$2,500 Gold Could Easily Result in $178.50 Silver – Here’s Why!

By Lorimer Wilson Sep 20 2010 11:49AM www.FinancialArticleSummariesToday.com

More than 95 respected economists, academics, analysts and market commentators are of the firm opinion that gold will go to $2,500 and beyond before the parabolic peak is reached. In fact, the majority (55) think a price of $5,000 or more -even as high as $15,000 – is actually more likely! As such, just imagine what is in store for silver given its historical price relationship with gold!

Precious metal bull markets have 3 distinct demand-driven stages and we are now quickly approaching or perhaps even in the very early part of the last stage 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. go parabolic) in price.

Gold

Gold went up 24% in 2009 and is up 16% YTD and, 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 $1275 would put gold at $4,960. (More on what that might mean for the future price of silver is analyzed below.) 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. (For a complete list of the economists, academics, market analysts and financial commentators who maintain that gold will go parabolic to $2,500 -$15,000 in the near future please see:

http://www.munknee.com/2010/09/5000-gold-bandwagon-now-includes-these-55-analysts-got-gold/

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 along with gold. The 49% increase in silver in 2009 (and 23% YTD) attests to that in spades. During the last parabolic phase for silver in 1979/80 it 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 of almost $21 would represent a future parabolic top price of $175. (For what that might mean for the future price of gold see the analysis below.) Frankly, such prices seem impossible in practical terms but that is what the numbers tell us.

Gold:Silver Ratio

The current gold:silver ratio has been range-bound between 70:1 and 60:1 for quite some time 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?”

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 gold:silver 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 attest.

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

- Over the past 125 years the mean gold:silver 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 gold:silver ratio has increased to 45.69:1
- The present gold:silver ratio has been range-bound between 60:1 and 70:1 (61.3:1 as of September 17/10).
- 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.

Let’s now 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 Sept. 17, 2010 price of $1276.50 for gold and apply the various gold:silver ratios mentioned above and see what they do for the potential % increase in, and price of, silver.

Gold @ $1276.50 using the current 61.3:1 gold:silver ratio puts silver at $20.82 (Sept. 17/10)
Gold @ $1276.50 using the above 45.69:1 gold:silver ratio puts silver at $27.94 (i.e. +34.2%)
Gold @ $1276.50 using the above 13.99:1 gold:silver ratio puts silver at $91.24 (i.e. +338.2%)

Now let’s apply the projected potential parabolic peaks of $2,500, $5,000 and $10,000 to the various gold:silver ratios and see what they suggest is the parabolic top for silver.

@ $2,500 Gold

Gold @ $2,500 using the gold:silver ratio of 61:1 puts silver at $41
Gold @ $2,500 using the gold:silver ratio of 45:1 puts silver at $55.50
Gold @ $2,500 using the gold:silver ratio of 14:1 puts silver at $178.50

Before we go any further the above analyses bears closer scrutiny. In paragraph four above it was noted that “During the last parabolic phase for silver in 1979/80 it 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 of almost $21 would represent a future parabolic top price of $175.

It is interesting to note that the above $175 is almost identical to the $178.50 that would result from a reversion to the mean in the gold:silver ratio with gold at $2,500. For the gold bugs who believe that gold is going to go even higher it can only mean a very much higher price for silver as the analyses below suggest.

@ $5,000 Gold

Gold @ $5,000 using the gold:silver ratio of 61.1 puts silver at $82
Gold @ $5,000 using the gold:silver ratio of 45:1 puts silver at $111
Gold @ $5,000 using the gold:silver ratio of 14:1 puts silver at $357

@ $10,000 Gold

Gold @ $10,000 using the gold:silver ratio of 61:1 puts silver at $164
Gold @ $10,000 using the gold:silver ratio of 45:1 puts silver at $222
Gold @ $10,000 using the gold:silver ratio of 14:1 puts silver at $714!!

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 gold:silver 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 are all an illusion. This fiat currency experiment will end badly in a currency crisis and when that happens, as it surely will, gold will go parabolic and silver along with it but even more so as the gold:silver ratio adjusts itself to a more historical correlation. The wealthiest people in the future will be those who put 10% to 15% (or perhaps more – much more!) of their portfolio dollars into physical silver today and were smart enough to research and pick the best silver mining/royalty stocks and warrants to maximize their returns.

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.

Please Note:

- This is a one-of-a-kind article which no doubt will get a great deal of attention and be posted on a large number of other financial sites and blogs. This is encouraged but to avoid copyright infringement the author’s name must be included with a hyperlink to the original article.

