal entitled, "Defending Yourself Against Deflation" and on Monday Paul Krugman wrote an editorial in the New York Times entitled, "Why Is Deflation Bad?". We decided to do a simple Google News archive search to see when previous spikes in media chatter about the topic of deflation have taken place.

The largest spike this decade in articles about deflation came in May of 2003. At that time, the Dow Jones was 8,500, the price of gold was $350 per ounce, and the price of oil was $30 per barrel. The Dow Jones went on to rise for four years straight reaching a high in 2007 of 14,198 up 67%. Gold went on to rise for seven years straight reaching a high this year of $1,248 per ounce up 257%. Oil went on to rise for five years straight reaching a high in 2008 of $147 per barrel up 390%.

The second largest spike this decade in articles about deflation came in November of 2008. At that time, the Dow Jones was 8,000, the price of gold was $725 per ounce, and the price of oil was $50 per barrel. Since then, the Dow Jones has risen as high as 11,257 up 41%, gold has risen as high as $1,248 per ounce up 72%, and oil has risen as high as $88 per barrel up 76%.

NIA has come to the conclusion that the mainstream media talking about deflation is the most accurate contrarian indicator out there. The false threat of deflation in 2003 came at the beginning of the biggest rise in asset prices in U.S. history. The false threat of deflation in 2008 came almost exactly when stocks, precious metals, and commodities had reached their bottom. NIA believes that the threat of deflation today could mean that the biggest move to the upside for gold and silver in history is right around the corner.

Investors today are currently faced with a dilemma. It is becoming increasingly obvious that the U.S. economic recovery is phony, but the U.S. dollar is rapidly being debased. The U.S. dollar is no longer a safe haven and with the fundamentals of our economy continuing to deteriorate, stocks and Real Estate are no longer attractive investments. The only asset class suitable to protect investors from both inflation and our collapsing economy is precious metals.

The U.S. Dollar Index has been in free fall since early June and could be setting up for a crash. Yu Yongding, a former Chinese central bank adviser, wrote on Monday, "I do not think U.S. Treasuries are safe in the medium-and long-run." According to Yu, a "scary trajectory" of budget deficits and a growing supply of U.S. dollars has put the value of China's U.S. Treasuries at risk. Yu is concerned that China has no way to sell their U.S. Treasuries in a "big way".

Of course China has no way of selling their U.S. Treasuries in a "big way". China needs to continue buying larger amounts of new U.S. Treasuries in order to keep this ponzi scheme going. If China decided to sell in a "big way", the only buyer out there will be the Federal Reserve and we will see immediate hyperinflation.

With the U.S. dollar in rapid decline, the price of crude oil surged yesterday to over $82.50 per barrel. Surging crude oil prices will help contribute to across the board price inflation in the months ahead. The sentiment on Wall Street will quickly shift from fears of deflation to fears of massive inflation as soon as the bankers on Wall Street who are in control of the mainstream media are done accumulating their positions in precious metals.
 


Stagecoach Bars back in stock
Our Stagecoach Bars are back in stock this week, for those who have been waiting for them. Supplies are limited…
These popular bars are getting more difficult to obtain and carry a 6 week delivery time for us. We have no way to predict sales on them, and sometimes our inventory gets depleted; hence the wait when they are out of stock.

 

 


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"The collapse of the U.S. economy is a certainty - only the manner in which it will happen has yet to be determined. It is just a matter of time before the global derivatives bubble will produce the same result that has occurred to every other currency not backed by gold throughout history - those currencies, our 'money,' will become worthless."

Jeff Nielson
 


This Week's Video

 

 
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Gold Movements Suspect
By Patrick A. Heller
August 03, 2010
from Numismaster.com

A rough rule of thumb I follow is that once is a coincidence and twice is a pattern. There has been a run on COMEX silver inventories since June 16. Now there are strange developments with COMEX gold inventories.

There were unusual movements of COMEX gold inventories on July 28 and July 30 that 1) coincidentally roughly equaled what was needed for the sellers of contracts to meet delivery requirements, and 2) may indicate that unusually large quantities of COMEX gold will be withdrawn by the end of August.

The COMEX reports two forms of gold (and silver) inventories. All are stored in bonded warehouses. The first category is registered inventory, which are committed to delivering against open contracts. It is useful to think of this as dealer inventories as they really represent trading positions rather than investment holdings. The second category is eligible inventory.

Because they are in bonded warehouses, they are eligible to be delivered against COMEX contracts if the owner of the metal so chooses. However, the owner may also chose not to make this metal available to deliver against a COMEX contract and just use the bonded warehouse for only storage purposes. The advantage to an investor is that it gives him or her the flexibility to go in either direction. The eligible inventories are often referred to as customer inventories.

On July 28, there was a sizable withdrawal of 96,592 ounces from dealer inventories. This is relatively close to the 89,400 ounces of gold standing for delivery of maturing July contracts, which is not particularly remarkable by itself. However, on that day, there were still 112, 977 open August contracts, representing 11.3 million ounces of gold. This liability exceeds the entire COMEX registered and eligible gold inventories. What is unusual this time around is that normally contracts maturing within a month have long since been closed out or rolled over into future months. Though only a small percentage of these maturing August contracts are likely to be delivered, there is a strong likelihood that deliveries in the next month will be much higher than usual. If this is developing, the move on this day to deliver so much gold against maturing July contracts may have been a ploy to create the image that available physical gold is plentiful.

Owners of August long contracts would need to state by July 30 whether they were going to close out (by selling their contract), roll over, or stand for delivery of their contracts. If the delivery option is selected, the contract must be fully paid by that day.

