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The Reason Silver Has Been Rising Faster Than Gold
April30 , 2011
Issue 92
Today's Gold/Silver Ratio: 32/1 (same)

Issue 106

Gold: $1513.50/ Silver: $46.86

SGS Notes: The crazy ride continued this week…the week began Monay with a sharp rise from $46.86 to$47.88, then Tuesday spike up into the high $49s… closely pressing the $50 threshhold…then back down by end of day to just over $45. By Wednesday night, the price was back to the mid $48 level, continuing strongly in that range until close of week Friday night. The ratio has remained constant at 32/1… but we've also seen Gold do a huge $58 spike this week. The dollar went to 73.2 in the wake of the S&P downgrading the US credit rating down to C - lower than Mexico… We've had several inquiries this week about whether silver is still a good buy at $50+… This week's newsletter will be addressing that…

Psst! Letting you in on a little 'secret'… if you watch our Facebook page for SGS, (see link at right) you will see a flurry of activity of postings on Fri/Sat … this is because we post a lot of articles and links that we come across while preparing for the Newsletter, but 'reject' for newsletter publication… lots more extra stuff there, folks!

The Reason Silver Has Been Rising Faster Than Gold
Analysis of the different advance which has occurred in the silver price vis-à-vis gold in the past few months where the former has substantially outperformed the latter.
Author: Julian Phillips, MineWeb

Silver is breaking new records at around $40 and gold is touching new highs of close to $1,460. Looking back, over the past few years we have seen gold rise from around $312 to $1,460 a rise of 4.68 times and silver from around $6 to $40 a rise of 6.67 times.

But this does not give a clear picture, so we went back over the last year and what did we see? Since early 2009, gold has moved from $900 to $1,460, a respectable 62%. Over the same period silver has moved from $10 to nearly $40 a remarkable 400%. Why the difference in relative performance?

Both metals have moved as money. Gold and silver Exchange Traded Funds have attracted massive investments in the developed world where trust in the monetary system is far higher than it is in the emerging world. But it was the underlying gold and silver that attracted investors. Waning confidence in the value of paper currencies gave way to demand for precious metals as a store of value retainers for investors.

Gold and silver have substantial differences as value retainers which help us to identify why the two metals have differed so much in performance.

Gold is and has always been the 'senior' monetary metal held by Central Banks as money until 1971 and after that as a valuable reserve asset in the vaults of central banks.
Silver was rejected as money and as a reserve asset by the mid-fifties, despite it being treated as money throughout the ages before that.

Both gold and silver have been attacked as money through 'official' sales from the seventies until last year. But gold was sold to undermine the reality that it is money. Silver was sold out from reserves almost completely by central banks discarding it as money, completely.

Apart from a brief period when Egypt was at its height and supplies of silver less than those of gold, gold has always been in far shorter supply than silver and considered far more valuable than silver.

Silver in the past few decades has been seen as a commodity, mined mainly as a by-product of base metal mining, with only 30% mined in a pure silver mine.

Most silver is consumed whereas gold is not, which will continue to be the case until less expensive substitutes are found. This will only happen at far higher prices still.

GOLD AS AN INVESTMENT

Gold has always been the precious metal of choice for wealthy individuals, institutions and central banks. It has never been abandoned as such. Even when "Official" selling was at its peak, central banks sold only what they thought was sufficient to add credibility to the paper currency they were pushing to the centre of the system, first to add credibility to the dollar then after 1999 to the euro. With those tasks completed, Central Banks are now either holders or buyers of gold.

The amount sold in most cases was around 20%, but in the case of the uninspired then-Chancellor Brown of the U.K.'s case, half of Britain's reserves were sold. The largest holders of gold sold none or only small amounts. So while it was underpriced and we believe still is, did not see its price 'crushed' completely.

The path back to investment acceptance is a slow one and a long one with most of the journey still to come. We believe that we are on the brink of major changes in price levels in 2011 and beyond.

SILVER AS AN INVESTMENT

Silver had not really been an investment metal until 2004 and not a significant one until 2009.

It was a commodity metal in so short a supply that the Hunt brothers of Texas felt they could corner the market. In 1979, they took the silver price from its high of $8 an ounce [it had doubled since it stood at $4 an ounce in the mid- 1970s' already] to $50 an ounce by the early 1980's. It then fell all the way back to $5 an ounce thereafter as the Hunt Brothers found they were unable to sell the silver until prices had fallen back to those levels where they stayed until October 2003. Until 2009, it was relegated to the sidelines as an investment metal.