Lorimer Wilson
September 19, 2010

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Lorimer Wilson is the Editor of both www.FinancialArticleSummariesToday.com (a sight/site for sore eyes and inquisitive minds) and www.munKNEE.com (a site consisting of edited excerpts of the internet’s most informative articles on money matters).  He can be reached at editor@munknee.com

Original Source:  http://www.kitco.com/ind/Wilson/sep202010.html

You really have to hand it to the banksters. As was painstakingly detailed in the book Creature from Jekyll Island, the banking elite devised a brilliant plan in November of 1910 on Jekyll Island in which to take over control of the United States, steal the wealth from the taxpayers and the resources from the country.

It was at this meeting that the Federal Reserve was conceived by the banking cartel, as they devised a plan to protect its member banks from competition and convince Congress and the American public that this cartel was an agency of the United States government.

The creation of the Federal Reserve will undoubtedly go down as one of the biggest tragedies in American history. After all, the government handed over the right to print the nation’s currency AND charge interest to a private, for-profit corporation with foreign stockholders. The Federal Reserve was given the right to simply print massive sums of money out of thin air and then charge the American taxpayer interest on that money.

In essence what they did was place the American people into indentured servitude by forcing the people to pay usury on worthless fiat currency (paper money created out of nothing), not to fund the government, but to enrich the bankers and fund wars in which America should never be involved. It has led to the massive unsustainable debt situation and the dollar losing 96% of its purchasing power since 1913. Stop and reflect on that last statistic for a moment. If you held $100 since 1913, it would only be able to buy you $4 worth of goods and services today! Or put another way, it would take $20 in today’s money to match what just $1 would have bought you in 1913. The rest of the value has been absorbed by the banking cartel and government. How on earth we still allow this institution to exist and operate in privacy is beyond comprehension.

Furthermore, It is absolutely unconstitutional, as Article 1, Section 8 of the Constitution clearly states that only Congress shall have the power to issue money. This view was confirmed in Lewis v. United States, 680 F.2d 1239 (1982), in which the Supreme Court ruled:

The Federal Reserve Banks are “independent, privately owned and locally controlled corporations”, and there is not sufficient “federal government control over ‘detailed physical performance’ and ‘day to day operation’” of the Federal Reserve Bank for it to be considered a federal agency.

As the United States debt-to-GDP ratio approaches 100%, the interest owed on the debt has become one of the largest annual budget items. The total U.S. debt according to http://www.usdebtclock.org/ has reached $56 Trillion or $180,000 for every U.S. citizen. This figure does not even include unfunded liabilities such as Social Security and Medicare, off-balance-sheet liabilities such as Fannie and Freddie and other liabilities that put the true total debt well over $100 Trillion. But let’s just use the $56 Trillion number for now.

The Federal Reserve conveniently stopped printing the total money supply statistic (M3) back in 2006. But since that date, a number of statisticians have extrapolated the number and come up with estimates that are widely believed to be in the ballpark. Using these numbers, the total amount of U.S. money outstanding is approximately $14 Trillion. If you divide 14 Trillion by the U.S. population of 310 million people, there is approximately $45,000 for every US person.

So, if the debt per citizen is $180,000 ($56 Trillion / 310 million people) and there is only $45,000 per citizen in existence, how can the debt ever be paid off? Even if we use the more conservative estimate of debt which is total public and private debt, we get $29.5 Trillion, which is more than DOUBLE the amount of dollars in existence.

The answer is that the debt CAN NOT be paid off. In fact, this is specifically how the banksters designed the system, so that everyone would eventually be in debt and servitude to them. Think about just how maniacal that is for a moment. But it gets worse…

You see, the government has already pledged all of America’s gold, which is surely no longer at Fort Knox as they haven’t allowed an audit in over 50 years. Even if the gold is still there, it now only represents a fraction of the annual deficit, let alone the total debt. Furthermore, the government will eventually have to pledge what is left of America’s public land, buildings and natural resources, privatizing everything from the Grand Canyon to Manhattan to Yosemite National Park.

On the individual level, since there will never be enough money for everyone to pay back their home mortgages, this means the banks will end up foreclosing on a huge portion of the real estate and housing that hard-working Americans own, a process which has already begun. So not only will the banking elite end up with all of the money, they will also end up with all of the land and resources of the once great United States of America. Sound alarmist? Consider this visionary quote from one of our nation’s greatest leaders:

“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

It is absolutely ridiculous that we have become so apathetic and brainwashed to be allowing this to happen right under our noses. This charade is going to end badly, either by default or hyperinflation and most likely with a high level of social unrest. Either way, the banksters have created a fiat money system that is absolutely destructive to this country, our freedoms and our way of life. If you are outraged, there are fortunately some things that you can do.