On July 30, a massive 367,716 ounces of gold (3.2 percent of all COMEX registered and eligible inventories) were reclassified from customer inventory to dealer inventories. The same day, JPMorgan Chase issued delivery notices of 368,500 ounces, virtually identical to the amount that was reclassified.

Gold and silver COMEX contract prices went into backwardation on July 23. In normal commodity markets, the prices of future month contracts are higher than the current or “spot” month, typically by the amount of the interest rate and transaction costs. The standard condition is called contango. When the spot month price is higher than one or more future months, the market is said to be in backwardation. If spot month prices remain higher than the near future months for more than two or three days, that is a sign of a physical supply squeeze, which often foretells a near term rise in the price.

At the close on July 29, the COMEX July, August and September gold contracts settled at the exact same price. While not technically in backwardation, it is also not a normal contango market. The moves of COMEX gold inventories on July 28 and July 30 could be indicators of one or more of the following conditions:

• There is a supply squeeze where there just isn’t enough gold to meet delivery requirements; or,
• One or more dealers such as JPMorgan Chase may literally have no metal immediately available to meet delivery requirements; or,
• Much larger than normal amounts of gold will be withdrawn from COMEX warehouses in the next month.



These moves of COMEX gold inventories are the akin to the run on COMEX silver inventories since June 16. If both are happening at the same time, as I suspect, they will almost certainly result in much higher precious metals prices by September. Roughly two months ago, I thought there was a high probability for much higher gold and silver prices by the end of July. That did not happen. I think my conclusion as to the direction of the market is still valid, but the timing will take one to two months longer than I originally thought.

Another significant news development not covered by the mainstream American media:

On July 29, London’s Financial Times ran a story explaining what their researchers think was behind the huge gold swaps handled by the Bank for International Settlements this year.

The Financial Times reported that more than 10 banks based in Europe swapped gold to the BIS in order to obtain U.S. dollars. Among the participating banks named in the article are HSBC, Societe Generale, and BNP Paribas. Two central bank officials told the paper that the commercial banks needed the U.S. dollars to meet demands from depositors to withdraw funds from the dollar accounts. The article does not speculate why investors may want to liquidate their holdings of U.S. dollars, but I think the main reason is a concern about the future decline in the value of the dollar.

The article goes on to say that much of the gold used as collateral in the swap came from the unallocated accounts of private investors. Although these investors, in theory, own the gold in unallocated accounts, this gold is now subject to a prior claim by the BIS should the owners want to remove or sell their position. This very possibility is one of the reasons I have urged readers to close out their unallocated gold storage accounts and turn them into physical gold under their direct control. Other gold for the BIS swaps was leased from central banks in emerging nations.

These swaps emphasize what I have regularly stated – gold is a safe financial asset that is more desirable for collateral than any of the world’s currencies. The central banks may talk about this not being true, but their actions belie their words.

Here’s one story that did get mainstream media coverage:

The Houston Chronicle carried a recent story disclosing that the University of Texas Investment Management Co. had allocated $500 million to purchasing gold, nearly 3 percent of the university’s total investment fund of $22.3 billion. On Aug. 1, the Chronicle carried a story discussing the reasoning behind this change in investment direction. The first reason discussed was the growing U.S. debt crisis. UTIMCO’s CEO, Bruce Zimmerman, also mentioned fiscal and monetary stimulus programs as being a potential source of inflation, where gold would typically outperform other asset classes. About the growing federal budget deficit, the article even quoted former Federal Reserve Chair Alan Greenspan as saying, “Unless we start to come to grips with the long-term outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward.”

 

Gold and Silver Capitulation is Near ~ from National Inflation Association

SGS Notes: If you see prices dropping on gold and silver, don't be dismayed… don't be alarmed… this has been predicted by the experts for some time just before the upside begins… These corrections will happen as the price manipulation is brought under control with the coming position limits.. and the consequential sale of paper silver/gold. Use the drops to buy as much as you can. Then, once the manipulation ends, hang on to your precious metals and … Hang on for the ride.

Gold and Silver Capitulation is Near
National Inflation Association

On Tuesday, the price of gold fell $25.10 to $1,158 per ounce while the price of silver declined by $0.57 to $17.63 per ounce. Based on the emails and phone calls we have received in recent days, NIA believes we are approaching a capitulation point in gold and silver prices. The sentiment on gold and silver has abruptly changed to the negative like nothing we have ever seen before and to us this means the big move to the upside is right around the corner.

If you do a Google search for, "There is no inflation", it will bring up a shocking 385,000 web results and almost all of the articles are related to the U.S. economy. Investors around to globe are pointing to the consumer price index (CPI), which shows prices only up 1.05% from one year ago, and saying that inflation in the U.S. is not a problem. The most popular forecast by Wall Street analysts today is that the U.S. is headed for a long period of deflation, similar to Japan's "Lost Decade". NIA is currently in the process of dissecting exactly what took place during Japan's "Lost Decade". We are producing a short movie comparing Japan's economy to the U.S. economy and it will be released in the coming weeks.

NIA considers gold to be the best gauge of inflation, not the CPI. Most experts on Wall Street chalk up gold's rise from $255.95 to $1,158 this decade to rising fears and uncertainties and increasing jewelry demand from India, while maintaining that there is no inflation because the CPI says so. They fail to realize that the government has an agenda to minimize CPI increases in order to keep Social Security payment increases as low as possible. In the future, if the government decides to bailout their banker friends from hyperinflation by adjusting mortgage contracts to the rate of inflation, NIA predicts they will adjust mortgage principles based on the price of gold and not the CPI.

