Peak Silver

[Mike Mazzone of Palatine]

http://www.conspiracypenpal.com/columns/peak.htm

Peak Silver
by Edgar J. Steele

October 7, 2005

"To the Moon, Alice! To the Moon!"
--- Ralph Kramden, played by Jackie Gleason, to his wife (played by Audrey Meadows) on The Honeymooners.

Audio file of this column: http://www.conspiracypenpal.com/audio/peak16-16.mp3 (2.3 mb, 20 min) streaming mp3

A hot debate today centers upon whether or not we have reached "Peak Oil," that mystical point at which worldwide oil production tops out and then begins its inevitable decline as reserves dwindle, with a corresponding and immediate rise in price.

In economic terms, oil is a commodity for which demand is price inelastic, meaning that the great bulk of demand for it continues unabated in the face of price increases. Regardless of how much gasoline costs, you still have to drive to work. The market value of price-inelastic commodities can rise much faster than you might imagine, once demand outstrips supply. That it now takes a hundred-dollar bill to "tank up" so many cars fuels the argument raging over Peak Oil, of course.

Countering pro-Peak-Oil forces are numerous anecdotal accounts of vast oil fields discovered in remote reaches of the world, with wells dug that simply are capped off, awaiting the future. And, of course, there is debate over just how much oil exists in fields already in production, as illustrated by Saudi Arabia recently announcing that it miscalculated badly in the past and now realizes that its reserves (already the biggest in the world) actually are double what they previously thought.

Oddly enough, there are reports that many depleted oil fields now are regenerating spontaneously, lending credence to the new (circa 1951) theory of Abiotic Oil, upon which Russia has transformed herself from a net user into a major oil producer and exporter, second only to Saudi Arabia. Abiotic Oil theory suggests that oil continually is produced deep within the Earth's crust from strictly non-biological processes.

Abiotic Oil theory shatters the concept of Peak Oil altogether. Scarcely anybody seems to recall that the conventional explanation for the source of oil as being the residue of ancient plants and animals in near-surface sedimentary strata still is just a theory, a theory which increasingly seems unlikely to many petroleum scientists and engineers.

The debate over Peak Oil is instructive for followers of other commodities, particularly silver. While there should be even hotter debates raging over "Peak Silver," none exist. In fact, Google up the term and you likely will find references only to this article.

Regardless, Peak Silver is a concept whose time now has come. There really can no longer be any question as to whether we have reached the point of Peak Silver, save that suggested by silver's current market price. As we shall see, that price is an aberration which inevitably will be swept aside by the tidal force of massive market forces.

While oil may, in fact, be a renewable resource, per Abiotic Oil theory, there can be no question but that whatever silver now exists, including the ever-more-difficult-to-extract ore still in the ground, is all the silver that ever will exist.

What's more, unlike gold, virtually all the silver ever mined has disappeared via usage, while almost all the gold ever mined still exists in usable form, not that anybody really uses gold for anything. In fact, silver today is a much rarer precious metal than is gold.

Go back and read that last sentence again. I'll wait for you right here.....Good. Now go read it again.

Silver's relative scarcity is a vitally-important concept that simply has yet to sink into the minds of almost everybody in the world today. Else, why does silver trade for only $7 and change per ounce, versus nearly $470 per ounce of gold? Stand by, because all that is about to change. First, though, let's make the basic general case for precious metals as an investment.

If used solely as a money substitute, gold (like silver, platinum and palladium) finds its demand extremely sensitive to price changes. In other words, the demand for precious metals as money is price elastic. When the price of precious metals goes up, demand goes down. Ergo, the demand for precious metals must have declined a lot, you might say, because their prices have soared in recent years. Wrong.

Why are today's gold and silver prices half again as high as just a few years ago (many would say gold is almost 100% higher, but they point to a very brief time when it traded at around $260 per ounce)? Because the international value of the dollar has fallen by a third in the same time frame, that's why. Gold and silver haven't gotten more expensive. They are still the same old prices, just dressed in new, inflation-adjusted dollars.

The price increases seen in both gold and silver amply illustrate my book's contention that they are "particularly good means of transporting wealth from one side of an economic meltdown to the other." (Defensive Racism, Ch 12 - Money's End Game: Depression II) The bad news, for those who haven't yet noticed, is that America's economy is in rapid meltdown right now, just as it has been for the past several years. The worse news: The modern meltdown has only just begun and now is showing signs of rapid acceleration, as America's mortgage, bond and stock bubbles, created by the Federal Reserve's (criminally) excessive easy money policies, have begun to burst.

I call what is happening today the "modern" meltdown because today's dollar already is worth something less than 2 cents in 1914 dollars. Prior to 1914, the dollar had been stable, with zero inflation, for well over a century. What happened in 1914? Why, the Federal Reserve System was created, so as to "stabilize the value of the dollar," if you can believe it! Look, I couldn't just make something this ludicrous up. Look it up for yourself if you don't believe me. But, this is both a digression and a topic about which books have been written, perhaps one of the best of which is Eustace Mullins' Secrets of the Federal Reserve. My own book talks about money, precious metals and the Federal Reserve system extensively in its latter chapters, too.

Today's dollar has only one way to go: down. And it is a lot further to the bottom than one might imagine, despite the perspective provided by 1914. As I said on August 15, 2005: "A falling dollar couldn't be a surer bet than it is right this moment, here at the very tippy-top of the fifth and most prodigious bear market rally for the dollar since it started caving three years ago (and subsequently lost 1/3 of its value through the end of 2004)."

Preserving your wealth is more than a good enough reason to convert as many of your assets as possible right now into the form of precious metals, especially the sort you personally hold, such as rare coins and bar and coin bullion. Mining stocks are more volatile, thus possess more upside potential, but also carry significant risk in the event of a complete collapse of the economy.

Also on August 15, I said the following about buying gold and silver: "Back up the truck, boys and girls. Do it now." Since then, leading American and Canadian mining stocks have risen 20%. The spot prices of gold and silver are up about 5% in the same time period.

If my wife would let me, I would sell the ranch, buy gold and silver with the proceeds, then rent for the next two or three years. Women.

That is the basic case for precious metals. Now for Peak Silver. Remember our mantra from above: Silver today is a much rarer precious metal than is gold.

Yes, there still is much more silver in the ground than there is gold - eight times as much. Historically, we have pulled about eight times as much silver from the ground as we have gold, a ratio which has declined only slightly with today's production. Called the "poor man's gold," silver typically has been the least expensive of all the precious metals because it also has been the most plentiful. That was before industry began to use silver in significant quantities, however.

Silver has almost countless modern industrial applications, with both technology and population increases driving demand higher every day. Silver's thermal and electrical conductivity is unparalleled, making it the metal of choice for microcircuitry. Silver also plays a major role in the medical field, due to its natural antibiotic capability. What's more, silver is one of the few metals that does not corrode, making it essential in modern electrical switches of every sort (including your house and your car). And, yes, the photographic industry continues to consume about a quarter of all silver made available. Silver demand is increasing by leaps and bounds. What's little known is that silver demand has outstripped production for years.

During my lifetime (that's "modern times" to you, despite how you might feel about Bogart movies) we have been using silver a great deal faster than we mine it. Why hasn't the price of silver gone up before this (faster than necessary to counter inflation, that is)? Because the huge, above-ground inventories of silver built up prior to my lifetime (pre Bogie) were added to production in order to meet ongoing demand, that's why. Well, guess what? The stored-up silver now is gone. Just now, in fact. That, or those stores will run out within the next few months, depending upon whose figures you believe.

From here on out, we must live on current silver production alone, all while the non-investment demand for silver continues to grow. We either just passed or are about to reach the point of Peak Silver. In other words, never again will above-ground gold be more rare than silver. That's never again...as in NEVER AGAIN.

Nor will people be melting down their necklaces and heirloom cutlery at anything less than several times the current price of silver. The labor component of such trinkets simply is too high when compared to something like gold, which does see a great deal of jewelry turned in for reprocessing whenever its price jumps.

Owing to the huge industrial demand for silver, which simply does not exist for gold except in fashioning bathroom faucets for Arab oil sheiks, Peak Silver will reflect the price-inelastic demand generated by industrial applications.

The gold-to-silver price ratio also has risen well above the historic mean of 40:1 in recent years, suggesting that either gold will decrease in value or silver will increase. By many traditional measures ("bundle of stocks," "suit of clothes," etc.), gold already is grossly undervalued, due to government rigging of the price via the orchestrated sale and purchase of financial derivatives (again, see my book for a discussion of how gold derivatives temporarily can convert even gold into a fiat currency). In Defensive Racism, I go through a lengthy analysis in explaining how I think gold will spike well above $2,000 per ounce (in terms of today's dollars, not tomorrow's Greenspanbacks), then settle into a trading range three to four times higher than today's price.

Before silver is done, however, not only should/will/must it revert to the historic gold/silver mean ratio, suggesting a commensurate price for silver of $62.50 per ounce once gold becomes fairly priced. However, silver's scarcity should cause it to surpass even gold's price. Even if I am dead wrong about any upcoming increase in the price of gold, today's gold price alone, when divided by 40, suggests a "mean-ratio value" for silver of $11.75, which is a tidy 60% rise over today's actual silver price!

