10 Reasons Why Gold Is The Gut Reaction And Why Silver Is The Smart Decision
AUGUST 09, 2011
AUGUST 09, 2011
We are at the beginning of a major shift out of paper assets into real assets. Those that are starting to come to this revelation have no real understanding what they are doing when they are buying gold. Sure they might get that it is rare and might remember their grandfather saying buy to gold, but they have not gone through the educational process necessary to truly grasp what they are doing. When I wanted to get out of paper assets, I bought gold as a gut reaction. The more I learned about silver, the more I realized that silver was the smart decision.
When I first started my awakening process in March of 2005, I studied credit cycles and finally understood that the Federal Reserve is a privately and foreign owned bank. I wanted to get my wealth out of their casino. In fact, I recently warned paper investors that it is insanity to be betting in the paper casino, because the entire system is coming down. (Who Cares About Your Bet, If The Casino Is Demolished?!) Now that people are starting to see this insanity, they want out. So where do people who have trusted the paper market first go when they have their awakening? Gold. Gold is the largest precious metals market in the world and has the most advertising behind it. People have seen it in movies as pirate treasure and maybe heard it was confiscated may years ago. I think gold so impressive to hold and feel, it is hard not to make it your first purchase. In short, gold is the gut reaction for most paper investors who want out of the casino. I think this is the reason why we see so much activity in gold versus silver right now.
The more I learned about silver, the more I saw that it was the only investment for me and my family. I am more bullish now in 2011, than I was when I bet the house on silver in 2005. When you truly understand the fundamentals behind silver, you will see that it is simply the best investment out there. I challenge anyone to find me a better investment. I love a challenge.
First and foremost the reason for investment into silver is that it is a physical tangible asset. When I say invest in silver, I DO NOT mean anything else but the real stuff in your hand. If you don’t hold it, you don’t own it. Stay away from SLV, unallocated bullion accounts, mining shares, etc. stick to the physical. I would hate for you to be right on silver and wrong on the form of silver.
We are entering a generational shift out of paper assets into real tangible assets. As I have stated many times in the past, the dollar is going to collapse and it basis for the entire world economy. It is a mathematical certainty. This dollar collapse will be the single largest event in human history and will dramatically touch every human being on earth and will leave a scar on generations to come. Yes, it is going to be that big.
When the mathematically inevitable collapse of the dollar happens, all paper assets will be destroyed. This goes for Dollars, Yen, Euro, CDs, Munis, T-Bills, Money Markets, Insurance Policies, Pensions, Privately Owned Businesses, Structured Settlements, Social Security, Dividends, 401ks, IRAs, Stocks, Options, Bonds and even Real Estate. Without a functioning currency and the uncertainty it brings, credit grinds to a halt. Payments grind to a halt. Markets grind to a halt. The world economy grinds to a halt. People panic. This ALWAYS leads to war.
This naturally leads investors to tangible assets like commodities. Commodities are real things we use in our everyday life like pork, cotton, corn, oil and steel. The problem with most commodities is storage. I know for a fact that the two best assets to be in in terms of real inflation adjusted returns will be food and fuel. They are the most essential to humanity and the hardest to live without. I strongly recommend people stocking up on preparations before they buy silver. You will need at the very least 3 months supply of food per person as a buffer for the massive social upheaval we are going to go through with the collapse of the dollar. The problem with investing in most food and fuel is storage issues. Most food and fuel deteriorates and becomes worthless. Also storage can be prohibitive especially if we are talking about some big dollars. I don’t know about you, but I don’t have a grain silo or storage tanks.
In extreme conditions those that invest in food and fuel, put their life at risk. People’s violent response to those moneyed interests that tried to speculate with people’s food during times of crisis is something to consider. In 1565 one of Antwerp’s richest men, Pauwels van Dale, bought large amounts of grain with hopes of driving up the prices. When the starving people found out about the stash, they rioted all over the city. Speculators and the rich were targeted with violence for their arrogance and greed.
Unless you are a farmer or oil baron this usually rules out many commodities for the average investor. This brings us to metals because they don’t deteriorate. For most metals, storage again is a big issue. $8,000 will buy you a ton of copper but just over 4 ounces of gold. This is why precious metals are so sought after, because of their rarity and the ability to store so much wealth in a small space.
One of the biggest reasons why people invest in precious metals is that there is no counter party risk. Its value is derived from its intrinsic value of rarity and potential uses. With precious metals you do not have to worry about someone paying a dividend or earnings in a depression or a currency collapse. In fact the worse things get in the economy, the more people will escape to precious metals and drive up its price.
Once you see that precious metals are the place to be, then you need to choose between the big 4 precious metals; Gold, Silver, Platinum and Palladium. Platinum and Palladium have rarity and industrial use going for them, but they have not ever been used as money in history. With a currency collapse, I want something that will have the most demand to drive up the price the most. I want my metal to have industrial, investment and monetary demand. (Read the 3 Demands Of Silver.)
This leaves us with gold and silver as the only two rational choices for investment in the face of a mathematically inevitable world-wide currency collapse. So let us go through the competitive advantages of silver over gold .