This past weekend, the New York Times wrote a front page article about how hedge fund manager Anthony Ward, through his private investment fund Armajaro, has purchased enough cocoa to make five billion chocolate bars. Ward took delivery of 240,100 tonnes of cocoa, the biggest delivery in 14 years and about 7% of the world's annual production of cocoa. Some are calling this an attempt to corner the cocoa market, similar to how the Hunt brothers tried to corner the silver market decades ago. Many people believe Ward is trying to create an artificial cocoa shortage in an attempt to artificially manipulate cocoa prices to the upside for his personal benefit and to the detriment of chocolate lovers everywhere.

NIA considers it to be outrageous for so much attention to be paid to Ward and his long position in cocoa, when the mainstream media continues to ignore JP Morgan and their concentrated short position in silver. Ward's long position of 7% of the world's annual cocoa production pales in comparison to JP Morgan's short position of 20% of the world's annual silver production. Ward purchased this cocoa using his firm's own funds. JP Morgan sold silver that it neither owned or legitimately borrowed.

Almost nobody realizes that when the Hunt brothers tried to corner the silver market, they intended to profit not from their silver position itself, but from the actual production of silver from a mine they were getting ready to open. If their plan succeeded, the Hunt brothers would have likely become the richest family in the history of America. NIA knows what mine the Hunt brothers were secretly getting ready to open. Believe it or not, the infrastructure that the Hunt brothers put into place is still just sitting there today untouched.

Ted Butler
Weekly interview with King World News
This week, talks about the effect
of position limits on the
Silver & Gold Markets.

 


Stay tuned for forthcoming news on the Precious Metals
Online Barter Network we're putting together.
Development is underway

 

 

 


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“There is no means of avoiding the final collapse of a boom brought on by credit and Fiat monetary expansion. The only question is whether the crisis should come sooner in the form of a Recession or later as a final and total Catastrophe of Depression as the currency systems crumble.”

Ludwig von Mises
Mises Institute at http://mises.org/

 


 

This Week's Videos

Gold: Down But Not Out
Despite gold's eight percent drop this past month, the commodity is still the world's "currency of first resort," Ben Davies, CEO of Hinde Capital, told CNBC.

Eric Sprott
Chairman,
CEO & Portfolio Manager
Sprott Asset Management
Eric has been stunningly accurate in his writings for over a decade, and is one of the highly respected industry professionals who was able to foresee the current crisis. He chronicled the dangers of excessive leverage as well as the bubbles the Fed was creating, while correctly forecasting the tragic collapse we are all enduring.

 

 
 
 
 
What is Money When the System Collapses? ~ Mark Slavo
 
Issue 70

SGS Notes: This week's article is a little different from our normal content. If you were sitting on our end of the phones, you would understand how frequently we get asked questions about the potential use of silver and gold as barter currency. While we cannot be crystal-ball readers, we can point to some very good resources from folks who do projections and scenarios professionally... So, this is our attempt to help answer some of those questions.

What is Money When the System Collapses?
By Mark Slavo
From SHTFplan.com

What is money?

Economist Mike Shedlock defines money through the eyes of Austrian economist Murray N. Rothbard as “a commodity used as a medium of exchange.”

“Like all commodities, it has an existing stock, it faces demands by people to buy and hold it. Like all commodities, its “price” in terms of other goods is determined by the interaction of its total supply, or stock, and the total demand by people to buy and hold it. People “buy” money by selling their goods and services for it, just as they “sell” money when they buy goods and services.”

What is money when the system collapses and the SHTF?

In disaster situations, the value of money as we know it now changes, especially if we are dealing with a hyperinflationary collapse of the system’s core currency. This article discusses money as a commodity in an event where the traditional currency (US Dollar) is no longer valuable.

In a collapse of the system, there will be multiple phases, with the first phase being the “crunch”, as discussed in James Rawles‘ book Patriots. The crunch is the period of time directly preceding a collapse and the collapse itself.
 

Traditional Currency

Initially, the traditional currency system will maintain some value, though it may be rapidly depreciating in buying power. For those with physical, non-precious metal denominated currency on hand (paper dollars, non-silver coins), spending it as rapidly as possible is the best approach.

It is during the crunch that ATM machines around the country will run out of currency as people aware of the rapidly devaluing dollar will be attempting to withdraw as much money as possible. This immediate increase in money supply, coupled with the population’s general knowledge of the currency depreciation in progress, will lead to instant price increases for goods, especially essential goods.

If your physical cash has not been converted into tangible assets, this would be the time to do so. Acquiring as much food, fuel, clothing and toiletry items as possible would be the ideal way to spend remaining cash before it completely collapses to zero, as it did in the Weimar inflation in 1930’s Germany, or Zimbabwe’s hyperinflation in recent years.

Precious Metals

During the initial phase of the ‘crunch’ precious metals will be a primary bartering tool, but this may not last long. The old survivalist adage “you can’t eat your gold” will become apparent very quickly. In a total breakdown of the system, food, water and fuel will be the most important tangible goods to acquire.

Consider someone who has a two week or one month supply of food on hand. Do you believe they would be willing to part with that food for some precious metals? The likely answer is no. There will be almost no bartering item that one would be willing to trade their food for once it is realized that food supply lines have been cut.