I mentioned government rigging, which takes place in both the gold and silver commodity markets through massive (and illegal, I might add) buying and selling of futures contracts through straw-man brokerage houses. Stock market rigging is even more massive, by the way. Consistent with government's refusal to allow us a free market for anything, least of all money and precious metals, the danger of gold confiscation by the US government, as FDR once ordered, is likely before the inevitable massive revaluation of the dollar which must occur following America's impending economic collapse. The estimable Lawrence Patterson, an expert on investing in precious metals by anybody's standard, makes a compelling argument for likely gold confiscation in the August 2005 issue of his excellent monthly magazine, Criminal Politics.

Why does our government rig financial markets? For the money, of course. Your money. Maintaining monetary stability is a lie, because we had perfectly stable money before the Federal Reserve System was handed control of our money supply. The mark of perfectly stable money is zero inflation, as in no inflation whatsoever. People have forgotten that such is possible and now accept 3% inflation as normal, and seem to view what is about to happen as a temporary inconvenience. People have forgotten the lesson of Depression I.

Yes, what is about to happen is so significant that it will cause us to start numbering our economic depressions, just as we do our world wars. Speaking of which, if you think WWII following Depression I was just coincidence, then you probably don't realize that we already have seen the beginnings of WWIII, which truly is a story for another day.

Unlike gold, silver will not be confiscated. There simply is too little of it around and the dentists couldn't handle the workload. Remember that the Hunt brothers very nearly cornered the world silver market a generation ago. Today, the amount of silver available not only is less, due to the massive reserve depletion that has taken place, but the price is lower than before, even in inflation-adjusted terms (government rigging, don't forget). How low is the price of silver? Well, it is well within the power of a great many individuals (each of them, not all together) to purchase every last ounce of silver that exists above ground today.

This point bears repetition: Silver today is a much rarer precious metal than is gold. Recall our discussion above concerning the price inelasticity of the demand for oil. That goes several times over for silver. Per production unit of consumer and industrial goods and equipment, the consumption of silver is exceedingly small, so that industrial-demand-driven prices are very inelastic. In other words, the price of silver could triple and add but, perhaps, a penny (that's a dollar in future Greenspanbacks) to the cost of your next TV set. Even a hundred-fold increase in the price of silver would not affect the purchase price of most industrial and consumer goods by much. Or a thousand-fold increase, for that matter.

"To the Moon, Alice." That's where the price of silver is headed, now that we have hit Peak Silver. To the Moon.

As I said, back up the truck.

New America, an idea whose time has come.

______________________________________________

A few of your recent Emails:

Re: Never Trust a Jew ---

Jack writes to Henry Makow (whose Etherzone article "Edgar Steele's Racism - Why Jewish Bankers Love anti-Semites" prompted my response, "Never Trust a Jew"): "Through your recent essay concerning anti semitism driving Jews into the arms of zionists , I learned of Edgar Steele. I located his site and I have to admit I was uncomfortable with his message at first since I was state educated here in the peoples' republic of Canada. I have since read his book and ordered several copies of it to pass along to friends and associates. The fact that Rense [Jeff Rense, of www.Rense.com] did not run his counter essay to yours has proved his thesis. Thank you for introducing me to his work. I have many friends who are equally grateful as well."
Thanks, Jack. That made my day! I am pleased to report having received a flurry of emails similar in sentiment to yours. I also visited Makow's site and saw that he has deleted the link to my site that he originally had in his article. Fortunately, Google still exists for the curious.

C.M. writes: "In case you haven't seen this - Mr. Farrell of Honest Media Today posted your article 'Never Trust a Jew,' which was posted at http://www.honestmediatoday.com/RecentNews.htm, prefaced by the following editorial remark: 'Since it appears that the Etherzone refuses to allow Steele's response to Makow's writing, I feel it necessary for me to help share Steele's rebuttal.'"
Thanks, C.M. and Mark Farrell.

Charles writes: "I've read your book and always enjoy reading your columns, but your insistence that absolutely all jews are no good doesn't really serve you. ("never trust a jew") I just read an article by Henry Makow on propagandamatrix.com. I believe this guy is sincere and right on target. ps, if all jews are bad news - does that include Jesus and his mom too?"
Many share your general sentiment, but most do recognize that I do not insist "that absolutely all Jews are no good." However, until the average Jew stops giving cover to the Zionist bad guys, I will continue to rail against Jews in general. Besides, it is genetic, you know - even the good ones will have bad kids. Obviously, I do not believe that "Jesus and his mom" were "bad news."

J.C. writes: "Edgar Steele wrote an article titled 'Never Trust a Jew.' The article was posted to Liberty Forum...Moments after the article was posted the overseer of the site appeared and gave Edgar until noon Monday to defend his material or be forever banned from Liberty Forum. That is today. The reason given for this 'Don't Let the Sun Set On You' attitude was 'less we be labeled a hate site.'"
My supporters at Liberty Forum (where, incidentally, I never had posted) gave a spirited defense of my work, which I generally let speak for itself. Better that the forum moderator, who demonstrated a classic fear of Jewish reprisal, should question who the real haters are around here. Even better: Just what does he think "Liberty" means? However, unlike Etherzone, which refused to allow me even to respond to Makow's attack, Liberty Forum thus far has allowed my article to stand as posted, despite the unanswered threat.

Terry writes to Henry Makow: "I read your article attacking Edgar Steele on Rense.com. I like what Edgar has to say, the white race is under attack and it is coming from the zionist neocons that want to rule the world. I'm 56 years old and I remember the 50's and 60's and how much better America was when white people were in control. I grew up in a small town in Ohio, (and still live there) there was no crime that I remember, I felt very safe. That all started to change when JFK was assassinated...I think you mainly do damage control to divert attention away from the 'Jewish Agenda.' America can only be strong when European Americans are in control of America."

Steve writes: "Sorry Edgar, I like ya both..... but I gotta go with Henry on this one. I think he is right on."

Curtis writes: "Makow has always irked me in that he can say many things (because he is Jewish - as you correctly noted) that others can't say and for that reason has developed more credibility than he deserves. He then exploits that asset by exposing half truths and/or relatively benign info that Gentiles can't say, and then seeks to divert our attention away from organized Jewry and onto freemasonry, the Jesuits, etc... If one reads Makow, one can conclude that it's all the fault of nebulous bankers, many of whom, according to Makow, aren't Jewish. So Makow really does nothing to "enlighten" his readers, but instead acts as a disinformation agent provacateur."

Roger writes: "I feel like I'm growing old at an accelerated rate. I feel numb about our national situation, the corrupt politics and the mercenary Jews who have a stranglehold on us. I am so dismayed at the stubborn closed-mindedness of our people that I feel like a whipped prize-fighter, sitting on the floor, against the ropes, puzzled that I don't have the strength to move any more. Remember that scene in Braveheart where Wallace has an enemy subdued and at his mercy, only to discover the man under the visor is his own Scotland king. Wallace just went limp because his mind couldn't handle the contradiction. That's the way I feel. I have close relatives with whom I can't communicate about anything meaningful because they just don't want to hear about that kind of stuff. Our destroyers are unhampered. I think of New Orleans, and the picture that comes to my mind is that a black plague has just been spread across our nation with effects somewhat akin to biological warfare. While our people open their arms to welcome their own destruction! The word "bizarre" is inadequate to describe the mind-boggling insanity of our society today. I live back in the hills of Appalachia, where I milk my cow twice each day and gather eggs from a few chickens. Social Security doesn't go very far, but I like to think I am content. Ironically, while I am not forced to inure myself to the daily hell of modern America, this also permits me to see more objectively the catastrophe being enacted against us. And it is so terribly depressing!"

Morley writes: "How is it possible that Henry Makow PhD, a Jew, can say things like this, apparently with impunity, while people like you have to be more careful (and are marginalized) and people like Ernst Zundel go to jail when they say the same things? It's ironic, n'est pas?"
No, it is just the way it is in a world now run largely by Jews. Jews threatened the lives of my wife, my children and myself, far more than once, simply because I represented somebody they didn't like in a lawsuit (Richard Butler, in the days before I began speaking out) and nobody cared. However, let someone complain about the mess they have made of America and the rest of Western civilization and you would think we had begun feeding Jews into gas ovens here in North Idaho. In his article, Henry Makow makes the same tired, old accusation that Jews have flung at those whom they do not like for literally thousands of years when he calls me a racist and an anti-Semite. Makow reportedly said of my responding article: "Steele just doesn't get it." No, Mr. Makow, it is you who does not get it. You and your fellow travellers, who like to paint anti-Semitism as a disease. As I said to Mark Wiles, the Jewish Defense League thug whose voice can be heard threatening me in the WAV file noted above: Yes, anti-Semitism is a disease - you catch it from Jews.

Re: Ducks, Morons and George Bush ---

Lokey writes: "Your buddy Al could have put it this way: 'If California fell into the ocean, would it be worth telling anybody?'"

Re: The Big Uneasy ---

Jean writes: "No wonder America is the laughingstock of the world and has no respect from anyone. We can't even take care of own, so how can we even begin to expect anyone else to listen to us when we try to tell them how to run their business? We learned nothing from 9-11. Never mind the terrorists, the real enemies are already here anyway, and we are the ones that let them in!"

