Friday, December 2, 2011

Going Silver

I can't begin to tell you how manipulated the silver market is. Margin requirements are so high that all of the small players have been taken out of the futures game.

Here are the things that I think make silver a strong buy.

Position limits go into effect early in the new year. That means that banks cannot short unlimited quantities of silver and drive the price down. Margin requirements are ridiculously high. I can't see them being increased again in the foreseeable future.

China and India are big time silver and gold buyers. Eric Sprott's fund is looking for 1.5 billion ounces of physical silver.

I see industrial uses as pretty much static. However, I think some silver miners' might take a hint (Eric Sprott) and start storing mined product rather than exchanging it for paper. That should take more supply out of the mainstream.

I don't like the historical valuation comparisons that say gold and silver trade at a 15-1 ratio. There are a lot of people that love to point to that historical avg. and they are calling for 125-150 dollar silver. However, if position limits are actually enforced...this could get real interesting. I can only see silver moving up.

My number one reason for buying more silver is my steadfast belief that the worlds' politicians and central bankers will destroy us by debt accumulation. They simply lack the spine to let banks fail. This is only going to add more debt and delay the inevitable. There is no way out for them or us. Silver and gold is just insurance.

I don't think you can go wrong with silver at these levels. It has been consolidating. I had been waiting for a pullback (market crash/deflation event) but I am going to just try and add small amounts when I can. Ten and twenty ounces at a time. It's not like you can add a lot of gold at these levels. It takes the better part of 2 grand just to buy an ounce.

So I am going to stick with silver for now. I think the chances of silver blasting past 50 are very good. At these levels, that's like making 40% this year. Try making 40% at the bank or in the stock market this year.

1 comment:

Lisa said...

So, I've been buying all this silver because FG told me to...

BTW, my weiner dog (George, laying in my lap as I type this) appreciates your admiration!

So, in our soon-to-be Mad Max type future, how does this proceed?

No riding into the sunset in that scenario!