It started to regain popularity as an investment metal because it began to be considered as "poor man's gold" as the gold price rose out of reach of the poorer investment classes.

For instance, in India until its middle classes began to grow substantially, 70% of all gold bought was bought by the agricultural sector, whose income was directly related to the quality of the monsoon rains. When profits were good, they found their way into property and into gold, As the price rose, the quantity of gold available to such people fell. Then $1,500 bought five ounces of gold, but with gold at $1,460, it only buys just over 1 ounce of gold.

In India, precious metals are used in commercial transactions so the divisibility of silver relative to gold was far greater and more flexible. It also remained affordable in larger quantities. After all, now one ounce of gold buys 36.5 ounces of silver. So, silver remains affordable far lower down the economic ladder than gold does. It therefore can attract a far wider market than gold does currently at retail levels. Bearing in mind that precious metals are attracting a huge and growing market in the emerging parts of the world, the demand, as a wealth protector, at the retail end of the market is expanding rapidly.

CATCH-UP

It would therefore be wrong to still categorize silver as a monetary metal. Its day will come, but not until its price is much higher and not until paper currencies have lost considerably more credibility than at present.

The most difficult part of silver's rise as a wealth protector has been from October 2004 to October 2008, from when its price moved from $5 an ounce to a peak of over $20 an ounce then to fall back to than less $10 an ounce before taking off on its current path. The fall coincided with the onset of the 'credit-crunch.

All the while, demand from the photographic sector has waned. More importantly, the uses of silver have morphed from discretionary demand to a need. Even in a downturn, the demand for silver will remain strong as its uses are considered vital now.

So as a non-monetary, more volatile precious metal, its future then was far cloudier than now. The transition from those days to 'poor man's gold was its re-birth as an investment metal. While we believe it has now returned as such to stay, it still has a lot of catching up to do. By catching up we mean that it still has to return to the concept fully, that it is a lower category investment metal respected from institutions [eventually by central banks] as well as the retail end of the market.

Gold is already at that point. This does not mean that the gold price has reached a ceiling of any kind. It does mean that the gold price will rise relative to the value of currencies from now on with its metallic qualities being far in the background. Silver is still a long way off from that point.

Julian Phillips is a long time specialist analyst for gold and silver and is the principal contributor to the Gold Forecaster - www.goldforecaster.com - and Silver Forecaster- www.silverforecaster.com - websites and newsletters

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Peter Schiff
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A Few Notes...      

 

Some things we are seeing as the market demand is increasing…and things which have an impact on our customers…

  • Longer wait times for our inventory orders

  • Higher Premiums, especially for Silver Eagles

  • Product sell-out (from our suppliers)
Rest assured, however, that we are doing our utmost to get products out the door to YOU and will continue to provide you with the best service possible.
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The Bullion Report - Your Money is No Good Here
April 22 , 2011
Issue 92
Today's Gold/Silver Ratio: 32/1

Issue 105

Gold: $1513.50/ Silver: $46.86

SGS Notes: Whew! This week was a wild ride. (Did you notice the big drop in the ratio again?) I'm going to share a lot of info in the newsletter this week. As usual, the experts and economic advisors have been prolific in their writing the past 2 weeks. The S&P downgrading of the US credit rating was a HUGE factor in the numbers we're seeing. So read what you can now, bear with me, and stash this away for digesting the rest of the information as you are able. Let the dust settle a little this weekend and celebrate the MOST momentous occasion in history.

Your Money's No Good Here
Richard Zimmerman, Berkshire Asset Management

Fear premium seems like an understatement following the Standard and Poor's downgraded outlook for US debt. Markets reacted in kind, with and the threat of losing a AAA rating brought another round of potential haven seekers to gold and silver. What is it about the rating that is so special, and why should this change anything?

Let's get one thing clear - there were a few stories that reported the US' credit rating was lowered from neutral to negative. The Ratings Service actually lowered their outlook for US debt. The reasoning? They lack confidence that Washington will get the federal deficit under control in the next two years or so. The long term outlook suggests that there is a roughly 30 percent likelihood that the US will lose its current investment rating. That rating was actually reaffirmed in yesterday's Standard and Poor's release, but with paragraph after paragraph of concerns over the future growth and expenses for this western superpower.