Re: Escape from New Orleans, Part 5 ---

Joe writes: "Hello, This Katrina thing as well as your "Escape from New Orleans" is played out. I enjoy your articles and love the audio section. I think from your past articles you are capable of much much better then story telling."

Hazel writes: "Loved it, keep 'em coming."

John writes: "They won't be using 'Nukes.' They will be using 'Nutes' or neutron devices that only kill without damaging fixtures or leaving radioactive residue. There are only 48 missing from the commie arsenal."

Snakzrat writes: "Awesome!!"

Ron writes: "You know if you were not such an ass you might be funny. But definitely not informed."

Conrad writes: "Some of what you write is funny and even has an element of truth, but you know it is sorta 'racist!'"
Well, yes, you could say that. But - there is "racist" and then there is "racist." Please read my book and then tell me what you think.

Re: Defensive Racism ---

David writes: "Hi, Edgar. I just read your book, and it's great! I'm going to tell all my friends to buy it..."

Joe writes: "...BTW, I've read Defensive Racism (and passed it on). This should be required reading for the masses. Keep it up!"

Re: It Wasn't Arabs ---

Joe also writes: "Could you possibly provide a reference for this one? 'It wasn't Arabs who formulated American legislation providing pensions to Russian jewish immigrants for doing nothing - it was jews.' I desperately need to win a dispute over this."
Try this: http://www.texemarrs.com/061999/redarmy.htm.

For all who emailed, inquiring about the Stones and Jim Warner because of Hurricane Katrina, Monica writes: "Just to let you know that we are at least online at this address. Jim Warner is alive, he lost his home and the office. We still do not know the extent of the damage as nobody is now again not allowed into St. Bernard Parish. The CDL Report will not cease, we are trying to get back on track as soon as possible, but all of us were affected in the most horrendous ways, so all we ask is some patience. Sincerely, Monica Stone."

Thanks for sharing, folks. Again, I wish I could reproduce every single one. Rest assured that I do read them all.


-ed

Copyright ©2005, Edgar J. Steele

Forward as you wish. Permission is granted to circulate

among private individuals and groups, post on all Internet

sites and publish in full in all not-for-profit publications.

Contact author for all other rights, which are reserved.



On-Line link to this article in HTML format: http://www.conspiracypenpal.com/columns/peak.htm

[Mike Mazzone of Palatine]

Peak silver means that one day silver will be more valuable than gold.

http://www.gold-eagle.com/editorials...ski072303.html

70 APPROACHING FORCES FOR HIGHER SILVER PRICES
Douglas Kanarowski
I am an individual investor that has been following the evolving silver story for the past 19 years. Being curious about how high silver prices might eventually go, I began making a list of the APPROACHING FORCES that will likely contribute to higher prices. To make the list, entries must satisfy two substantial qualifiers: FAIRLY LARGE IN SCOPE and are STILL YET TO COME. I was surprised at length of my final list. The following represents a collection of what others have said over the years and a dose of my own common sense and thinking.

Before I start, one tremendously important fact needs to be established so that you can better assimilate "THE APPROACHING FORCES" information. Drum roll please …. NO ONE ON EARTH KNOWS WHAT THE TRUE PRICE OF SILVER SHOULD BE!! Why is this? Because, since1945, the end of WWII, the U.S. government has been selling-off the world's largest-ever silver stockpile. For the past 57 years, the government has dumped a total of 6 billion ounces of silver onto the world market. (This quantity equates to about 100 million ounces per year. And, as of late 2002, the entire U.S. government stockpile is now officially gone.) My conclusion is that ANY MARKET that has undergone this degree of distortion for this long, has lost all contact with the irrefutable laws of supply and demand that ultimately will determine price.

1. The same PROFESSIONAL DEALERS and INSIDERS that have made so much and done so much structural damage on the downside will surely be positioned to capitalize on the upside. At the very least, their personal accounts will somehow be properly positioned. (For example, as recently as the summer of 2002, these insiders had been short more than 350 million ounces of silver when the entire COMEX warehouse only held about 100 million ounces.) These people are just too big, powerful, smart and well connected to let this stellar opportunity pass them up. Their activities have not simply analogous to holding a lifejacket underwater but rather holding a helium filled balloon underwater. It not only wants to break the surface but also wants to fly to the moon.
2. Because of the ongoing silver supply deficit (every year since 1990), known silver stockpiles are low and are well on their way to zero. Between now and "zero-stockpile day", SOMEONE-SOMEWHERE WILL ATTEMPT TO BUY AS MUCH AS POSSIBLE OF THE REMAINING PHYSICAL STOCK. Wealthy individuals, hedge funds, political entities and un-named countries are all possible candidates. At $5 silver, the 100 million-ounce COMEX stock could be had for $500 million. This "accident waiting to happen" will come unannounced and as a surprise. Why hasn't this already happened? In part because the perpetrators will be unfairly villianized for causing the resulting shortage & price spike.
3. For eons the US GOVERNMENT has been a silver supplier. They have announced that beginning sometime in 2002, they will become a buyer due to exhausted supplies; an effective double whammy for silver price.
4. In a rapidly rising price environment, the process of metal coming to market will SLOW. Why? A DELAYED SHIPMENT will stand an excellent chance of being worth even more.
5. In a free market, the amount of metal coming to market will have to "overshoot" demand to create at least some SURPLUS. Stated another way, the words "silver deficit" will have to be removed from current literature. A permanent silver deficit is economically impossible in a free market.
6. The practice of "just-in-time" or zero inventory techniques will give way to the old STOCKING-UP MENTALITY for all distributors and end users. Why? Survival and price protection. Inventory building will increase demand & price.
7. The historically common practice of stockpiling silver by the big money crowd is not currently in vogue. WORLDWIDE REBUILDING of government STRATEGIC STOCKPILES, central banker VAULTS and Swiss custodial BANK ACCOUNTS will come back into fashion by TPTB.
8. Due to such a long period of low prices there has been a decrease in silver SUBSTITUTION research than would otherwise have the been the case.
9. Since silver cannot be created, it can only originate from 3 sources: ABOVE GROUND SUPPLIES, re-cycled silver, and mine production. Above ground supplies are nearing exhaustion, leaving only two remaining sources. Simple math. 3 minus 1 leaves us with only 2 sources.
10. Silver MINES open and silver mines close. More primary silver mines are CLOSING than opening (usually due to depletion). A report from silver expert David Morgan, showed a loss of 50 million ounces of production in 2001.
11. History reveals that year over year silver production has increased for as far back as the eye can see. A new era will begin in 2002 as YEAR OVER YEAR SILVER PRODUCTION IS PROJECTED TO DECREASE. This production decrease will aggravate the current supply/demand imbalance.
12. Because silver has been priced below its all-in production cost for so long, silver EXPLORATION has practically ceased. The net result is that there are almost no silver projects in the pipeline to activate. Rather than just re-opening shuttered mines to meet demand, the industry will have to start from ground zero exploration.