1. Move your money out of the big banks and into local community banks or non-profit credit unions. Because of fractional reserve banking, every dollar that you remove deprives the banks of $9 or more used for risky derivatives gambling where its heads they win, tails you lose.
2. Support a full audit of the Federal Reserve, sign the petition and write or call your local congressman. Voter action has already led to a partial one-time audit that recently passed the Senate, which is a good first step. But we need periodic full audits of exactly what the Fed is doing with taxpayer funds. The more the awareness is raised about the Fed, the better chance we will have of eliminating this institution one day and returning the right to print money to the Congress, INTEREST FREE!
3. Get out of debt and live within your means. We’ve had it good for a very long time and have been able to live beyond our means due to the dollar’s status as world reserve currency and easy credit. Those days are coming to an end, so you should do everything within your means to get our of debt while interest rates are still low. They will need to shoot dramatically higher one day, and you don’t want to have an adjustable rate loan of any type when they do. Establish your freedom from the banks and deprive them of their revenue (interest on your debt).
4. Invest in precious metals. The government’s most likely response to the debt issue and slowing economy is going to be to print money on a scale the world has never seen before. This will undoubtedly lead to hyperinflation, destruction of the U.S. dollar and skyrocketing prices for gold and silver, real money. In addition, the banks and their government bed buddies hate gold because it is out of their control. They can’t print gold or silver out of thin air and it is a threat to their fiat currency system and their very power structure. You should consider owning physical gold and silver and if you are enjoying the leveraged gains provided by mining stocks, make sure to occasionally convert those paper profits into more physical metal stored outside of the banking system.
5. Lastly, continue to learn and share this information with as many people as possible. We can take our country back and end debt enslavement, but we have to move beyond the two-party system and stop bickering over marginal issues. Both parties are completely corrupt and in the pockets of the banksters and megacorporations. None of this will change until we eliminate the Fed and eliminate money from our political system. The mainstream media is not going to tell everyone this, because they are owned and funded by the banksters and elites. The information must spread via the Internet at a grassroots level.

Jason Hamlin
Gold Stock Bull

by Tyler Durden

By Mike Hewitt

“No legal tender law is ever needed to make men take good money; its only use is to make them take bad money.” (Stephen T. Byington)

The U.S. dollar has changed from being a paper certificate for a tangible asset to a fiat currency – a paper note declared legal tender. By looking at the history of American paper money one can clearly see the distinction.

The following image shows two one-dollar bills from different years (click to enlarge).

At a glance, the two bills appear similar, but look closely.

The wording on the first bill, a 1957 Silver Certificate, reads:

THIS CERTIFIES THAT THERE IS ON DEPOSIT IN THE TREASURY OF THE UNITED STATES OF AMERICA ONE DOLLAR IN SILVER PAYABLE TO THE BEARER ON DEMAND

This statement is completely missing on the second bill, a 2003 Federal Reserve Note.

The U.S. dollar is defined by the 1792 Coinage Act as being equivalent to 371.25 grains of pure silver. One troy ounce is equal to 480 troy grains. The market value for this amount of silver today is US$13.6125. So while they both read as being ONE DOLLAR, the second bill represents a devaluation of 93% in real terms from the 1957 bill!

These Silver Certificates began to disappear from circulation during the 1940s and 1950s because they were immediately shredded once redeemed for silver due to a diminishing store of silver bullion in the treasury vaults. Silver Certificates were officially abolished by Congress on June 4, 1963 and all redemption in silver ceased on June 24, 1968.

Up until the late-1920s, higher denominations of issued U.S. currency were gold certificates.

The bearer could redeem their dollars for “twenty-five and eight-tenths grains of gold nine-tenths fine,” as per the Gold Standard Act of 1900.

Constitutional Legality
There is some question as to the constitutional legality of the Federal Reserve Notes we use today.

“No state shall…make anything but gold and silver coin a tender in payment of debts.” (U.S. Constitution, Article I, Section 10)

The justification is done through a loophole whereby it is the Federal Reserve that produces the currency, not the individual States.1 The changing of the dollar from being a silver certificate to a Federal Reserve Note has enabled the production of additional money, that is, in the words of former Federal Reserve Chairman Alan Greenspan, without limit.2

Inflating the money supply causes a transfer of wealth from existing holders of money to the first recipients of the newly created money through the process of devaluation. It is, in essence, a form of theft.