The AAA rating is endangered by what the Standard and Poor's views as "very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us" - exactly the kinds of things that have been moving more than a little investment in precious metals. Unlike the US dollar, I have often reiterated that gold and silver are difficult to manipulate with changes in policy. However, the key issue here is the cracks in the foundation.

Since the start of the global recession, it was not uncommon to hear that a country was in trouble on the credit front. Greece, Portugal, Spain, Ireland - there is no shortage of areas of potential weakness. The thing is - it seemed a lot less dire when it was somewhere else. The idea that the Euro zone would have a country or two with fiscal weakness is one thing, but an industrialized nation of this size? The US is practically the backbone of a global economy, and one of the largest single economies in the framework of the world.

Perhaps it is more unsettling because of the scope of foreign investment in the United States. As of February 2011, China held over $1 trillion in US treasuries. Japan had a cool $890 billion. The United Kingdom and other nations held more modest levels, around $200 billion or so, for a grand total of $4,474,300,000. (1) Of course, Japan's finance minister was quick to state that US treasuries remained attractive, despite the warning against the US. China was less magnanimous. Their foreign ministry urged policy makers in Washington to move to protect investors in their debt. Besides debt obligations, foreign governments are probably eyeing their ample US dollar reserves. While it is anyone's guess how much of China's foreign currency reserves are dollar denominated, it cannot be comfortable on any level to see the recent troubles in the US devalue the currency. Uncertainty in the future of the US and the overall perceived risk of default has as much of a chance to drive investors from the US dollar and into other assets.

The Treasury Department's projection is that the debt-ceiling is within reach, to be breached as early as May. Default could come as early as this summer.

Summary

The US is unlikely to see the kind of real growth that the situation requires to sort out its massive deficit. Right now, the economic crisis has pared growth, and playing an eternal shell game with the fiscal deficit doesn't seem close to over. The diminished outlook in a superpower like the United States is enough to rattle even the most stalwart investor's cage. That means the chance for more investor uncertainty, and that usually means fresh highs in precious metals. The threat from Standard and Poor's was a surprise to a lot of people. Everyone seems to be aware that things are not perfect, and that public finances are relatively tattered. The short term key will be how people feel this credit ruin stands up to global counterparts. If the US is viewed as the 'best of the worst' as it were, this initial gain in gold and silver will likely be met with some pressure. If all it does is create talking points ahead of re-election promises then people are less likely to assuaged, and that means a harder currency than a feeble buck.

1. http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

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Yes, we like Ayn Rand, Atlas Shrugged… which, by the way is out in theaters…We saw it last week, Part 1. Check it out here: http://www.atlasshruggedpart1.com/
Just picked up a copy of the book at Costco to re-read.

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20 Reasons to SELL Your Physical Silver

 



Gold at SGS

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Silver Is Getting Too Popular, Right? by Jeff Clark
April 16 , 2011
Issue 92
Today's Gold/Silver Ratio: 34/1

Issue 104

Gold: $1487.10/ Silver: $43.12

SGS Notes: If you've been watching spot prices in Precious Metals the last 2 weeks you're probably holding on to your seat at the leaps being taken. 3 weeks ago, on 3/11 our newsletter reported the gold:silver ratio at 39:1 with gold at $1419.60 and silver at $35.90. This week the ratio has dropped to 34:1 with gold at $1487.10 and silver at $43.12. This represents a 20% increase for silver and a 4.7% increase for gold, which is in keeping with the fact that silver has outperformed gold historically, and the projections that it will continue to do so.

Jeff Christian says "Metals most likely to top out in 2nd quarter, correct into late summer before resuming another run"… We will surely see some correction in these prices on the short term, but for the long term, experts are agreeing that prices are projected to increase as currency is debased around the world and economic policies remain in place. Even at these prices, silver and gold are still a good hedge against inflation as well as having potential for solid dividends.

Silver Is Getting Too Popular, Right?
Jeff Clark, Daily Gold

04/15/11 Stowe, Vermont - It's no secret that the silver market is red hot. As I write, silver American Eagles and Canadian Maple Leafs are sold out at their respective mints. Buying in India has gone through the roof, especially noteworthy among a people with a strong historical preference for gold. Demand in China continues unabated. Silver stocks have screamed upward.