That being said, since most will not barter their food, not even for fuel, the next recognized medium of exchange by merchants, especially those selling fuel, will be precious metals. For the initial crunch, silver coins, especially recognizable coins like 90% silver quarters, dimes and half dollars, along with one (1) ounce government mint issued silver coins like US Silver Eagles, will be accepted by some, probably most, merchants. For those trying to flee cities to bug-out locations, silver coins of the aforementioned denominations may be a life saver, as they can be used to acquire fuel. While we recommend having gold, as well, the issue with gold is that its value is so much higher than that of silver, that breaking a one ounce gold coin into 10 pieces just to buy a tank of gas will not be practical. It is for this reason that having silver on hand is highly recommended. Packing at least $25 - $50 of silver coins in each bug-out bag would be a prudent prepping idea. (SGS Note: We think the 1/4 and 1/2 oz .999 fractional silver and divisible silver will also be good for use with vendors due to its higher silver content. A savvy vendor will accept any silver or gold bullion - not just Eagles.)

In a total SHTF scenario, silver and gold may eventually break down as a bartering unit, as contact with the “outside” world breaks down. One reason for this, is that the fair value price of precious metals will be hard to determine, as it will be difficult to locate buyers for this commodity. (SGS Note: This is one reason we want to start building a barter community together. We also plan to implement a 'buy back' system in the not-too-distant future, but we're recommending that our customers hold on to their silver for the time being.)

This, however, does not mean that you should spend all of your precious metals right at the onset of a collapse. Precious metals will have value after bartering and trade is reestablished once the system begins to stabilize. Once stabilization begins, the likely scenario is that precious metals will be one of the most valuable monetary units available, so having plenty may be quite a benefit. At this point, they could be used to purchase property, livestock, services and labor.
 

Water

Water is often overlooked as a medium of exchange, though it is one of the most essential commodities for survival on the planet. Had individuals in New Orleans stockpiled some water supplies during Hurricane Katrina, much of the loss of life there could have been avoided.

For those bugging out of cities, it will be impractical to carry with them more than 5 - 10 gallons of water because of space limitations in their vehicles. Thus, having a method to procure water may not only save your life, but also provide you with additional goods for which you can barter.

An easy solution for providing yourself and others with clean water is to acquire a portable water filtration unit for your bug-out bag(s). While they are a bit costly, with a good unit such as the Katadyn Combi water filter running around $150, the water produced will be worth its weight in gold, almost literally. This particular filter produces 13,000 gallons of clean water! A Must have for any survival kit.

Because we like reserves for our reserves, we’d also recommend acquiring water treatment tablets like the EPA approved Katadyn Micropur tabs. If your filter is lost or breaks for whatever reason, each tablet can purify 1 liter of water. In our opinion, the best chemical water treatment available.

Clean water is money. In a bartering environment, especially before individuals have had time to establish water sources, this will be an extremely valuable medium of exchange and will have more buying power than even silver or gold on the individual bartering level.

SGS Barter Links

We would like to begin a section on our Web site and in our weekly Newsletter where we publish links to vendors who accept silver and gold in exchange for goods and services. These can be local to any area or online vendors.

If you are interested or know of a vendor who is interested, please have them contact us by phone or eMail (see contact info below). Together we can build this list for the betterment of everyone.

One effective way we've found to locate vendors, is, when shopping routinely, to simply ask them if they would consider accepting silver or gold as payment for their product(s). We know it sounds way too simple... but a genuine inquiry is really a door-opener.

If a vendor says 'no' ... that's fine... but often they will be curious and want to you to paint a scenario for them or explain how that would work for them. This is an open door...

My personal hairdresser is now accepting silver in exchange for my grooming services...

So you never know!

Other Articles of Interest

Best Online Sites for Bartering

Why Being Prepared
Is A Good Idea

Silver's Role In a Barter Economy


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“Only people suffused with a level of self-entitlement that is completely absurd could demand that their concerns be completely divorced from fiscal reality. The public service unions’ mantra can be reduced to one phrase, as in’ you can get blood from a stone.’ And their prevailing attitude is now quite familiar to most Americans: 'Screw everyone else, give me mine.'”

Arnold Ahlert
 


This Week's Video

 

! Special Notice !

Due the recent rate increase by
American Express
We can no longer accept American Express Credit Cards.
We apologize for this inconvenience for our AMEX cardholders, but we do not wish to raise our pricing structures for everyone, just to accommodate the increase in charges for this card provider.

 

Food

In a system collapse, food will be another of the core essential items that individuals will want to acquire. We suggest storing food for 1) personal use 2) charity 3) bartering.

Dry goods, canned goods, freeze dried foods can be used for bartering, but only if you have enought to feed yourself, family and friends. They should be bartered by expiration date, with those foods with the expiration dates farthest out being the last to be traded. You don’t know how long the crunch and recovery periods will last, so hold the foods with the longest expiration dates in your posession if you get to a point where you must trade.

Baby formula will also be a highly valued item in a SHTF scenario, so whether you have young children or not, it may not be a bad idea to stockpile a one or two week supply. (For parents of young children, this should be the absolute first thing you should be stockpiling!). In addition to water, baby formula may be one of the most precious of all monetary commodities.

Another tradeable food good would be seeds, but the need for these may not be apparent to most at the initial onset of a collapse, though having extra seeds in your bug-out location may come in handy later.

Fuel

Fuel, including gas, diesel, propane and kerosene will all become barterable goods in a collapse, with gas being the primary of these energy monetary units during the crunch as individuals flee cities. For most, stockpiling large quantities will be impractical, so for those individuals who prepared, they may only have 20 - 50 gallons in their possession as they are leaving their homes. If you are near your final bug-out destination, and you must acquire food, water or firearms, fuel may be a good medium of exchange, especially for those that have extra food stuffs they are willing to trade.

Though we do not recommend expending your fuel, if you are left with no choice, then food, water and clothing may take precedence.