“…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” (Governor Ben S. Bernanke, Deflation: Making Sure “It” Doesn’t Happen Here)

What we today regard as U.S. legal tender notes are not legitimate dollar bills. There is no longer any paper currency or fixed concept of value known as a “dollar bill”. We carry and transact business with Federal Reserve Notes, and they merely represent the concept of a dollar bill.

Notes
1 The Federal Reserve was established through the Federal Reserve Act signed into law by President Woodrow Wilson a few hours after being passed by the Senate two days before Christmas on December 23, 1913.

2 “And in the case of a central bank of a fiat currency regime, such reserves can be created without limit.” Taken from a speech given by Alan Greenspan before the World Bank Conference on April 29, 1999.

About The Author

Mike Hewitt is the editor of DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies. His website also provides a no-cost market data feed service with up-to-date quotes on currency exchange rates, commodity prices and major indices. Mike can be emailed at mikehewitt@hotmail.com.

Original Article Source:  http://dollardaze.org/blog/?post_id=00748

By Nick Barisheff
Sep 29 2009 2:40PM

http://www.bmginc.ca

“I’m not so much interested in the return on my money
as I am the return of my capital.” – Will Rogers

In this extraordinary environment, preserving your personal wealth becomes priority one. Before you make another major financial decision, it is imperative to understand the big picture by recognizing and understanding three critical issues. First, we are in a secular bear market for financial assets (stocks and bonds). Second, the consequences of the global bailouts will likely be highly inflationary. Third, we are at a pivotal point in the long-term investment cycle. Let’s examine each of these three keys in more detail.

KEY 1: WE HAVE ENTERED A SECULAR BEAR MARKET

In a secular (long-term) bear market, stocks plunge in value, single digit price/earnings ratios become the norm, and they can stay that way for decades. The secular bear we are experiencing now actually began when the stock markets crashed in 2000-2001, but few investors noticed because in 2003 the markets were artificially propped up by massive amounts of easy money from the US Federal Reserve under Chairman Alan Greenspan. This was not a new monetary policy. Greenspan’s response to every financial “crisis” he faced starting with the stock market crash of 1987 all the way through to and past 9/11 was to pour money into the system. The system was never allowed to self- correct, allowing a variety of asset bubbles to form.

During a secular bear market such as this one, stocks habitually move down or sideways. But there are occasional and sometimes violent bear market rallies to the upside that suck in naïve investors hopeful of a quick market turnaround. The most recent example is the spring/ summer 2009 rally in which the S&P TSX, the Dow and the S&P 500 has risen between 48 and 56 percent from their March lows. Since we are just in the early to middle stages of this secular bear market for stocks, investors still have time to rebalance their portfolios into negatively correlated assets. That means selling stocks and bonds (which will decline when interest rates rise) and buying an asset class that will thrive in this uncertain market: precious metals

Cash may seem to be a safe haven but it won’t protect against rising inflation. Bonds did well in 2008 because interest rates were slashed to zero. But rates have nowhere to go but up, which means adding or keeping bonds in your portfolio is likely to produce a negative return. It is important to note that bonds no longer provide true diversification protection because stocks and bonds have become positively correlated, meaning they generally move in the same direction.

Buy and Hold Doesn’t Work In A Secular Bear Market

Following traditional bull market mantras such as ‘Buy-and-Hold’ and ‘Stay the Course’ is a recipe for disaster in a secular bear market. Because secular trends last for years, they also take years to break. The most recent examples are the1966-1982 bear market in equities which, on an inflation-adjusted basis, investors lost nearly two thirds of their value during this period. As Warren Buffett points out “During these 17 years, the stock market went exactly nowhere.”

During this current bear market, the DOW has been negative over the past ten years, the MSCI World Index is only marginally positive, yet precious metals have soared over 200 percent (Figure 1). If inflation is taken into account the stock indices would be in significant negative territory, while volatility has been extreme: many of the stocks that formed the DOW in 1999 are no longer even in existence. One more fact: if you are counting on stock dividends to help you get through this downturn, consider this: at the time of writing, companies are cutting dividends at the fastest and deepest pace in at least 50 years.

KEY 2: MASSIVE BAILOUTS WILL TRIGGER MASSIVE INFLATION

As Merrill Lynch economist David Rosenberg wryly points out, “the new growth engine for the economy is government spending.” We are in the early stages of a global government spending spree of unprecedented proportions which, coupled with zero percent interest and extraordinary money supply growth, will be hugely inflationary. Financial assets will continue to lose purchasing power in this kind of environment, but gold and precious metals will hold theirs because they are a proven hedge against an investor’s two worst enemies — inflation and economic turmoil.