I have attended a large mining show for several years running. Most exhibitors have multiple gold mining projects in the works but true silver projects are in the extreme minority.
13. Once a discovery is made, a mining project must advance through a series of pre-production steps before a mine is opened. In-fill drilling, feasibility studies, permitting, project financing, infrastructure construction and the like. Because silver has been priced below its production cost for a so long, DEVELOPMENT and ADVANCEMENT phases of silver projects has practically ceased.
14. Because silver has been profitless for so long, when the POS rises and mining companies decide to gear up, one of their 'discoveries' will be A SHORTAGE OF EXPERIENCED WORKERS. Who is left that still has the technical knowledge, experience and gumption to get the job done?
15. Around 75% of mined silver originates from by-product base metal mining. A deepening RECESSION, particularly in manufacturing, will dampen the demand for base metals resulting in decreased overall silver production.
16. Any ANXIETY BASED CRISIS that comes along will boost demand. Stock market, holy war, oil shock, civil unrest, default, currency crisis etc. are possibilities.
17. Higher ENERGY PRICES and OTHER PRODUCTION COSTS are here to stay. The process of mining, smelting, transporting and refining require huge amounts of energy. Higher production costs of any kind necessitate higher commodity costs.
18. Presently, the PAPER COMMODITY PRICE is determining physical silver price. A price jolt will occur when prices begin to be set by physical silver availability.
19. Large quantities of silver have been LEASED into the world market. Leasing is generally only productive in a falling price environment. During this process, silver that is BORROWED (leased) is actually SOLD into the physical market, depressing prices. As falling prices reverse or the supply of lease silver evaporates, this prevailing negative counterforce will nearly evaporate. Leasing is like holding your hand in a fire.
20. In most cases there will be a legal and/or contractual obligation to RETURN LEASED SILVER to the lenders (not paper). This force will add to the demand side of the equation. (Some bankers may have leased material in their safekeeping without the knowledge or approval of the actual owners).
21. Metal LEASE RATES have averaged near historically low levels. Rising lease rates will increase the incentive to return borrowed metal from an ever-shrinking physical pool.
22. A historically, huge PAPER SHORT POSITION has depressed prices. When prices begin to rise in earnest, most short sellers will switch to becoming buyers (some will default). To close out a short position, the short must deliver physical silver or buy out their contracts if so allowed.
23. A percentage of FORWARD SELLING MINERS will repay their metal loans with physical silver thus removing those ounces from the grasp of the marketplace and increasing the shortage in the marketplace.
24. A percentage of UNDERWATER, HEDGED MINERS may slow production, close down, or go bankrupt. Because they will owe so much while being denied the profit from higher prices, they will have little remaining incentive to produce their product.
25. LEGAL attacks and LAWSUITS by a wide range of parties will be launched that will effectively curtail some production. Lawsuits by two or more of the following parties will be commonplace. Auditors, bankers, bullion banks, central bankers, commodity houses, counter parties, depositors, employees, government agencies, hedge funds, individuals, insurance companies, lessees, lessors, management, mining companies, regulators, shareholders, speculators, third parties, and users.
26. If and when the STRONG DOLLAR falls as is expected, it will take more dollars to buy the equivalent amount of silver.
27. When supplies are exhausted and prices skyrocket, GOVERNMENT will be expected to "do something". The usual, counterproductive answer is to interfere and regulate. In economic circles, it is a well-established fact that when anything is regulated, you get less of it. (I would not be surprised if they seized all available supplies and rationed them "according to need" …… could happen with all visible COMEX stocks no matter who the owner is. A similar situation just happened to energy suppliers to Calif.)
28. The RULES that the COMEX and Commodity Futures Trading Commission (CFTC) presently operate by could be described as liberal to the extreme and have contributed to depressed metal prices. More rigid and restrictive RULE CHANGES should be anticipated.
29. In a free market, INFLATIONARY FORCES are unevenly manifest in different economic sectors. One day it's Nevada land prices. The next day it's the price of milk. The long term price of silver has gone nowhere for years which seems to indicate in part that ongoing price inflation has not yet been properly priced into the commodity.
30. When INFLATIONARY FORCES once again sweep the land, SILVER and other PM's will shine as usual. Why? PM's have always been one of the vehicles of choice during inflationary periods.
31. During most market conditions, ASTUTE INVESTORS do not try to pick bottoms. Rather, the preferred technique is to wait until an apparent bottom can be observed before big positions are initiated. With silver fundamentals as well known as they are, you can be assured that there are huge amounts of investment money poised to enter this arena once a technical turnaround is apparent.
32. At this point in the silver cycle, man has placed a higher value on collecting ever-depreciating piles of paper promises rather than the actual, tangible wealth itself. Consequently, on a historical basis, SILVER INVESTMENT DEMAND is vastly under-represented compared to its other uses. When this "blonde moment" passes and history repeats itself, man will again discover why all history books refer to the beautiful, white metal as a PRECIOUS METAL. Accumulating INVESTMENT SILVER (bars, coins and bullion) will once again be popular and this underrepresented area of silver demand/consumption will greatly expand.

Special note to the above: Because physical silver and silver mining stock is so scarce, this is likely to be one of the few times in history when "waiting for the big breakout" may completely fail the investor. The market might resemble the game of musical chairs with only one major rule change. This time when the music stops, there will only one empty chair for each one hundred players. Therefore, prudent silver-related purchases should be made now.
33. INVESTMENT DEMAND … JAPAN, A SPECIAL CASE. DESIRE and NEED are not the true forces that move markets. The potential consumer/investor must also have the FINANCIAL ABILITY to meet his desires and needs. Many third world people have a desire and need for refrigerators & air conditioners. But, they lack the financial means to follow through. Enter JAPANESE SILVER INVESTMENT DEMAND… a special case scenario. The world's most successful savers (financial ability) are being pushed to the edge of a financial cliff. Precious metals investment represent their only viable means of escape & PROFIT. With an average nest egg of $115K and $5 silver, the entire 100 million-ounce silver COMEX stockpile could theoretically be bought by 4,348 Japanese families. DESIRE, NEED & ABILITY are all in place for this activity to begin.
34. A certain percentage of investors will be attracted to silver for only one reason, BECAUSE IT'S GOING UP! Like a month attracted to light, these momentum investors will want to jump on the bandwagon as they begin to see an established track record develop.
35. Due to the INTERNET etc., the world will quickly be alerted to what is happening and why. They will want their piece of the action.
36. The total silver MARKET IS TINY. It would take perhaps $10 billion dollars to buy all the remaining physical silver and silver mining stocks in the world at today's prices. Only a few dollars moving into this market will have the resultant force of a tsunami.
37. Mutual funds and other institutional players are grossly underrepresented in ownership of PM stocks and physical. If and when these investors simply RE-BALANCE their PORTFOLIOS to include silver, it will result in a tidal wave of demand for this tiny market segment.
38. If GOLD FUND MANAGERS only agree that silver will make appreciably larger percentage moves than gold, then we can conclude that even the GOLD FUNDS (who can own silver shares and physical), ARE UNDERWEIGHTED in silver. Once they begin listing multiple silver mining companies among their "largest holdings", we will know that they finally got the proper message.
39. Virtually every US and world citizen already has a WORKING KNOWLEDGE of what silver is. We're not talking semiconductors, megabytes, export quotas, or quasars where the learning curve is extreme. When silver begins to get world attention, this residual, in-place knowledge will grease the skids for the novice silver investment demand.
40. In the coming economic environment, precious metals may be one of the few investment areas making established up trends. Individuals, businesses, mutual funds, pension funds and hedge funds who WOULD NOT DREAM OF INVESTING IN METALS today may have few other choices.
41. NEW USES are constantly being discovered in a very immense range of applications. Silver may be the most versatile metal of all.
42. NEW USES …. Special case. SUPERCONDUCTIVITY technology as applied to electricity transmission efficiency will increase silver demand. (On one hand this is just a repeat of "new uses for silver being discovered." However the amount of silver that this area may use is so relatively high, that it merits its own place on this list.)
43. NEW USES …. Special case. Increased use in battery manufacture as automobiles evolve into ELECTRIC-GAS HYBRIDS for greater fuel efficiency.
44. NEW USES …. Special case. Traditional SOLDERING MATERIALS have primarily contained a tin-lead alloy. In Japan, environmental concerns have prompted regulations calling for the complete phasing out of lead in consumer and electronics products sold there by 2005. A tin-silver alloy containing about 3.5% silver has proven to be the best of the alternative alloys.
45. The % OF SILVER BULLS in the newsletter business is now at historically low levels. This number & their newsletter readership can only go up.
46. The more taxes rise (the overall trend has always been up), the more people will seek ways to keep the government out of their pockets. Silver is one of the few remaining alternatives available to AVOID SOME TAXATION.
47. In a growing environment of litigation, envy & financial distress, the NON-REPORTABILITY advantages of silver will enhance its demand.
48. Due to a growing need for government revenue and mass computerization, a rapid DETERRIORIATION OF PERSONAL FREEDOM & PRIVACY is underway. Many will conclude that rather than opening an offshore trust, secret Swiss account or the like, most of the same benefits can be had by simply selling those dollars locally and purchasing non-counterfeitable assets like precious metals, gemstones, collectibles and the like. These holdings represent pure, distilled freedom & privacy. Assuming that they are properly concealed, they are pure wealth that can never ever be taken away from you, taxed or litigated away.
49. If a mineral is found in great abundance in the earth's crust, depletion will never be a real issue. But a silver occurrence is an extremely rare event. Therefore, every day that a silver mine is in production it is one day closer to its closing date due to REAL DEPLETION. "They ain't making any more of it."
50. In broad geologic terms, the deeper you go in a gold mine, the richer the ore deposit becomes. Silver is the opposite. The deeper you go in a silver mine, the lower are the concentrations of silver. To state this PERCENTAGE DEPLETION another way, because silver deposits are found near surface, they have already been found and mined out.
51. At this point in the business cycle, there is a very high level of confidence in paper or fiat, especially the US dollar. This cycle can be expected to change. The result will be INCREASED TRANSFER OF PAPER WEALTH to PM's.
52. There are presently no PM backed currencies in the world. Yet, the history of currency shows us that all paper currencies eventually crash. A SILVER BACKED CURRENCY is just a matter of time. The discussion phase has already begun in some quarters.
53. For many reasons, WE HAVE NOT HAD A PURE AND FREE MARKET IN WORLD SILVER since the US government began supporting the price of silver in the late 1800'. Also, they have been selling silver nonstop since the end of WWII. This LONGSTANDING, ARTIFICIAL INTERVENTION is finally coming to an end and the market just won't know how to act rationally. It will be like turning loose a 50 year old elephant in your community that has been born and raised in a zoo all of its life. Both silver and the elephant will rise many an eyebrow as they adjust to their long-sought freedom.
54. In world markets, virtually all commodities go from being under priced to being overpriced and back again. There is no reason to believe that the POS will stop rising when it reaches its EQUILIBRIUM PRICE.
55. The present public perception says that "BECAUSE SILVER IS SO CHEAP, IT CAN'T BE VALUABLE!" A Ted Butler essay said it this way, "PEOPLE DON'T LIKE SILVER BECAUSE YOU GET TOO MUCH FOR YOUR MONEY." What can we conclude? After silver gets high priced, people will then recognize that silver IS VALUABLE and will then want it … adding to the demand.
56. As a civilization advances, the per capita usage of silver increases by a disproportionately wider margin. Much of the third world population, particularly in Asia, is rapidly advancing toward the ranks of the "developed world". This APPROACHING MASS OF HUMANITY will want to take their share of family pictures and connect their new refrigerators, TV's, washing machines, cell phones and air conditioners to the electric/electronic, silver-consuming grid just like you and I.
57. The industrial demand for silver significantly exceeds the supply from mines and recycling. When above ground inventories run out, mines and recycling will not be able to gear up to fill all of the demand. SOME SILVER USERS MUST NECESSARILY BE DENIED SILVER. Who will they be? If the macro users (jewelry, flatware & coin makers) were the biggest buyers, rising prices could shut them out of the market and market equilibrium would be quickly reached. However, this is not the case. It is the micro users (companies that use the tiny amounts of silver per product) that are the largest silver consumers. … Kodak & DuPont. The message is that equilibrium will occur, but only at prices that are extreme.
58. For both the little and big people in the distant corners of the world, squirreling away US dollars has been one of the preferred methods of saving. It is estimated that two-thirds of the US currency in existence is in circulation in other countries. The USS Titanic has already struck a few icebergs but still larger, unavoidable ones are directly ahead. Once it finally becomes apparent that the ship is lost, THESE FOREIGNERS WILL SHED THEIR DOLLAR BILL LIFEJACKETS and successfully escape in seaworthy gold, silver and platinum lifeboats.
59. During falling equity markets, investors have always rushed to high dividend paying enterprises. To pay high dividends, a company needs to be lean n' mean and be positioned in a profitable sector. While silver mining companies are currently unprofitable and pay no dividends, these companies can be expected to be wildly profitable and have more cash than they know what to do with. HIGH DIVIDENDS from silver mining companies are therefore inevitable.
60. Unlike real estate, farmers, bankers, doctors, labor unions, and even the homeless, silver has a NO POLITICAL ADVOCATES and enjoys NO LEGALIZED PRIVILEDGES that everyone else seems to enjoy. Silver presently gets "no respect" and it shares the dog house with only gold, uranium and tobacco. (It even earns negative respect from the Silver Users Association who's mission seems to be to depress silver prices to their own benefit.) Once stockpiles go to zero, an immense appreciation for the unloved metal will emerge and special financial favors will follow.
61. Gold is ACCUMULATED but silver is LOST due to micro-usage-depletion. Consequently, silver has less total quantity in existence every single day. As hard as this is to believe, reliable estimates indicate that there is currently 10 times more gold than silver in above ground stocks! While this phenomenon has been going on for some time and is not a new force, THIS OBSCURE STATISTIC IN NOT WIDELY KNOWN and clearly has not been priced into the commodity.
62. For eons top brokerage houses, astute financial advisors and professional money managers have RECOMMENDED a baseline 5-20% PORTFOLIO DIVERSIFICATION into precious metals. Partly due to the lengthy, worldwide bull market in equities and the extended bear market in precious metals, this sage advice has largely been ignored in recent years. A return to this prudent guideline will equate to an increase in PM demand.
63. The prophecy that "China is a sleeping giant" is certainly proving to be true. As a group, CHINESE PEOPLE are not only extremely hard-working but they also RANK AT THE TOP AS SAVERS. Furthermore, they have more experience with the pitfalls of paper currency than any other nation. The combination of the above factors clearly suggests a future, high level of precious metal demand.
64. "A great speculator looks for "REVERSE BUBBLES" (the exact opposite of BUBBLES or MANIAS) where everything that can possibly go wrong over an extended period of time (at least several years) HAS and the bear has fed upon itself to a point of hyper pessimism. The still viable investment will be on sale for 90% off or more!" All competing market forces are ultimately reflected in one single measurement; the price. The primary evidence of a reverse bubble in silver is that it has been priced below its worldwide cost of production on a multi-year basis. Therefore, SILVER EASILY QUALIFIES AS A REVERSE BUBBLE.
65. By all CONTRARIAN AND PSYCHOLOGICAL MEASURES, the outlook for silver just doesn't get any better. This essential ingredient of all modern societies is thoroughly un-loved, un-wanted, un-appreciated and un-heard of by the mainstream. (Who can name a single silver mining company?) Its stellar investment merits are un-popular and completely un-recognized in the investment community at large to a point that nobody cares and nobody wants to know. Profound, unwarranted pessimism is at the heart of all historically important bull markets.
66. As the world wide bear market in equities grinds onward, advisory services, brokerage houses, pension fund managers, mutual fund managers, certified financial planners, and investment advisors will increasingly come under the gun for non-performance. More and more, if these PAID PROFESSIONAL INVESTMENT ADVISORS want to keep their accounts, jobs, commissions and bonuses they WILL BE COMPELLED TO BUY THE POSITIVE PERFORMANCE OF THE PM SECTOR (whether they like it or not). For them, the new mantra will be, "Buy or Die".
67. With rare exceptions, all of the PM's (gold, silver, and platinum), appear to be "joined at the hip" and have historically moved together in price. The market outlook for platinum is presently neutral (1-03). However, gold appears to be in the early stages of a strong bull market that is supported by excellent fundamentals. DUE TO THE INTERRELATIONSHIP OF THE PM FAMILY, A MAJOR MOVE IN GOLD WILL AUTOMATICALLY FUEL A CORRESPONDING BUYING INTEREST IN SISTER SILVER.
68. A precious metal INVESTOR is an individual who buys precious metals today with the expectation of selling in the future for a profit. There are generally three classes of precious metal investor's that will emerge: the un-informed-wealthy, the smart-wealthy, and *joe-sixpack-amateur-investor. When the inevitable wave of PM investment buying begins, the un-informed-wealthy will buy gold because it is going up and that's what they always buy. The smart-wealthy will buy a higher proportion of silver over gold-platinum because SILVER WILL OFFER A HIGHER PERCENTAGE RETURN. When JOE-SIXPACK-amateur-investor starts his investment buying, he will choose silver over gold-platinum because he GETS MORE FOR HIS MONEY. Conclusion: By all accounts, SILVER WILL WIN THE PM INVESTMENT POPULARITY CONTEST. Evidence of this scenario playing out will be observed in a narrowing of the gold-silver ratio.