For those with the ability to do so, store fuel in underground tanks on your property for later use and trading.
 

Firearms and Ammunition

Though firearms and ammunition may not be something you want to give up, those without them will be willing to trade some of their food, precious metals, fuel and water for personal security. If the system collapses, there will likely be pandemonium, and those without a way to protect themselves will be sitting ducks to thieves, predators and gangs.

Even in if you choose not to trade your firearms and ammo during the onset of a collapse, these items will be valuable later. As food supplies diminish, those without firearms will want to acquire them so they can hunt for food. Those with firearms may very well be running low on ammunition and will be willing to trade for any of the aforementioned items.

In James Rawles’ Patriots and William Forstchen’s One Second After, ammunition was the primary trading good during the recovery and stabilization periods, where it was traded for food, clothing, shoes, livestock, precious metals and fuel.

Clothing and Footwear

We may take it for granted now because of the seemingly endless supply, but clothing and footwear items will be critical in both, the crunch and the phases after it. Having an extra pair of boots, a jacket, socks, underwear and sweaters can be an excellent way to acquire other essential items in a trade.

As children grow out of their clothes, rather than throwing them away, they will become barterable goods.

It is recommended that those with children stock up on essential clothing items like socks, underwear and winter-wear that is sized a year or two ahead of your child’s age.

Additional Monetary Commodities

The above monetary units are essential goods that will be helpful for bartering in the initial phases of a collapse in the system. As the crunch wanes and recovery and stabilization begin to take over, other commodities will become tradable goods.

In A Free Falling Economy Makes Bartering Go Boom, Tess Pennington provides some other examples of items that will be bartering goods during and after a crunch including, vitamins, tools, livestock, fishing supplies, coffee and medical supplies.

Another important monetary commodity after the crunch will be trade skills. If you know how to fish, machine tools, hunt, sew, fix and operate radios, fix cars, manufacture shoes, or grow food, you’ll have some very important skills during the recovery period.

 
Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1

 
 
 
Historical Silver: Gold Ratio Suggests Parabolic Top For Silver of Over $100 per Ounce! ~ Lorimer Wilson

Historical Silver: Gold Ratio Suggests Parabolic Top For Silver of Over $100 per Ounce!
By Lorimer Wilson


Approximately 70 respected economists, academics, gold analysts and market commentators (see list below) are of the firm opinion that gold is going to go to at least $2,500 if not as high as $10,000 per ounce (or more) before the parabolic top is reached. As such, just imagine what is in store for silver given its historical price relationship with gold. We’re looking at an extreme case scenario of a future parabolic top of perhaps as much as $714 per ounce for silver, the ‘poor man’s gold’. Let me explain.

The current price of gold and the price of silver – the silver:gold ratio - continues to hover around the 67:1 range which is way out of whack with the historical relationship between the two precious metals. It begs the question:

“Is now the perfect time to buy silver instead of the much more expensive gold metal?”

It is critical to step away from all the noise and clutter that passes for knowledge and take the time to gain perspective on where the price of gold and silver are in terms of the ‘big picture’, i.e., where they are in their individual performance channels and in respect to their historical relationship with each other over the long, medium and short term and, based on those relationships, how they might perform in the future.

Bull Market Stages

The key to a secular gold/silver bull is the collective gold/silver transactions of investors worldwide buying and selling gold/silver that ultimately sets the price and determines their fortunes. The collective demand trends of gold/silver investors effectively divide precious metals bulls into 3 distinct demand-driven stages, namely:

1. Stage One which occurs when a devaluation of the dominant currency in which gold is priced, i.e. the USD, leads to a moderate increase in the price of gold. Stage One for gold began on February 15th, 2001 when it reached a 22-year secular low of just $255.10.

2. Stage Two which occurs when the decoupling of gold from local-currency devaluation begins to outpace the dollar’s losses and gold starts rising significantly in virtually all currencies worldwide. Stage Two began on June 5th, 2005 when gold (at $417.67US) first surpassed 350 Euros for the first time.

3. Stage Three which occurs when the general public around the world starts investing in gold and this deluge of capital into gold causes it to escalate dramatically (i.e. to go parabolic) in price. We are approaching Stage Three and it will become clearly evident when the price for gold begins its daily record ascents to dramatically higher prices.

Gold

We are now in the very early stages of Stage Three with gold having gone up 24% in 2009 and up 13.3% in the first 6 months of 2010. As such there are no shortage of prognosticators who see gold going parabolic reminiscent of 1979 when gold rose 289.3% in the course of just over a year (from a $216.55 closing price on Jan. 1, 1979 to a closing price of $843 per ounce barely a year later on Jan. 21, 1980) and 128% higher in a late-1979 parabolic blow-off of just under 11 weeks! A 289% increase in the price of gold from $1250 would put gold at $4,866. That being the case what appear on the surface to be rather outlandish projections of what the bull market in gold will top out at don’t seem quite so far-fetched.

Below is a list of the parabolic tops for gold as discussed in articles and/or speeches by well known economists, academics, market analysts and financial commentators. Their prognoses are limited to those above the CPI adjusted 2010 price of $2,300 and they are grouped according to the extent each individual sees gold appreciating over the next few years (and next few months in a few cases).

The list below is provided on my site - with a link to the actual article in which each estimate was put forth if you care to check out the rationale behind each individual’s projections.