In recent years, the US money supply has been growing at an alarming rate. In 2008, despite a slowdown in lending and credit, money supply still grew dramatically with M3 (the broadest measure of money supply) increasing at about 11 percent, as Figure 2 shows. In 2009 the money supply is still growing at approximately 9 percent on an annualized basis. Over the long term, M3 increases have been the best leading indicators of future increases in the price of goods and services.

Most people think of inflation as a rise in the price of goods and services but in actuality price rises are the effect, not the cause, of inflation. As famed economist Milton Friedman pointed out many years ago, “inflation is always and everywhere the result of an increase in the money supply”.

Precious metals are the only currency to own when central bank printing presses are debasing global currencies at unprecedented rates. Because they are a proven store of value, precious metals are likely to be the only asset class that will preserve the purchasing power of your savings as we enter into a prolonged period of ‘–flation’: deflation, stagflation or inflation (one of the latter two being much more likely).

KEY 3: RIDE THE INVESTMENT CYCLE

A buy and hold strategy might work if it weren’t for the existence of cycles that drive bull and bear markets. A good way to understand the investment cycle is to look at what is called the Dow:Gold ratio. The Dow:Gold ratio (Figure 3) calculates the number of ounces of physical gold bullion it would take to ‘purchase’ one share of the Dow Jones during any given time period. When the ratio rises, as it did in the 1920s, 1960s and 1990s, it tells us that portfolios should be overweight stocks. When the ratio slumps, as it did in the 1970s and today, it tells us that portfolios should be overweight precious metals bullion.

The last three major stock market bubbles ended with the Dow:Gold ratio above 18:1, while the last two major bear markets (1932 and 1980) ended with the ratio near 1:1 At the height of the equities bull market in 1999, the Dow:Gold ratio peaked at over 40:1. But now the current ratio is below 10:1 and falling. It is certainly not too late to increase your allocation to gold and precious metals.

Precious metals preserve wealth

Precious metals have successfully preserved wealth for thousands of years because, unlike stocks and bonds and paper currencies, they are not someone else’s promise of performance and they are not someone else’s liability. Massive credit expansion has put US debt at over $11 trillion, but if the $60 trillion in unfunded pension liabilities and Medicare obligations that the US owes its citizens, actual debt is approaching a staggering 500 percent of GDP.

America’s spiralling debt crisis is leading many experts to consider the previously unthinkable: that the US might become the next Argentina, which famously defaulted on its debt ten years ago. To learn more about the debt crisis, visit www.ChrisMartenson.com. Dr. Martenson has created a superbly researched video called the “Crash Course” which explains in layman’s terms how massive debt is destroying investors’ wealth.

Precious metals are a safe haven

In 2008, stocks lost 30-70 percent of their value, while gold increased about 5 percent in US dollars. But equally significant, in a year of record-setting volatility, gold’s volatility was reassuringly low. At its lowest point, gold was only down 14 percent and at its highest it was up 21 percent. Both Goldman Sachs and UBS see the price of gold rising, and UBS expects investment demand for gold to pull the price of silver and platinum up along with it. Citigroup is calling for gold to rise above $2,000.

Precious metals protect against depreciating dollars

Since gold and precious metals are priced and traded in US dollars, they surge in value when the US dollar declines. As trillions in new money is printed, the dollar and other currencies will fall precipitously relative to gold. In an environment where the dollar is already weak and other currencies are weaker, investors seeking to preserve and grow their wealth must understand the impact of declining currencies on their portfolios.

Figure 4 shows the Canadian and US dollars have lost approximately 84 percent of their purchasing power since 1970. The world’s other currencies have fared no better. Not coincidentally, 1971 was the year the link to the gold standard was cut. Only gold, along with its two precious metals brethren – silver and platinum – will hold their value in periods of severe deflation and inflation.

Physical bullion versus proxies

Few investors are aware of all the precious metals investment options available to them. Some precious metals investments such as futures contracts and options are better suited for speculation and a higher tolerance for risk. But certificates, pooled accounts, ETFs and mining stocks also have higher risk. Only physical, bullion stored on a fully allocated, insured basis can guarantee peace of mind because it gives the investor exclusive title to the safest and lowest risk precious metals investment of all.