*Footnote on Joe-Sixpack: In 15 years of talking the stock market to novice investors, one particular phenomenon has happened virtually100% of the time. Given the same industry, tell Joe about company X selling for $1 per share and company Y selling for $30 a share. He will want to buy the one dollar stock EVERY SINGLE TIME even though the higher priced stock may, for any number of concrete reasons, hold exceptional promise for a greater PECENTAGE return.
69. Interest rates have a profound effect on investment decisions. Currently, INTEREST RATES ARE EXTREMELY LOW AND CAN BE EXPECTED TO RESULT IN A HIGHER DEMAND FOR PRECIOUS METAL PRODUCTS. A low rate environment reduces the opportunity costs of holding non-interest paying PM bullion. Furthermore, low rates also increase the incentive to buy PM stocks on margin.
70. Many entering the PM investment arena will be correctly armed with the arithmetic/mechanical truth that $5 SILVER CAN MORE EASILY DOUBLE THAN $400 GOLD.

It would not be fair to only present one side of the silver story. So the question is, "What forces might contribute to LOWER silver prices. See below:

1. In a high price environment, some jewelry, tableware, silver coins and the like will come out of hiding and be sold to into the market. It is thought that much of this silver is long gone. Most people don't own any silver to sell and have never seen a real silver coin.
2. In a very high price environment, STERLING SILVERWARE and TABLE ITEMS will be too costly and many potential buyers will be priced out of this market.
3. Sales of silver JEWELERY that is now being sold at your local shopping mall and flea markets will practically vanish. (However, investment demand can be expected to more than take its place.)
4. High prices will cause end users to attempt to MINIMIZE USAGE by any means available. If an electronics manufacturer can get by with using just a little bit less silver solder, he will.
5. A RECESSION or DEPRESSION will result in less industrial silver demand. (This force is more than likely to be offset by decreased by-product mining).
6. During a silver shortage, fewer and fewer retail outlets (coin shops and the like) will have silver available for distribution. If some potential buyers are not able to satisfy their demand, potential maximum demand will be reduced.

On one hand, making investment predictions and projections is a huge waste of time because almost no one is ever right. But on the other hand, virtually all investment buying and selling is an exercise in price prediction. We only buy when we expect a price increase and sell when anticipating a general price decrease.

Short term, medium term, and long term predictions (expectations) all have their place. When comparing the price of silver and gold, I predict the following: In the 3 to 7yr time frame, I expect the POS to exceed the POG.

A huge question that silver investors will face in the future will be WHEN TO SELL. This document will help. Just mark off each of these forces as they occur. When they are nearly all checked off, we will be closer to the end than the beginning.

Douglas Kanarowski
(209) 966-3496
e-mail dski209@webtv.net

23 July 2003

[Mike Mazzone of Palatine]

Jones On Gold and Silver

[youtube]1w0LOtWmy_o[/youtube]

[Mike Mazzone of Palatine]

Live POS

http://www.netdania.com/QuoteList.asp

[Mike Mazzone of Palatine]

Here's a CNN article about silver from March. It doesn't even mention silver's long history as money.

http://www.cnn.com/2007/US/03/19/silver/index.html

Slivers of silver for what ails you?
POSTED: 3:27 p.m. EDT, March 22, 2007
Story Highlights
• Silver long known to possess antibacterial and other beneficial properties
• Scientists harness metal's potential by shrinking it down to miniscule sizes
• Recent boom of consumer products that utilize small amounts of silver
• Some environmentalists worried that pervasive silver could disrupt ecosystems
By Greg Botelho
CNN

WASHINGTON (CNN) -- Want to get rid of germs? Mold and grime? Smelly feet?