Link: http://www.munknee.com/2010/07/these-70-analysts-have-sound-reasons-to-believe-gold-will-reach-parabolic-top-as-high-as-10000/

Higher than $10,000

1. Jim Sinclair: $17,000; (by 2012);
2. Mike Maloney: $15,000;
3. Howard Katz: $14,000;
4. Silver-Coin-Investor.com: $7,000-$14,000;
5. Jim Rickards: $4,000 - $11,000
6. Roland Watson: $10,800 (in our lifetime);

$5,001 - $10,000

1. Arnold Bock: $10,000 (by 2012);
2. Porter Stansberry: $10,000 (by 2012);
3. Tom Fischer: $10,000;
4. Shayne McGuire: $10,000;
5. Eric Hommelberg: $10,000;

6. Gerald Celente: $6,000 - $10,000;
7. Peter Schiff: $5,000 - $10,000 (in 5 to 10 years);
8. Egon von Greyerz: $5,000 - $10,000;
9. Patrick Kerr: $5,000 - $10,000 (by 2011);
10. Peter Millar: $5,000 - $10,000;
11. Alf Field: $4,250 - $10,000;
12. Jeff Nielson: $3,000 - $10,000;
13. Dennis van Ek: $9,000 (by 2015);
14. James Turk: $8,000 (by 2015);
15. Joseph Russo: $7,000 - $8,000;


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“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns-or dollars. Take your choice-there is no other-and your time is running out.”

Francisco d’Anconia
From Atlas Shrugged


This Week's Video

 

Jim Rogers Loves Gold,
Buys Silver

Special PDF Download

Ayn Rand's
Hymn To Money

Ayn Rand was a Russian-American novelist, philosopher, playwright, and screenwriter. She first achieved fame in 1943 with her novel The Fountainhead, which in 1957 was followed by her best-known work, the philosophical novel Atlas Shrugged.

 

16. David Petch; $6,000 - $$8,000;
17. Michael Rozeff: $2,865 - $7,151;
18. Martin Murenbeeld: $3,100 - $7,000;
19. Dylan Grice: $6,300;
20. Murray Sabrin: $6,153;
21. Harry Schultz: $6,000;
22. Paul van Edeen: $6,000;
23. Paul Brodsky/Lee Quaintance: $3,000 - $6,000;

 

$5,000

1. David Rosenberg: $5,000;
2. Martin Hutchinson: $5,000 (by end of 2010);
3. Doug Casey: $5,000;
4. Peter Cooper: $5,000;
5. Robert McEwen: $5,000;
6. Martin Armstrong: $5,000 (by 2016);
7. Peter Krauth: $5,000;
8. Tim Iacono: $5,000 (by 2017);
9. Christopher Wyke: $5,000;
10. Frank Barbera: $5,000;
11. John Lee: $5,000;
12. Peter Dawes: $5,000;

$2,500 – $5,000

1. Pierre Lassonde: $4,000 - $5,000;
2. Howard Katz: $3,300 - $5,000;
3. Mary Anne and Pamela Aden: $3,000 - $5,000 (by February 2012);
4. Larry Edelson: $2300 - $5,000 (by 2012);
5. Luke Burgess: $2,000- - $5,000;
6. Ian Gordon/Christopher Funston; $4,000;
7. D.P. Baker: $3,000 - $3750;
8. Christopher Wood: $3,500 (in 2010);
9. Adam Hamilton: $3,500 (by 2010/11);
10. Eric Roseman: $2,500 - $3,500 (by 2015);
11. John Henderson: $3,000+ (by 2015-17);
12. Hans Goetti: $3,000;
13. Michael Yorba: $3,000;
14. David Tice: $3,000 (by 2012);
15. David Urban; $3,000;
16. Michael Lambert: $3,000;
17. Brett Arends: $3,000;
18. Ambrose Evans-Pritchard: $3,000;
19. Trader Mark: $3,000 (by mid-2011);
20. Ian Williams: $3,000;
21. Byron King: $3,000;
22. John McAvity: $2,500 - $3,000 (by 2012);
23. Graham French: $2,000 - $3,000;
24. Sascha Opel: $2,500+;
25. Rick Rule: $2,500 (by 2013);
26. Daniel Brebner: $2,500;

Silver

Silver has proven itself, time and again, to be a safe haven for investors during times of economic uncertainty and, as such, with the current economy in difficulty the silver market has become a flight to quality investment vehicle. The 49% increase in silver in 2009 attests to that in spades (albeit up only 10% in the first 6 months of 2010). During the last parabolic phase for silver in 1979/80 silver went from a low of $5.94 on January 2nd, 1979 to a close of $49.45 in early January, 1980 which represented an increase of 732.5% in just over one year. Such a percentage increase from the current price for silver would represent a future parabolic top price of $155. Frankly, such prices seem impossible in practical terms but that is what the numbers tell us.

Silver:Gold Ratio

How both gold and silver perform, in and of themselves, does not tell the complete picture by a long shot, however. More important is the price relationship – the correlation – of one to the other over time which is called the silver:gold ratio.

Based on silver’s historical correlation r-square with gold of approximately 90 - 95% silver’s daily trading action almost always mirrors, and usually amplifies, underlying moves in gold. With significant increases in the price of gold expected over the next few years even greater increases are anticipated in silver’s price movement in the months and years to come because silver is currently seriously undervalued relative to gold as the following historical relationships attests.

Let’s look at the silver:gold ratio from several different perspectives:

- Over the past 125 years the mean silver:gold ratio (i.e. 50% above and 50% below) has been 45.69 ounces of silver to 1 ounce of gold.

- In the last 25 years (since 1985) the mean silver:gold ratio has increased to 66.9:1

- The present silver:gold ratio is range-bound between 63:1 and 70:1 (66.77:1 at the end of June 2010).