For absolute security, physical bullion should always be stored in allocated and insured form. If not, investors take the risk that their bullion may be lent out without their knowledge or consent or may not be there at all. Today, buying and storing physical, allocated bullion has never been simpler. You can privately and securely purchase bars of gold, silver and platinum in large bar sizes and have them insured and stored for you at a registered LBMA vault without ever breaking the Chain of Integrity. Visit www.bmgbullionbars.com to learn more or read our BMG Special Reports on how to invest in precious metals at: www.investinpreciousmetals.ca and www.goldmyths.com

It’s time to preserve your portfolio’s purchasing power

A minimum 10 percent allocation in precious metals is considered adequate in a bull market, but a much larger allocation of 20 percent or more is suggested for protection in a secular bear market. If you have not already done so, now is the time to rethink your investment strategy and preserve your hard-earned wealth. Physical bullion will keep its value regardless of whether the economy is headed for inflation, deflation or hyperinflation.

For the first time in history, the central banks have an unlimited ability to print as much money as they need. Precious metals are the only currency that will survive intact in this environment, because while governments can print infinite amounts of money, they cannot “print” more precious metals. More and more investors and institutions are turning to precious metals, because this secular bear market is expected to last for many years, eating away at investors’ hopes and dreams and portfolios along the way. Don’t let your portfolio be one of them. Now is the time to make an investment in your future, because the future is precious metals bullion

Nick Barisheff
President, Bullion Management Group Inc.
September, 2009

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Nick Barisheff is President and CEO of Bullion Management Group Inc., a bullion investment company that provides investors with a cost-effective, convenient way to purchase and store physical bullion. Widely recognized in North America as a bullion expert, Barisheff is an author, speaker and financial commentator on bullion and current market trends. For more information on Bullion Management Group Inc., BMG BullionFund and BMG BullionBars visit: www.bmginc.ca.

A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets.

Author: Lawrence Williams

We are indebted again to Paul Mylchreest’s  Thunder Road Report  for news that will bring big smiles to gold and silver investors everywhere.  Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder.  If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!

The report notes that China’s Central Television, the main state-owned television company, has run a news programme letting the public know how easy it is to buy precious metals as an investment.  On silver investment the announcer is quoted as saying ” China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in.”

What appears to have happened in China is a total relaxation of strictures on holding precious metals by the individual with the government pushing gold and silver as an investment option, seemingly at every opportunity.  This is a far cry from the situation only a few years ago where the distribution of gold and silver was strictly controlled.  Now, the Thunder Road Report notes that every bank will sell gold and silver bullion bars in four different sizes to individuals and gold related investments are said to be soaring in popularity.

Around a year ago, Leyshon Resources managing director, Paul Atherley, in an investor presentation in London – and no doubt delivered elsewhere in the world too – commented that some employees at the company’s gold mining project in northern China would, on pay day, go to the local bank and buy a small gold bar as an investment and wealth protector.  To an extent we put this down at the time to mining company hype – but this seems to be exactly the same phenomenon noted by Thunder Road.  The Chinese are being converted from being the lowest per capita gold consumers in the world to a nation of small precious metals investors.  Now, by next year, Chinese consumption of gold is likely to exceed that of India, which has been for years the world’s biggest gold market.  And one suspects that the potential for gold purchasing by individuals is only in its earliest stages.  As more and more Chinese move into the cities and individual wealth grows, this trend is only likely to accelerate.

Paul ends the piece on Chinese gold and silver potential with the following comment: “Simply put, the Chinese government is trying to trigger a national gold craze…and it’s working. The Chinese public now has gold trading platforms on steroids…. …Also, for the first time in history, Chinese investors can even trade gold abroad (in London) with the swipe of a ‘Lucky Gold’ card. I can’t even get Bank of America to open a foreign currency account.”

This may be an overstatement of the case from a precious metals bull – or it may not!  Certainly if China is indeed pushing the public to buy gold then there may well be a hidden agenda here.  It’s unlikely they are doing it and will suddenly pull the rug out from under millions of investors.  A cynic (or a raging gold bull) would suggest that this will precede a move to switch a good proportion of the country’s reserves into gold which would have a huge effect on the global gold price and could prove disastrous for the dollar.  Maybe it’s not in China’s interests to drive the dollar down too much until it has managed to divest itself of the huge dollar overhang (see the article on Chinese Sovereign Wealth Funds we published yesterday – Chinese sovereign wealth fund dumping dollars for strategic investments like gold ).  The country may well already be, of course, surreptitiously building its gold reserves without reporting the build-up.

If the Chinese are indeed beginning to buy gold and silver as the quoted report suggests then this has to be a strong signal that prices are going to rise, and perhaps rise dramatically, in the relatively near future.  We await comment from other China watchers for confirmation of the gold and silver buying spree, but with global gold production at best flat and probably in decline, even a small increase in Chinese buying could have a substantial impact on gold and silver prices.