A growing number of scientists and businessmen say such a miracle substance exists, and in fact has for millions of years: Silver.

Innovative technologies and approaches have fueled an explosion of products taking advantage of silver's antibacterial properties. Consumers today can buy clothes, disinfectants, laundry machines and other items that utilize silver as an active agent.

"People have found out you can use [silver] far more effectively when you shrink it down," says Andrew Maynard, science adviser to the Project on Emerging Nanotechnologies, a joint effort of the Woodrow Wilson International Center for Scholars and Pew Charitable Trusts. "The range is quite incredible. It's as if a lightbulb has suddenly gone off."

Though silver is generally harmless to humans, environmentalists worry that excessive use of silver may allow it to seep into the environment, kill small organisms and disrupt the ecosystem.

"The projected uses are just too broad," says Jennifer Sass, a senior scientist at the National Resources Defense Council. "It is being used around the world in anything that you would want to kill bacteria ... It's reckless [and] many of the uses are frivolous."

While hardly the only antibacterial substance, Maynard says silver's ability to use multiple mechanisms to target germs otherwise resistant to antibiotics makes it especially effective -- and also may make it persist longer in the environment.

"There isn't a huge amount that is unknown [about silver]," says Maynard. "Is there any risk to the environment? That's a little bit fuzzier. There are issues out there [for which] there aren't easy answers."
Miniscule slivers of silver

In recent years, scientists have discovered cost- and time-effective ways to divide silver into miniscule particles, some just a few nanometers across. This not only lowers the price to buy and reproduce silver, but enhances its surface area, thus compounding its effectiveness.

"We're getting incredibly small, [which] gives us unprecedented control," Maynard says. "You can make it go a lot further."

The number of nanotechnology consumer products is surging, according to the Project on Emerging Nanotechnologies, which expects its inventory to surpass 500 such products this spring. And silver leads the way, surpassing all other elements, including carbon.

"It's not going to rival photography, jewelry and coinage in terms of overall demand, but the demand [for nanosilver] is growing," says Michael DiRienzo, executive director of The Silver Institute, an industry trade group. "We've known for centuries that silver has these special properties, [but] only recently have they found how it works."

One of the most well known applications is X-Static, which Noble Biomaterials president Bill McNally says is used in 1,000 products -- from sportswear and socks to hospital linens and military uniforms.

"Silver [is] antibacterial, it's used in every burn care center, and it's naturally anti-odor because it binds with anti-odor causative agents," said McNally, who co-founded Noble 11 years ago and calls the company "the pioneers of silver." "My mission was to create a product line that allowed you to take advantage of all those attributes."

Some try to utilize silver's properties in supplements and liquid forms, known as colloidal silver. Keith Moeller is the managing director of American Biotech Labs, which sells a supplement that uses a relatively sparse 10 parts of silver per million. He cites studies that claim the company's products can boost immune systems and fight malaria, salmonella, E. coli, bird flu and other ailments. Company president Bill Moeller testified to Congress in 2005 about the products' medical potential.

But the Food and Drug Administration has not found evidence that products containing colloidal silver are safe and effective. The agency targets companies that tout the medical efficacy of silver products.
With concerns, recognition of potential

"Over-the-top" advertising of silver irks Sass. If silver claims to kill microbes, she contends, it should be regulated like a pesticide -- with steps made to prevent its infusion into the environment.

But DiRienzo says, "To single out silver is unfair," given that it is viewed as less dangerous than most other metals and is being used in microscopic quantities.

"We're encouraging the federal government not to rush headfirst into regulations," he says, adding the silver industry has worked with the Environmental Protection Agency for decades and he doesn't oppose self-touting "germ killers" registering their products.

That said, most scientists concur that silver products hold significant potential. Even Sass, while opposing "broad releases that lead to obvious exposure," has no qualms about "targeted, controlled, restricted and important" uses, particularly medical applications.

For instance, silver ions are an active agent in QuikClot, a wound dressing for severe bleeding now being used by U.S. military forces and first responders. And McNally notes X-Static has been incorporated into many medical products, including hospital garments, sheets and bandages.

"Silver [provides] bacterial protection from the worst of the worst, as well as the ability to stimulate tissue growth," he said. "We have the ability to save people's lives."

[Mike Mazzone of Palatine]

Here's an article by David Morgan of www.silver-investor.com about silver as money. Had you subscribed to his newsletter back when it started, you would have seen a 4000% return in SSRI shares and a 3000% return in PAAS shares had you invested in his original top 2 recommendations.

http://www.gold-eagle.com/editorials...gan071001.html

Is Silver Money?

I took out my Black's Law Dictionary and looked up money. Interesting when will look at the legal aspects of things. I will admit I have an old version 1968 to be exact. The reason is bias on my part. It seems the definition of things keep changing as we move forward in time. To quote Blacks Law Dictionary, Money." In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, and does not embrace notes, bonds, evidence of debt, or other personal or real estate. Lane v. Railey, 280 Ky.319,133 S.W. 2d 74, 79, 81."

Reading further we find:
In its strict technical sense "money" means coined metal, usually gold or silver, upon which the government stamp has been impressed to indicate its value. In its more popular sense, "money" means any currency, tokens, bank-notes, or other circulation medium in general use as the representative of value. Then under that several more sites are named.

Silver has the six aspects of money in a classical sense. It is divisible, durable, convenient, consistent, has utility value, and cannot be created by fiat. Silver is used as a medium of exchange and as a store of value.

Before we get into a big argument about whether silver is money or not, I need to point out a couple of details. First, it is a recorded fact that silver has been used in more places and for longer periods of time for money than gold. Secondly, I would like to quote Nobel Laureate Milton Friedman, who stated "The major monetary metal in history is silver, not gold."

Quoting from the Silver-Investor.com web site: It is impossible to write about silver without evoking emotions, although it is my goal to be as objective as possible. There are very strong views about this metal both positive and negative. One such area involves the silver as money issue. The facts are that precious metals are rare, fiat currencies can be printed at will, and have always been abused.

My projection for the ultimate price of silver would be meaningless, but the facts surrounding the value can be objectively studied. In the end we all have a vested interest in the monetary system holding together. Precious metals are a barometer of world financial health. If gold and silver start moving up in a manner similar to 1979-1980, then the paper money game is essentially finished . Will this happen? Objectively, I do not know! However, I do know, throughout all of recorded history when a country has adopted a monetary system founded on edict (fiat), the nation has had a financial collapse. As we enter the next Millennium, remember the gold window was closed in 1971 and for the first time in history, the reserve fiat currency is worldwide phenomena.

The price of silver is a function of the understanding of the market itself. When the market understands that money based on unsound principles cannot help but fail eventually, then the true value of silver will be determined. Until that time arrives it is prudent to prepare some savings in the form that best retains value.

It would be of tremendous importance to everyone if I were able to predict one event in the investment world that had a 100% certainty of being fulfilled. I cannot, however here is something to ponder. All fiat currencies have eventually reached their intrinsic value of zero. This implies that the dollar will reach zero as well. Now, we currently are under the influence of a "strong" dollar. We must ask ourselves; strong relative to what? If the Federal Reserve admits that today's dollar is worth the equivalent of five cents in 1913, we have lost 95% of the purchasing power. So I ask how strong is today's dollar? Is the dollar's strength based upon the restraint of the printing press, the rate of return ( interest rate), the productive capacity of the people, or faith?

Now, take the time to look at your "money" be it coin or currency. You will notice that all have the statement "In God We Trust". Are we to put our trust in Mr. Greenspan, the Fed, or any political affiliation? Or are we to trust the source? Before, I am accused of going religious on my readership, let me make my point. The source of all wealth is land. If you believe God created the Earth fine, if not fine, we all can agree we live in a physical universe and land composes part of the Earth's character. Let me repeat myself, the source of all wealth is land. That is an interesting concept is it not? Gold and silver are mined out of the earth, many foodstuffs are grown in soil, houses , apartments , and shopping centers are built on it. In fact most of the list of commodities are derived from the land in one way or another, from soybeans to cotton, from sugar to copper. However, there is one subset that trades on the commodities exchanges that are the sole creation of man- fiat currencies, bonds, notes, and bills. (Not money according to Black's).

The world has entered into a great economic shift from paper assets to hard assets. This cycle repeats itself and now is the time when investors should be or should have liquidated their stocks and bonds and begun to accumulate physical commodity type assets. This is the real thing, commodities cannot and will not go bankrupt, there is real tangible value and most commodities are required by mankind.

Now we have some insight into where we are in the economic cycle between paper assets and physical assets. What takes place at the end of great inflations? What does history teach us? Actually, at the end of the inflation two interesting things happen. First, real money as defined above begins to appear in the market for everyday transactions. Almost anyone on the internet is aware gold can and is used for transactions through e-gold, GoldMoney and a few others. Once a person or business has enrolled with an internet gold holding company transactions over the internet can be made using gold. There are also some actual warehouse receipts being used by NORFED and Millennium Money. These warehouse receipt are exchangeable by the bearer on demand for actual silver or gold. The receipts themselves can also be used to purchase everyday items.