- Interestingly, during the build-up to the parabolic blow-off in 1979/80 silver outpaced gold going up 732.5% vs. gold’s 289.3% causing the ratio to drop from 38:1 in January 1979 to 13.99:1 at the parabolic peak for both metals in January,1980.

Conclusions:

There are many! Let’s look at the various price levels for gold and the various silver:gold ratios mentioned above one by one and see what conclusions we can draw.

First let’s use the mid-year (June 30th, 2010) price of $1243 for gold and apply the various silver:gold ratios mentioned above and see what they do for the potential % increase in, and price of, silver.

Gold @ $1243 using the current 66.77:1 silver:gold ratio puts silver at $18.61 (June 30/10)

Gold @ $1243 using the above 45.69:1 silver:gold ratio puts silver at $27.20 (i.e. +46.2%)

Gold @ $1243 using the above 13.99:1 silver:gold: ratio puts silver at $88.85 (i.e. +377.4%)

Now let’s apply the projections made above by the various economists, academics, gold analysts and market commentators listed above to the silver:gold ratio and see what that suggests is the parabolic top for silver.

@ $10,000 Gold

Gold @ $10,000 using the silver:gold ratio of 66:1 puts silver at $150

Gold @ $10,000 using the silver:gold ratio of 45:1 puts silver at $222

Gold @ $10,000 using the silver:gold ratio of 14:1 puts silver at $714!!

(For what it is worth Jim Sinclair’s projection of $17,000 gold might well mean that silver would reach a parabolic top of $1,215 per ounce based on a 14:1 silver to gold correlation.)

@ $5,000 Gold

Gold @ $5,000 using the silver:gold ratio of 66.1 puts silver at $75

Gold @ $5,000 using the silver:gold ratio of 45:1 puts silver at $111

Gold @ $5,000 using the silver:gold ratio of 14:1 puts silver at $357

@ $2,500 Gold

Gold @ $2,500 using the silver:gold ratio of 66:1 puts silver at $38

Gold @ $2,500 using the silver:gold ratio of 45:1 puts silver at $55.50

Gold @ $2,500 using the silver:gold ratio of 14:1 puts silver at $178.50

From the above it seems that, any way we look at it, physical silver is currently undervalued compared to gold bullion and is in position to generate substantially greater returns than investing in gold bullion.

Summary

History will look back at the artificially high silver to gold ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. This fiat currency experiment will end badly in a currency crisis. The wealthiest people will be those who bought silver today and were smart enough to research and pick the best silver mining stocks and warrants.

Indeed, while gold’s meteoric rise still has room to run, silver’s run is yet to get started. As such, it certainly appears evident that now is the time to buy all things silver.

 

 
Note: If you are getting duplicates of the S&GS Newsletter, please eMail us and let us know.
Contact us at info@silverandgoldshop.com
Phone: 888-203-2232 x 1

 
 
 
Silver Is Indispensable ~ The Silver Institute
 

Silver Is Indispensable
from the Silver Institute


We want you to own silver, the miraculous metal. If you read carefully about the thousands of uses for this indispensable metal, perhaps you will see the wisdom in buying it. Look at the seemingly infinite uses of this strategic metal. Both rechargeable and disposable batteries are manufactured with silver alloys. Billions of silver oxide-zinc batteries are supplied to world markets
yearly, including miniature sized batteries for watches, cameras, and small electronic devices and larger batteries for tools and TV cameras.

Steel bearings electroplated with high purity silver have great fatigue strength and load carrying capacity for use in hi-tech and heavy-duty applications. Silver coated bearings provide superior performance and safety for jet engines.

Silver solder facilitates the joining of materials and produces smooth, leak-tight and corrosion-resistant joints. Silver brazing alloys are used in air-conditioning, refrigeration, power distribution, automobiles and aerospace. Silver's unique combination of properties are of the first importance for plumbers, appliance manufacturers, electronics and a host of manufacturing industries.

Chemical reactions can be significantly increased by adding
elements that do not enter into the reaction, and silver is one of those elements. Approximately 700 tons of silver are in continuous use in the world's chemical industry for the production of plastics. Silver is essential for producing a class of plastics which includes adhesives, laminating resins for construction, plywood, particle board, finishes for paper and electronic equipment, textiles, surface coatings that resist heat and scratches, dinnerware, buttons, casings for appliances, handles and knobs, packaging materials, automotive parts, thermal and electrical insulating materials, toys, and the list goes on.

Silver, the miracle metal, is necessary for producing soft plastics used in polyester textiles for all types of clothing and specialty fabrics. It's used for molded items such as insulating handles for stoves, key tops for computers, electrical control knobs, appliance components, and Mylar tape which make up 100% of all audio,VCR, and other types of recording tapes. It's also used to produce antifreeze coolant for automobiles and cleaning solvents.

Silver is a recognized powerful oxidizer. Metallurgists have long known the unique affinity of silver with oxygen. Molten silver will hold ten times its volume in oxygen.The oxidizing power of silver has worldwide application in numerous industries.

Silver is used in bullion, commemorative and proof coins around the world. It has wide usage in silverware, jewelry and the decorative arts.

Silver is the best electrical conductor of all metals and is used in conductors, switches, contacts and fuses. Ordinary household wall switches, and virtually all switch contacts, use silver because it does not corrode, or cause overheating and fires.The use of silver for motor control switches is universal.

In the home, all electrical appliances, timers, thermostats and sump pumps use silver contacts. A typical washing machine requires 16 silver contacts to control its electric motor, pump, and gear clutch. A fully-equipped automobile may have over 40 silver-tipped switches to start the engine, activate power steering, brakes, windows, mirrors, locks, and other electrical accessories.

