IWith more financial uncertainty in the world than in
memory and with price volatility going through the roof,
it’s hard to think about the long term. The only problem
is that our lives are still measured in the long term.
In financial terms, starting families, raising and educating
children, preparing for retirement and preserving hard-earned
wealth are not day to day considerations; we are forced
to look ahead. In looking and planning ahead, there is
no
crystal ball; no guarantee that things will turn out
as we expect. All we can do is to make assumptions based
upon
what we now know and then try to position ourselves for
what may come.
Imagine that you are going on a journey for ten years
and will be out of touch for that time. With no short term
trading allowed, what assets would you choose to invest
in until your
return? Silver is an asset that can offer spectacular returns
and preserve value with low risk. It is a vital resource
and essential industrial material in addition to being
a
precious
metal. And because so few investors are familiar with the
real silver story, it is a near certainty that silver will
become more appreciated over time.
There are limitations on the future supply of silver. Every
metal resource in the world becomes more expensive to produce
each year. That’s due to the growing cost of extraction
and because ore grades have declined (the biggest and cheapest
deposits have already been found and exploited). The grades
for silver ounce per ton of ore 150 years ago at the Comstock
Lode were hundreds of times richer than grades being discovered
today. It takes greater effort and expense to extract metals
from the earth, to say nothing of new environmental restrictions.
The world population now stands at seven billion. Over
the next ten years, the world will add another 750 million
and perhaps a billion people on top of that over the twenty
years. That’s six times the equivalent of the current
population of the U.S. That will most likely be accompanied
by an increase in the standard of living throughout the
world. One measure of an increased standard of living includes
greater
use of electrical appliances and electronic devices of
all types, from TV’s, refrigerators, washing machines
to computers and cell phones. Since silver is the best conductor
of electricity it is sure to be in greater demand. Plus
silver
has other important attributes. It’s the best reflector
of light, the best transfer agent for heat and has important
biocide properties, making it indispensible to modern life.
Silver
performed better than any other asset over the past decade.
But don’t buy silver because it did well, buy
it for the new forces in place in the world. Ten years
ago, there was no net investment in silver. Only in the
last five
years has the world taken to investing in silver. Over
that time, over 600 million ounces of silver have been
bought in
Exchange Traded Funds (ETFs), with hundreds of millions
of additional ounces of silver bought in coins and bars.
Five years in a worldwide investment movement is a very short
time
frame. In per capita terms, the world only bought one-tenth
of an ounce of silver per person. It would be accurate
to suggest that a worldwide movement towards investing
in
silver
is in its infancy.
There is more investment capital today
than ever before. Between the banks, large investment pools,
and hedge funds,
that capital base is more concentrated than ever. We are
talking about many trillions of dollars. All the silver
bullion in
the world is valued at less than $35 billion. Despite silver’s
great investment performance over the past 5 and 10 years,
it has yet to attract investment from these big concentrated
pools of wealth. It is only a matter of time before the
really big guys wake up and make a move into the metal.
Considering how little silver exists to accommodate them,
the effect
on
price when it occurs should be explosive.
One thing that
didn’t exist ten years ago is the growing
unease over government debt. For the first time in living
memory, sovereign debt in the developed nations has come
to be questioned and shunned. This is not going to go away
or
be resolved easily. It is not hard to imagine the distrust
of paper growing. A distrust of paper is a distrust of
someone else’s promise to pay. The only escape route
is to switch to assets not dependent on someone else’s
promise or ability to pay. Silver is a premier example
of such an asset.
The kicker with silver is that without any rush from paper
assets it will still be great.
The growing distrust of
European sovereign debt is occurring at the same time there
has been a rush to deposit money
in government paper obligations and insured bank accounts.
Given
volatile stock markets, a troubled real estate market and
broad economic malaise, people are voting for safety, despite
historically low returns on deposits. Investors are flooding
the banks with deposits that earn little or no interest.
Money is piling up on the sidelines like never before.
In due course,
it will seek better investment returns than the near zero
returns currently offered on insured deposits. Silver will
attract some of this money. Either we’ll come out of
this economic mess and all the money currently flooding
into the banks will increase industrial demand for silver;
or we’ll
slide into further distrust of paper which could set off
a buying panic in silver. In either outcome, it’s hard
to see how silver won’t be the place to be.
The outlook for silver looks better than ever. There are
important regulatory changes afoot that promise to powerfully
impact the price. There will also be closure to the current
CFTC investigation of wrongdoing in the silver market.
The manipulation to the downside in silver has many times
the
awareness that it did a decade ago and there are fewer
counterarguments to explain it. Take advantage of the current
low prices to
establish a long term position in silver; I doubt you’ll
regret it. As unsettling as financial events may be, they
are actually quite positive for silver.
The reason for recent
price drops rests with a group of around 20 commercials
on the COMEX, including JPMorgan,
that know how to suddenly rig prices lower (usually in
the middle
of the night or at some other thinly traded time). Knowing
that this will scare some people into selling and keep
others from buying, this small group of commercials then
sits back
and waits to buy what they can scare others into selling.
I call this financial terrorism because it causes fear
among investors. The proof is that government data consistently
reveals that these commercials are always the big buyers
on
any sharp sell-off in silver. No exceptions. Some might
call this just luck on the part of these commercials. I
call it
manipulation and financial terrorism.
It's ironic that
most silver and gold investors originally bought precious
metals as protection against exactly the type
of financial crisis we are going through now. In other
words, the price of gold and silver should be soaring based
upon
current conditions. Instead, the manipulation is so pronounced
that the crooked commercials on the COMEX have managed
to convince the market that a flight from paper assets
is somehow
bad for precious metals. That’s preposterous and you
should not be fooled by their crooked games. The proof
is that these commercials crooks are buying hand over fist
on
the contrived sell-offs. You should do exactly the same.
These rigged price drops are an opportunity like no other.
The fact
that it is being artificially suppressed means you are
getting a chance to buy it much cheaper than it would be
in a free
market. That has to change and when it does it will be
like a sling shot in the other direction. The facts are
more bullish
than we can fully comprehend.
Article obtained from: http://www.silverbearcafe.com/private/12.11/longview.html |