1) Silver the second most versatile commodity, second only to oil. With its growing technological and medical uses, its demand is vital to any recovery we will see. Silver’s unique anti-microbial, reflective and conductive qualities make it a vital element in many high ticket projects. Since it is so vital and used in such small quantities, its price is inelastic. If silver goes to a $1,000 an ounce and Apple Computer needs a 1/10 of an ounce to make their $2,000 computer work at the highest quality, they will simply raise the price $100 to make up the difference.
2) Silver is cheap enough for the common man to buy. With gold at $1755 an ounce it is not really conceivable the average American, much less most people in the world, will ever have enough money to buy one ounce of gold. People are struggling to make mortgage payments, much less buy an ounce of gold. With silver at $38 dollars an ounce, a husband could buy a couple of coins without consulting the wife. If he blew $1,755 on one ounce of gold, he might have some explaining to do. Since silver is relatively cheap, the higher the price of gold goes, the more demand will naturally flow into silver.
3) Gold is treasured, silver is thrown away. Since the dawn of man, gold has been treasured. In more recent times, silver has been trashed as an industrial commodity and not valued as a precious metal. With the rise of technology, silver has been literally thrown away in such small quantities that is may never be recovered. In fact, the USGSsaid that if this current trend continues, silver will be the first element to become extinct on the periodic table.
4) There are no large stock piles of silver left. Over the past decades we have been consuming more silver every year than we mine. This is only possible because we used up all of humanity’s previously mined silver. In 1950, it was estimated that there was 10 billion ounces in major stockpiles, today there are none left. So even though gold is 10 times more rare than silver when mined out of the earth, the fact that gold has been treasured and silver has been trashed, makes the silver that is left much more rare than the 10 to 1 ratio that naturally occurs.
5) The gold to silver ratio is at 1:45. It takes approximately 45 ounces of silver to buy one ounce of gold. If throughout all of history silver has been mined a gold to silver ratio 1:10, how much longer can a 1:45 ratio exist? If silver has been trashed for decades and gold treasured, how much longer can the 1:45 ratio exist? If the amount of dollars invested in gold and silver at Sprott Asset management and GoldMoney is 1:1, how much longer can the 1:45 ratio exist? At some point the market is going to recognize the incredible opportunity. When it does, it will most likely overshoot and could make silver more valuable than gold. So if you really want gold, buy silver. You can buy 45 ounces of silver now and if the ratio falls to a 1:1 ratio you can trade 45 ounces of silver for 45 ounces of gold. (Read the 3 Big Charts I Watch For Silver.)
6) Silver has the largest and most persistent short position in any commodity, ever. The only reason why the 1:45 ration exists is because the banksters sell paper silver into the paper markets to suppress the price of silver to give strength to the dollar and the quadrillion dollar paper empire they rule. Last May, when they crashed the silver market, they sold something like 8 billion ounces of paper silver into the market in 5 days. There is only about 1 billion ounces of silver mined a year globally. This massive naked short will unwind the day that they cannot deliver on the silver they promised. Crash JP Morgan; Buy Silver. (Read Blythe Master’s Rides The Silver Rocket.)
7) The banksters are running out of silver and time.The COMEX registered inventory now stands at 27 million ounces. I knew when the May smack down came that it was all BS. Logic would dictate that if the price of silver dropped that significantly there must be more physical silver in their vaults. When the inventory numbers came out, there was actually less silver. Not only was more silver delivered to buyers, sellers cancelledtheir warrants and shrunk the inventory from the supply side like OPEC does. (Read the11 Mentality Shifts Of Silver Investors.) When this massive fraud is discovered, there will be panic buying as the sharks smell blood in the water.
The silver market is so small. With only 27 million ounces in the COMEX, a little over a billion dollars would completely empty that largest stock pile of silver. Last Wednesday the Treasury added $240 billion dollars to our debt in just one day. If you see that quadrillions in paper assets are going to fail and that most commodities are not suitable for investment and how small the silver market is, it does not take a very large stretch of the imagination to think what will happen when people try to get into this market. Since the gold market is so large, I think that is why we see central banks and major institutions are buying gold. If they dumped a billion into silver, they would explode the market. A billion into gold would hardly make a ripple. I believe this is why we have seen gold react, while silver sits.
9) The majority of gold owners are the banksters. If you look at the largest stockpiles of gold owners it falls mostly on the central banks of the world. The very guys that are destroying the paper markets, are the largest owners of gold. There is no central bank that I know of that even owns an even an ounce of silver. Since silver has been used more times as money throughout history as money than gold, logic would dictate that at some point banks are going to want to own silver.
10) Gold bullion is more reported on than Silver bullion. Gold is reported on twice as much in the media as silver. I would bet if you only looked at major media reporting, Gold is probably reported 100 times more than silver, since silver is almost completely ignored. The only time I have seen silver reported is when we get a major smack down in price and the main stream propagandists strike fear in to their consumer slaves about how scary the silver market is.