The second issue is that man made instruments are exchanged for real wealth at an accelerating rate. Those that have saved U.S. "dollars" decide to buy something with them. The problem is that once this transfer begins there is not many places to find safety. Because money represents something that can be use presently or stored for future use this shift becomes very intriguing. Although the major shift is into commodities, which of the commodities are able to fulfill the ability to be spend presently or store value for future use?

Yes, land and real estate can and will be used, but land is not very liquid. The only real places to transfer the financial asset class is into the metals.

What would happen if one of our foreign exchange partners running a balance of trade surplus decided to use some US dollars ( bond holdings) to buy real wealth? It would have to funnel money into the area slowly because too big a buy at one time would move the market a great deal. Once this shift was seen by the market the tendency is for others to follow.

Mexico is considering using its silver as a financial store of value. Some banks actually offer their customers money as defined above. This is a noble and valiant act. Some economists in Mexico have argued that the Mexican people have imported about as much U. S. paper as ever need and it might be wise to recycle this paper.

Grupo Elektra, quoted on the NYSE under symbol EKT, and Banco de Mexico, Mexico's Central Bank, have signed a contract authorizing Grupo Elektra as a distributor of Banco de Mexico's "Libertad" one ounce silver .999 coin, which has no face value and is legal tender under certain circumstances.

Grupo Elektra operates 550 stores throughout Mexico. It will initiate operations in silver sales and repurchases from the public at five stores in the Cuernavaca area, for the purpose of gathering experience in this field, which is new to the company. National expansion will follow shortly thereafter.

An interesting question to ask yourself is "When or under what circumstances would silver ( or gold) be the most valuable? This question poses some interesting aspects because it tests your own belief system. Do you trust the government or the source? The most important time may be when the man made asset class loses value and is shunned in favor of something real. Since there are too many paper claims outstanding versus the amount of silver or gold available not everyone will be able to shift into a financial asset that has stood the test of five millennia.

Sooner or later, nearly everyone everywhere will catch on to the fact that the currency game is drawing to a close, that all fiat currencies are doomed. Action in the marketplace, suggests this recognition is spreading; using gold back internet currencies, and the potential for a major silver producer (Mexico) to encourage its people to obtain value based money. A flight from all national currencies into real values is developing and will gain momentum. Ultimately people not government determine what money is and what money is not.

July 10, 2001

David Morgan

[Sean Martin]

A bunch of Christians financed a machine to prove it didn’t take millions of years to produce oil or coal. You could throw garbage in it and it would turn it into coal in about 5 minutes.

While it took more energy to produce the coal than the coal would produce, it did prove that it wouldn’t take a billion years to make a chunk of coal.

I believe oil and coal are replenishable resources. All this peak fossil fuels are nothing more than a scam. They did this in the 70’s to bring gas from a quarter a gallon to a dollar a gallon and they are doing the same thing now.

[Mike Mazzone of Palatine]

Jason Hommel is an advocate of silver as money and releases mining stock recommendations for free at www.silverstockstrategies.com

I prefer Morgan's perspective of the silver market, but you might enjoy reading Hommel's study of silver in the bible.

http://bibleprophesy.org/

Here's a video of him talking about silver as money.

[youtube]CTBXc8z3vDw[/youtube]

[Mike Mazzone of Palatine]

David Morgan answers questions about his "10 Rules For Silver Investing" in this interview.

http://www.marketmattersradio.com/mp...vid_morgan.mp3

Join his free email list if you're interested in taking action to preserve your hard earned wealth.

http://www.kitco.com/ind/Morgan/jul262006.html

Silver Speculator or Silver Investor?


By David Morgan
July 26, 2006


www.freemarketnews.com

I received an invitation to write a timely piece for the launch of this web site devoted to the silver industry. Thinking about what would be of value to the reader at this point in the market it suddenly hit me that many people that think they are silver investors are really speculators.

Personally, I have nothing against speculation and in fact many from the mainstream financial press would consider any commodity based “investment” to be nothing more than speculation at best anyway.

When the silver-investor.com website was begun in the year 2000 a full six months went by before we had our first subscriber. Things have certainly changed since that time until present and many of the opportunities that we laid out for our subscribers do not exist anymore.

I recall a speech I gave in early in this bull market and it involved a New York listed silver company that was the best performing stock in 1979 for the entire NYSE. Silver and silver investing was all anyone could talk about near the end of 1979, the silver market had move up considerably and many investors were in a panic to find precious metals investments. Fast forward to the beginning of this bull market and this same stock had done an equal performance going up ten fold any yet the general market participant and even the precious metals investors were basically unaware of this important fact. In other words this significant move was largely ignored across the board.

I would like to re-emphasize the point that we were talking about a NYSE company that was selling at fifty cents in danger of being removed from the New York listing and this company made it up to the five dollar level several months later. This is the type of speculation we like, risk is low upside is great and most factors about the company can be fully investigated.

Today, these types of opportunities are practically non-existent. Certainly, opportunities do exist and they always will, but the almost “sure” thing is difficult if not impossible in the mining sector presently. This does not mean you should not investigate this sector only that there are many more choices and sifting through all the possibilities can be cumbersome.

As far a silver itself, it is much closer to a sure thing because of the dynamics for silver are so extra ordinarily bullish. This article will not outline the fundamental case for investing in silver.

Before looking deeper into silver investing versus speculating I wish to bring to the readers attention that any serious metals investor should sign up for our free mailing list that provides the “Ten Rules of Silver Investing” for you.
Go to http://www.silver-investor.com/joinfreelist.html
An outline of the Ten Rules is below, this is only an outline each rule is explained in detail and may help the novice as well as the seasoned professional to obtain better results.

Here is an outline of the rules.

1. Why silver, Why Now?
2. Start small- keep it simple.
3. Boost the buying power of your dollars with mining shares.
4. Dollar – cost average to lower your costs – and increase your discipline.
5. Do not get a raw deal from your dealer.
6. What’s yours is yours – so keep it that way.
7. Silver speculation’s like cough syrup- good in small doses-- But too much can make your portfolio sick.
8. A little information can mean a lot more dollars.
9. Collecting silver is an art- but not really an investment.
10. What percentage is the correct amount?

At this time we are looking at rule #7 it reads

7. Silver speculation’s like cough syrup- good in small doses, but too much can make your portfolio sick.

Depending on your individual goals and our personal tolerance for risk, a small portion of the assets you commit to silver can be used for speculation, perhaps in futures contracts or options on futures. Never forget, however, that this type of trading is speculation, NOT investment.

Commenting on the above, we have seen many speculators that have been attracted to the silver market based upon the supply and demand fundamentals and consider the “trade” to be a no-brainer. However the novice trader usually sets up a commodity trading account and goes long silver without adequate capital or a disciplined plan. Shortly, into the market the trader loses money and immediately looks to place the blame for the loss somewhere.

Often the trader finds those that write about the fundamentals as having flawed analysis or move the blame for their loss on to anything outside of themselves. Unfortunately many of these novice traders that were once bullish silver, never come back to the market and usually extol the virtues of staying away from silver at all costs.

In our view most people should steer away from futures or options. We have been consistent from the very beginning to purchase physical metal for cash and this should form the basis or your foundation. Once the investor has established a core holding in physical metal the next area is to obtain mining equities in producers that have sufficient room for growth. In our view get real, get physical and purchase real silver. The purchase of real metal that you can actually touch is truly an investment. Anything above and beyond the physical metal is some type of derivative.

Certainly a producing mining company is a real tangible asset, but a share in such a company is only a claim on the real asset not the asset itself. Therefore investing in top tier mining companies might be considered to be “investments” but they carry greater risk and at times greater rewards but not always.

During the second leg up of this major precious metals market more investors will be moving into the sector. Most mutual fund managers and institutional managers have very strong guidelines that in several cases prevent them from placing money in micro cap junior mining companies. This is not to say it does not occur, only that this is not where the big money is flowing; the large moves generally are in the more liquid mining equities that have market capitalizations of 300 million to one billion dollars.

This is where we have focused our efforts for this phase of the precious metals market. Actually, we prefer mid cap companies because they are faster growing and more dynamic that the largest companies in the sector. This is where the safest and in many cases easiest money will be made over the next several months. The problem becomes one of timing or money management because the volatility has increased substantially.

As an example in the few days it took to compose and finalize this article one of our favorite silver stocks has gone up over twelve percent. However, during sell-offs the move down can be equally dramatic.

The next level that we look to is the junior sector and this is certainly the most risky but also offers huge potential thus the best place to speculate in our view. We make no excuses there really isn’t any investment per se in this sector; at least for all practical purposes any money placed here should be “speculative” risk capital.

Nothing can be more frustrating to precious metals investors than having a basket of junior mining companies and watch gold and silver move up and yet their personal holdings are basically treading water and really not performing as well as the metals themselves.

Many “investors” only have speculative types of mining companies and this presents more possibilities but is also an opportunity to under perform the general precious metals market.

As I have stated many times, never in my career has a junior mining executive come to me and stated, “we have an average project, in an area that is somewhat risky, our management team is adequate, and our funding is minimal.” No, indeed the story usually goes something like; we have the best possible project, in a very safe area, top-level management, and money in the bank!