So, as an investor looking to maximize my profit, I have a natural question: is the silver trade getting too crowded, meaning we're near the top? Have the masses finally joined the party such that we should consider exiting? After all, it's not a profit until you take it, and you definitely want to sell near the top.

There are several ways to measure how crowded the silver market might be. I prefer to look strictly at the big picture and not get caught up in the weeds. This means I'm looking for signs of market exhaustion or the masses rushing in. Nothing says "peak" more than an investment everyone is buying.
So how crowded are silver investments right now? Let's first look at the ETFs.

At $35 silver, all exchange-traded funds backed by the metal amount to $20.7 billion. You can see how this compares to some popular stocks. All silver ETFs combined are less than a quarter of the market cap of McDonald's. They're about 10% of GE, a company that still hasn't recovered from the '08 meltdown. Exxon Mobil is more than 20 times bigger. And this isn't even apples-to-apples, as I'm comparing the entire silver ETF market to a few individual stocks.

This comparison is even more interesting when you consider that it's the ETFs where most of the public - especially those that are new to the market - first invest in silver. So while the metal has doubled in the past seven months, total investment in the funds is still far beneath many popular blue-chip stocks.

Okay, maybe all this money is instead going into silver mining stocks. How does the market cap of the silver industry compare to other industries?

While you fetch your magnifying glass, I'll tell you that the market cap of the silver industry is $73.1 billion. It barely registers when compared to a number of other industries I picked mostly at random. The dying newspaper industry is over 26 times bigger. Drug manufacturers are 213 times larger. Heck, even the gold market is 19 times greater. And here's the fun one: the market cap of the entire silver market, with all its record-setting prices and stock-screaming highs, represents just one-third of one percent of the oil and gas industry.

To be fair, there are a number of sectors that are smaller than silver. Radio broadcasters ($43.2B), video stores ($10.9B), and sporting goods stores ($2.5B) have puny market caps, too. But then again, who's buying DVDs or baseball mitts to protect their wealth from a coming inflation?

Silver hardly resembles the picture of an investment that is too crowded.

I'm not saying one should rush to buy silver right now. After all, it has doubled in seven months. Unless this is the beginning of the mania, prudence would certainly be called for at this juncture. The price will always ebb and flow in a bull market, and an ebb is overdue.

The question, of course, is from what price level it occurs. What if a correction doesn't ensue until, say, a month from now, and the price falls back to…where it is now? I remember some articles in January that insisted silver would fall to as low as $22, and, well, they're still waiting and have in the meantime missed out on some huge gains. For silver to fall back to $22 now would require almost a 50% drop!…Not impossible, but I wouldn't hold my breath.

Fixating on market timing takes your focus off the ultimate goal. In my opinion, instead of worrying about what will happen next week or even next month, focus on how many ounces you have, and then buy at regular intervals until you reach your desired allocation. This has the added benefit of smoothing out your cost basis. And don't forget to buy more as your assets and income increase.

This is a market where you'll want to be well ahead of the pack. Someday in the not-too-distant future, average investors will be tripping over themselves to join in. That will make the market caps of our silver investments look more like some of the others in the charts above. And that will do wonderful things to our portfolio.

See Related Article: The Tiny Silver Market - Jason Hommel
(3 parts)

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Road To Roota Updates
on YouTube


Instead of offering you one particular video this week, we are directing you to Bix Weir's page where several are listed.

Bix says, "I'm amazed by all the information that is coming into line with the Road to Roota Theory on Youtube and other forms of the "New Media". From all corners of the world events related to the "End Days" of the fiat monetary system are taking place and the "New Media" is the place to track down the TRUTH. From the end of the Oil Standard to the Silver Moonshot to the final preparations of implementing a true gold standard in the US...it is all happening NOW!"


Gold at SGS

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These Perth Kangaroo Bars (1 tr. Oz) are a good buy at only $48 over spot.
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$300 Silver is Beginning to Look Conservative! Here's Why
April 9 , 2011
Issue 92
Today's Gold/Silver Ratio: 36/1

Issue 103

Gold: $1476.40/ Silver: $41.00

SGS Notes: Wow! What a week for silver… since last weekend, silver took a $3.17 rise in price, and a reduction in the gold/silver ratio from 37/1 down to 36/1. While many of us remember fondly our purchases of silver in the $12-$15 per oz range, there is still much more room for newcomers to the market to realize growth in their investment.