Silver Dollar Coin Values

www.dailyreckoning.com

I try not to think about silver, because when I do, my head ends up whirling around at the sheer compelling nature of the fundamentals, and I always come to the conclusions that whirling makes me dizzy and that I need to buy more silver right away because silver is going to start exploding in price over the next few years, it could happen soon enough to do me some good, especially considering the sorry state of all alternative investments right now and the sorry state of just about everything right now, and by the fact that I am slashing the kids’ allowances to zero, freeing up some of the cash I will need!

But sometimes something comes along that makes me think about silver, such as David Morgan of the silver-investor.com site reporting that “during the past ten years, silver’s use in industry has gone from roughly 35% of the entire annual production in silver, to greater than 50%. Not only that, but it is the fastest growing area of the silver market.”

So how much silver was mined? Well, the commoditynewscenter.com notes that “According to the US Geological Survey, about 672m ounces of silver was mined in 2008. And with an average silver price of $14.94 per ounce, if all mined silver was sold at spot, the entire supply chain would generate revenues of only about $10 billion.”

It is statistics like these, coupled with the dismal fact of the virtual elimination of above-ground stocks of silver as the myriads of electronic devices produced over the decades consumed it all, that makes me look at the world with suspicious distrust, my eyes narrowed to slits and my hand inching under my jacket to the shoulder holster in case I have to blast my way out as I realize – to my dismay – that the creatures of this planet are so stupid that they can look at this silver thing, and yet not start buying silver right away! Weird! More than weird!

Even when I politely yell at them, “Hey! You are Really, Really Stupid (RRS) if you are not buying silver, and I hope your children are not as stupid as you, although they are every bit as ugly as you, ya morons!” they still don’t buy silver! Again, weird!

Addison Wiggin of Agora Financial’s 5 Minute Forecast does not actually come out and say, “It’s weird!” or that I am, for once, making sense or how he can’t understand why everyone hates me, but he does say that “there are only 22 pure silver mines around the world. For 15 years straight, they’ve fallen short of meeting total silver demand.” Wow!

In fact, “in the last two years alone, they were off by nearly 76 million ounces”!

And since this is after decades of dis-hoarding of strategic stockpiles, the result is that “Today, most of the U.S. silver stockpile is gone,” and whereas “the world once had about 2.2 billion ounces of silver above ground,” now there are “only about 300 million ounces. In other words, total world silver supply has plummeted by over 86% just in the last few years…while silver demand has gone UP!”

I know you won’t listen to me, since you never have, and all I ever hear is how you are sick of hearing me tell you to buy silver and gold, for one reason, protection against the inexorable predations of a ravenous, sick government, and secondly to make money with silver since the supply/demand imbalance is (as we professional economists term it) So Preposterously Out Of Whack (SPOOW), and you are always asking, “If you’re so smart, how come you are just a lonely, pathetic little man who locks himself in the closet under the stairs because he is so scared of everything?”

Well, I am tired of screaming my lungs out in rebuttal, so maybe you will listen to Addison Wiggin, who is a bigshot at Agora Publishing and has his own newsletter, whose own statistics scream, even if he doesn’t, “Whee! This investing stuff is easy!”

The MOGAMBO GURU, for The Daily Reckoning
by Richard Daughty

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Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning , and other fine publications.

BUY GOLD & SILVER COINS

The American Eagle Silver Dollar, first released November 24, 1986, is the official Silver Bullion Coin of the USA. The coin is ‘struck’ in the 1 troy ounce denomination and contains one troy ounce of pure silver (99.9%). Its nominal face value is one US dollar.Since release, the American Eagle coin has risen in popularity as a collectible and for investment purposes. The coin’s design is considered by many as outstandingly beautiful. The obverse (front) face of the coin features Adolph A. Weinman’s Walking Liberty motif. The reverse face features the heraldic eagle designed by John Mercanti.

As an investment item, the American Silver Eagle is approved in the United States for funding Individual Retirement Account investments.

Asture financial advisors would offer the recommendation to allocate a percentage of one’s cash resources into the presious bullion and coin asset group. Especially at this time of global market uncertainity. This advice is considered a prudent strategy. By adopting a ‘buy n hold’ mindframe, the long-terms benefits will be welcomed.

In short, the pure bullion and coin asset class acts as ‘stored value’ investment. For example, the valuse of fiat currencies will fluctuate over time, however, the volatility in the precious metal market is less apparent over time.

When the time is right to begin your incremental acquisition of items within the pure bullion and coin asset group, then the internet is an ideal location for search and buy. There are many online platforms for buying and for that matter selling gold and silver bullion and coins. This can be both fun and financial rewarding.