Silver relays are used in washing machines, dryers, automobile
accessories, vacuum cleaners, electric drills, elevators, escalators, machine tools, and so on up to railway locomotives, marine diesel engines and oil-well drilling motors whose performance is required to be flawless. For circuit breakers, silver combines the highest heat conductivity and the highest electrical conductivity of all metals, with almost unlimited performance.

Silver is also widely used in electronics, including silkscreened circuit paths, membrane switches, electrically heated automobile windows, and conductive adhesives. Every time a home owner turns on a microwave oven, dishwasher, clothes washer, or television set, the action activates a switch with silver contacts that completes the required electrical circuit.The majority of the keyboards of desk-top and lap-top computers use silver membrane switches.These are found behind the buttons of control panels for cable television, telephones, microwave ovens, learning toys and the keyboards of typewriters and computers. Due to their reliability and wide use, the silver-contact membrane switch market in the U.S. is a multi-billion dollar industry.

The silver we urge you to own is truly indispensable to a modern society. A new electronic application for “smart tags” promises to use significant quantities of silver. From grocery items to pre-paid toll gizmos, Radio Frequency Identification or RFID devices are coming on in a big way. Not only are these tiny 'smart tags' fast replacing bar codes at the checkout counter, but they're being used to prevent shoplifting, trigger warehouse inventory counts and will soon make an appearance imbedded in credit cards and passports. Although the amount of silver used in each smart tag is miniscule, tens of millions of throwaway tags are expected to be produced in coming years and the applications appear virtually endless. Silver makes a perfect antenna because it is highly conductive and malleable.

Another important use of silver is for printed circuit boards (PCBs) that use silver for connecting paths of electronic circuitry and are essential to the electronics that control the operation of aircraft, automobile engines, electrical appliances, security systems, telecommunication networks, mobile telephones and television receivers.

The use of silvered windshields in General Motor's all purpose vehicles reflects away some 70% of the solar energy that would otherwise enter the car, reducing the load on air conditioners in summer. Every automobile produced in America has a silver-ceramic line fired into the rear window.The heat generated by these conductive paths clears the rear window of frost and ice.

The ease of electroplating silver accounts for its widespread use in coating. Silver plating is used in a wide variety of applications from Christmas tree ornaments to cutlery and hollowware. Silver possesses working qualities similar to gold but enjoys greater reflectivity and can achieve the most brilliant polish of any metal.

This unique optical reflectivity, and its property of being virtually 100% reflective after polishing, allows it to be used in mirrors and in coatings for glass, cellophane or metals. Everyone is accustomed to silvered mirrors. What is new is invisible silver, a transparent coating of silver on double pane thermal windows.This coating not only rejects the hot summer sun, but also reflects inward internal house heat. A new double layer of silver on glass is sweeping the window market, as it reflects away almost 95% of the hot rays of the sun, creating a new level of household energy savings. Over 250 million square feet of silver-coated glass is used for domestic windows in the U.S. yearly, and much more for silver coated polyester sheet for retrofitting windows.

Silver has a variety of uses in pharmaceuticals. In fact, silver sulfadiazine is the most powerful compound for burn treatment. It is used world-wide. In another application catheters impregnated with silver sulfadiazine eliminate bacteria. In a world concerned with the spreading of virus and disease, silver is increasingly being tapped for its bactericidal properties and used in treatments for conditions ranging from severe burns to Legionnaires Disease.

One out of every seven pairs of prescription eyeglasses sold in the U.S. incorporates silver. Silver halide crystals, melted into glass can change the light transmission from 96% to 22% in less than 60 seconds and block at least 97% of the sun's ultraviolet rays.

The photographic process is based on the presence of silver halide crystals suspended on an unexposed film. Silver-based photography has superior definition and low cost. It's the biggest user of silver.The use of silver worldwide in X-rays consumes millions of ounces more.

Silver paste is used in 90% of all solar cells. Sunlight striking silicon cells generates electrons, which the silver conductors collect to become a useful electric current. In the collection of solar energy, silver is the best reflector of thermal energy (after gold).

Silver is employed as a bactericide and algaecide in an ever increasing number of water purification systems. Silver ions have been used to purify drinking water and swimming pool water for generations. New research into silver compounds is providing physicians with powerful, clinically effective treatments against which bacteria cannot develop resistance. Silver ions in house
frames
help resist mold and mildew, something that has plagued the building industry for decades.

Every year brings new, widespread applications for silver.

Meanwhile, there is less and less silver.

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Other Articles of Interest

Inflation's Clever Disguise

by William Histed

Opportunity of a Lifetime

by Jim Cook

Howard Ruff on
Being Prepared

The Over-Consumption
of Silver


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"Gold and silver play identical roles when conventional investments go sour. They act as a storehouse of value. Whenever currencies fail and economies contract, people turn to gold and silver. Whenever
bankruptcies and defaults sweep through a nation or a credit collapse shakes the financial foundations, people rush into precious metals. Gold and silver
protect against loose money and credit. Silver acted as a perfect hedge against the inflation of the 1970’s.

Silver promises to act as a bulwark against inflation, a falling dollar and depression. That’s a primary reason to buy silver. It’s one of the best means of preserving capital. Any pending price rise because of short supply and industrial demand is a bonus. Silver will let you keep what you have in the face of today’s unfolding economic problems. Ten to twenty percent of your net worth in silver will keep you hedged, keep the rest of your wealth insured and keep you partially outside the paper and credit woes of a highly leveraged financial system.

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