$300 Silver is Beginning to Look Conservative! Here's Why
Nico Pantelis

The price ratio of gold versus silver has been dropping in the last couple of years in favor of the white precious metal. At the moment, the gold/silver ratio is trading below the "crucial" bandwidth of 40-to-50, currently hovering around 38x… [which] marks the beginning of a new phase in the bull cycle. The gold/silver ratio could finally be on its way to our target of 16x, the historical bottom in the last century. [Let me explain why I think that may well be the case.]

So says Nico Pantelis (www.goldmoney.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read.

Recent Gold: Silver Ratio


Historical Gold:Silver Ratio

The latest research from Deutsche Bank shows that the gold/silver ratio averaged around 12x (hovering between 10x & 15x) in the Middle Ages. Furthermore, Newton fixed the gold/silver ratio to 15.5x from 1700 till 1873… [For a more extensive analysis of what the historical gold:silver ratio could mean for the future price of silver go here.]

The real price difference between both metals should be dependent on available quantities in the Earth's crust and that's where things start to get tricky. Scientists and geologists have varied conclusions, with some citing silver deposits over 20 times physical gold reserves, while others claim they are as low as 7x. I think the lower end of these assumptions may be more useful as far as future silver prices are concerned, since silver is processed and consumed at a rapid pace - mainly due to the emerging market giants China and India - while gold is being hoarded at the same speed.

Conclusion

If we take all the possible gold/silver ratio's from the past, combined with the assumptions of the physical metals probably available on our planet today, then we could see the gold/silver ratio drop to 10x in the current bull cycle. This brings us to a silver price - still taking my target price for gold into consideration - of up to $500 per ounce and more. I won't go there (for now), but it makes my current target of $300 silver look less exaggerated, doesn't it?

Stick to your guns, we still have a long way to go!

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Silver Bull Run
Lindsey Williams

 

Lindsey Williams who has been an ordained Baptist minister for nearly 30 years, went to Alaska in 1971 as a missionary and because of the executive status accorded to him as Chaplain, he was given access to the information that is documented in his book, The Energy Non-Crisis reveals new bombshell information.

In 2009, Williams talked about the plan by the global elite to sabotage the dollar, destroy the economy and America by 2012. If you think that Gold and Silver are expensive now , you have not seen anything yet says Lindsey Williams , gold and silver are the currency of the elite and anything on a paper (fiat money bonds stocks ) isn't worth the paper it is written on.

 

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The Coming Retirement Trap ~ Ron Holland
April 1 , 2011
Issue 92
Today's Gold/Silver Ratio: 37/1

Issue 102

Gold: $1429.20/ Silver: $37.91

The Coming Retirement Trap...Has Started
Ron Holland

Mandatory IRAs just proposed by Obama Administration on 1/25/10 is the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market! Read the veiled report in Business Week.

A Personal Note from the Author

Dear Concerned American:
I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation. "He who has his thumb on the purse has the power." Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor.

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck's death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany's military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse.

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is on a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered, as is our ability to finance the national debt.

Although the historical government solution to unsustainable government debt loads has always been the destruction of the debts by currency depreciation and eventual hyperinflation, there is always an intermediate step used to buy more time for the politicians in power. This action, usually side-stepped and downplayed by the establishment historians paid to hide the real facts of history, is wealth confiscation. Napoleon had it right when he stated, "History is a state of lies agreed upon."

The largest source of liquid private wealth remaining in the United States is the $15 trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private retirement plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and, although they'd never use the word "confiscate," use your assets at their discretion.

The retirement trap I'm writing about is only a proposal at the present time and since it may well begin in the latter years of the Obama Administration, assuming the Democrats can somehow maintain their majorities in Congress, I'm calling it the "Obama Retirement Trap." But make no mistake, the government need for current revenue and their frenzied search for liquidity to monetize their debt obligations is an unspoken quest of both political parties. The establishments of both political parties will do whatever it takes to stay in power, including the raiding and pillaging of your retirement funds.

Read rest of article here:

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Gerald Celente
The Game Changer

 

 

 

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