Gold Silver Coin Auctions

by Howard Katz

You have probably been taught that the responsible way to handle your economic affairs was to work hard, be thrifty and invest safely. This is what the old timers did, and it worked for them. When they reached 65, they were able to retire

However, the old timers lived in a country on the gold standard. They went to work at age 16, saved 15% of their income each year and put it in the local savings bank at 5% interest per year.  Let us do a little 8th grade math.

Assume an average wage of 30 oz. of gold per year. Saving 15% of that means saving 4½ oz. per year.  At the end of a 49-year working lifetime, you have saved 220½ oz. of gold.

Now listen closely because what happens next is so astonishing that it was called a miracle: the miracle of compound interest. When you lend money at interest, in the first year you get the agreed upon rate. If you lend $100 at 5%, you get $5.00.  It is in the second year, that the miracle starts. In the second year, you don’t merely get another $5.00.  In the second year, you are not lending $100; rather you are lending $105, and at 5% this produces an interest of $5.25.; so at the end of the 2nd year you have $110.25.  This is interesting.  Not only is your capital growing; it is growing at an increasing rate.

Now to calculate what 5% interest does to your capital over a 49-year working life span is a long, difficult problem in 8th grade math. But I was a bad boy one day and had to stay after school, and so I calculated what 5% interest does to capital over a 49-year period. The answer, to cut to the point, is that it multiplies it by 4.25.  So, the man who saves 220½ oz. of gold will, after 49 years at interest at 5%, have 220.5 x 4.25 = 937 oz. of gold.  That is, you saved 220½, but you have 937. This so impressed the people of the 19th century that they called it the miracle of compound interest.

So here you are at age 65 with 937 ounces of gold in the savings bank.  You can stop working, continue to draw interest on your capital, and you will receive 5% x 937 oz. = just shy of 48 oz. of gold per year.  In other words, you can stop working and receive 50% greater salary than you did when you worked.

This was a wonderful system.  It no longer exists, but it is very important if you want to know what to do with your wealth today and how to survive in the modern economic climate.  To read the full article, click here…

Silver Dollar Coin Values

Search through eBay style auctions on silver coins…also gold, rare, ancient coins as well.

http://silverdollarcoinvalues.com/silver-dollar-coins/buy-silver-coins.html/

BUY SILVER & GOLD COINS

by David Morgan

Last week I updated our readers about a video shot at the Orlando Money Show. This week I have two videos where we discuss the ups and downs of the silver market and how silver differs from gold as an investment.

Gold gets most of the press and silver always seems to be in second place, and it will probably stay that way until we get to the blow-off phase of this precious metals bull market. During the panic buying phase or mania that accompany the blow-off phase, gold will be outside the price range of many people. Anyone seeking any protection from the destruction of the U.S. dollar will buy whatever they can, and that is silver.

Silver is far more volatile than gold but, in my studied view, has far more potential than gold.  As I see it, both metals should be owned, although silver can give you one heck of a ride, as most silver investors are well aware.  We also discuss new applications for silver in laptop computers and in the health industry.

Later we discuss the gold market and how gold is holding up better than other asset classes and actually was making new highs in some currencies, although it did fall back, in U.S. dollar terms. This was just a few months ago, when a huge demand for U.S. dollars surfaced as a result of the credit crisis.

As the host points out, eventually the chickens will come home to roost, and with all the money flooding the system it is only a question of time before this “new” money hits the system and manifests into more inflation.

My view is a bit reserved and those who follow my work carefully know I am actually looking beyond the inflation/deflation question to the question of a currency destruction.

However, that is getting a bit ahead of the story. For the time being, you can watch this video and learn why it might take a bit longer to see all this bailout money boost the gold price to the next level.

I want to be cautious here, because both of these metals can take off to the upside at any point, and making a short-term call is difficult at best. Longer term, most of the gold community are not in agreement with the policies set forth by the major nation states of the world and see the metals are going far higher.

It is an honor to be.

Sincerely,

David Morgan

www.silver-investor.com
March 20, 2009

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Mr. Morgan has followed the silver market daily for more than thirty years. Much of his Web site, www.silver-investor.com, is devoted to education about the precious metals. To receive full access to The Morgan Report click the hyperlink.

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The “US Dollar” is steadily losing it’s worth!
PROTECT yourself, and YOUR family
by Investing in SILVER, Today!

==>  http://www.thetruthaboutsilver.com

There has never been a MORE IMPORTANT time for YOU, to start investing in silver, for YOUR future!

http://www.thetruthaboutsilver.com

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