Bottom line is most of these companies are what are known in the business as “story stocks”, a story stock is more or less a bet on the story. That is the mining company is very near a recent large discovery, or the management has a proven track record of making discoveries, or so much money has been spent on the property previously by a major and they walked away because it was not big enough but this is perfect for you Mr. Investor. The stories take on all types of forms and there are combinations of these general themes.

What can happen is some people (speculators) fall in love with the story and will hold a company that really has little chance for success. Cheap stocks are cheap for a reason, they are generally extremely high risk, have large burn rates of cash (drilling we hope, not just promoting) and the odds are at least two thousand to one against you. Having said all of this, many people still love cheap stocks they think or believe that the story they have is so compelling that it is just a matter of time.

What is the correct approach? Actually there really is not a right or wrong way to participate in this market. Basically is boils down to each individual investor/speculator, however for most a good balance of well known mid tier companies, sprinkled with some high risk/high reward juniors is the most prudent approach.

High priced stocks are high priced for a reason, they have value, many facts are know about the projects such a production rates, outlines of future production, cash costs, total costs, reserves, management and most of all profit or loss. These are the types of investments that the fund managers and institutions have made and will continue to make well into the future. Don’t overlook a mining equity just based on price, remember the higher prices are usually the best companies and don’t you deserve the best?

In this business it pays to stick with the winners and use discipline in all aspects of your portfolio management. So, let me conclude with rule eleven which does not exist, in the original work. You should have fun, make it interesting, and find a style that suits you personally.

Finally, the book on silver investing I have committed to writing is finally available

You can preorder the book here.

By David Morgan

[Mike Mazzone of Palatine]

Good thread I started a couple years ago about silver's modern applications.

http://www.vnnforum.com/showthread.php?t=22006

[Mike Mazzone of Palatine]

Raise the margin requirements. Another trick the kike has up his sleeve for delaying the inevitable silver supernova. Their reign of mercantile supremacy is coming to an end. The competition is fierce and is kicking their asses at their own game. The real fireworks will start on 1/20/09.

http://investing.reuters.co.uk/news/...ER-MARGINS.XML

NYMEX says to raise silver futures margins
Mon Aug 20, 2007 7:38 PM BST138

NEW YORK, Aug 20 (Reuters) - The New York Mercantile Exchange (NMX.N: Quote, Profile , Research) said on Monday it will raise the margins requirements for its silver and COMEX miNY silver futures contracts, effective at the close of business on Tuesday.

The NYMEX often adjusts margin requirements to mitigate risks for itself and market participants according to changing market conditions.

The NYMEX said margins for the silver futures contract will be increased to $3,000 from $2,500 for clearing and non-clearing members, and to $4,050 from $3,375 for customers.

Margins for the COMEX miNY silver futures contract will rise to $1,500 from $1,250 for clearing, and non-clearing members and to $2,025 from $1,688 for customers.

The exchange had lowered its silver and COMEX miNY futures contracts on June 7.

[L. Edwards]

Mike, I had a stock account worth hundreds of thousands of dollars back before 2001. After the crash I lost about 85% of a life savings - gone in less than a couple of days. I can now say that I' a lot wiser than before, but the question I want to ask is what do I do with the remaining gold mining stocks?

I have watched them plummet to nothing even before the 2001 stock heist. I have hundreds of shares of gold mining companies that are worth 1/20 of what they were. The current gold prices have no effect on these stocks at all. They just sit there languishing.

Should I cash out the remaining stocks and get a few measly thousand out of it or should I ride it to the ground hoping that when gold hits 700 it will bring the stock back up. Somehow, I have a feeling these stocks are a lost cause.

Just curious as to what your take on this is.

Thanks,
Larry

[America First]

Mr. Anti, check here if you please.


http://www.goldismoney.info/forums/f...splay.php?f=46

[Mike Mazzone of Palatine]

Just curious as to what your take on this is.

Sell the stocks. Buy SLV. It's an ETF based on silver price. Perhaps split between SLV and SSRI. Silver Standard stock has been up 4000% since 2001.

[townie35]

I have for years now had liking for silver, to me it has never been inferior to Gold.

[Mike Mazzone of Palatine]

http://www.freemarketnews.com/WorldNews.asp?nid=47905

CFR Seeks End of US Currency?
Sunday, August 26, 2007 - FreeMarketNews.com

Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today's instability. -May-June CFR Foreign Affairs

Author Benn Steil is Director of International Economics at the Council on Foreign Relations and a co-author of Financial Statecraft.

Click Here For The Full Story
http://www.foreignaffairs.org/200705...-currency.html

[William Robert]

http://en.wikipedia.org/wiki/Silver_..._United_States

Silver mining in Arizona was a powerful stimulus for exploration and prospecting in early Arizona. Cumulative silver production through 1981 totaled 490 million troy ounces (15 million kg).[1] However, only about 10% of Arizona's silver production came from silver mining. More than 80% of the state's silver was a byproduct of copper mining; other silver came as a byproduct of lead, zinc, and gold mining.[2]

Most of the silver produced in California has been a byproduct of mining other metals, such as copper (Copperopolis), tungsten (Pine Creek mine in Inyo County), or gold (Randsburg).[5] However, there have been mines where silver was the principal product.

The largest current source of silver in Colorado is as a byproduct of gold mining at the Cripple Creek & Victor mine, a large open-pit heap leach operation owned by AngloGold Ashanti at Victor, Colorado. In 2006, the mine produced 4.0 tonnes (130,000 ounces) of silver

Most silver in Oregon was produced as a byproduct of gold and copper mining.



Is the Demand for Copper Decreasing?

Will silver forever be the byproduct of Copper?

Will Copper mining ever stop?

[Mike Mazzone of Palatine]

Is the Demand for Copper Decreasing?

It's just my pet conspiracy theory, but I say that the copper market has been manipulated upwards. Copper prices have been up over 600% since 2001. Copper prices were intentionally overinflated to increase profit motive for mining companies to work overtime to bring more copper to the marketplace, and thus more byproduct silver. These efforts have only served to postpone the impending supernova in silver prices.

http://charts3.barchart.com/chart.as...=BSTK&evnt=adv

[Mike Mazzone of Palatine]

http://www.zealllc.com/2007/alarmsil.htm

Alarming Silver Technicals

Scott Wright August 31, 2007 2777 Words



Commodities and commodities-stock speculators have had quite a rough-and-tumble last full month of summer. In a season where the markets typically hold traders in a mire of malaise, various extraneous events have awoken the volatility beast making for an exciting August.



With general stocks retreating from record-high levels in mid-July, commodities stocks have transcended general stock losses and have temporarily bucked the historically-inverse correlation with general-stock bears. Precious-metals-stock traders in particular have endured a session of wailing and gnashing of teeth. Key tactical support levels of the venerable HUI gold-stock index were sliced through like a warm knife through butter.



But though the commodities stocks have taken some abuse of recent, this fearful selling is seemingly just shaking out the over-leveraged and weak-handed traders. Far too often traders forget that volatile consolidations are par for the course within commodities bulls. All this activity might just be the final rebalancing of sentiment so a powerful new upleg can emerge.



Now though in the last six weeks or so this mini-stock panic has looked like the end of the world for some, the performance of most of the underlying commodities was nowhere near as bad. But the behavior of one commodity in particular, silver, has really riled up many traders.



While gold has weathered this recent stock-market maelstrom rather well, silver’s erratic behavior has prompted a number of its long-faithful investors to question its steadfastness. Frankly I was shocked to see some of the wild commentary and distraught inquiries into the supposed perils of this white metal. Let’s take a look at what this fuss is all about.





This first chart displays the 2007 performance of gold and silver using daily closing data. As you can see gold has done just fine so far this year showing strong support off its 200-day moving average. The Ancient Metal of Kings is still in the midst of a textbook-perfect uptrend off of its October 2006 low under $570 and has powered 23% higher to its highs earlier this year.



But looking at this chart, the “as goes gold so goes silver” mantra hasn’t quite played out of late. And this is why silver traders are up in arms. All this commotion does surprise me though, as experienced and battle-hardened silver traders should understand the white metal’s fickleness compared to gold.



Regardless, this short-term chart has many folks scratching their heads. And the apparent technical breakdown of silver over the last several months has miffed even some of the silver elite.



Now the undulations of gold and silver are nearly identical from a quick visual glance, especially if one data set is transposed directly over the other. The differences on both the flows and the ebbs though are in the extremes, when prices move sharply in either direction. And silver’s extremes have given its trend a whole different look than gold’s.



Whereas gold has been trending up bouncing off its 200dma, silver has been in a six-month downtrend. It has actually spent much of the last couple months at prices below its 200dma. And where gold is currently trading above where it began the year, the price of silver is lower than its opening price.



Even more alarming to silver traders is the depth to which its price had recently fallen below its key 200dma. As measured by percentage, it was the lowest point in its entire bull! Silver’s relative weakness has got a lot of attention recently.



This first very-short-term look at silver can indeed paint a somber picture. But the picture that short-term analysis sometimes paints may not always depict prevailing strategic realities. Even the most beautiful cities in the world have slums. But if a slum is the first part of a city you view, the rest won’t pique your interest. Perhaps all you need to do is stroll down the street in order to change this initial opinion.



If we zoom out a little and take a look at silver over the last 18 months, things don’t look as bleak. This next chart captures silver’s bull-to-date high achieved in May of last year. And this latest and most powerful upleg that vaulted the price of silver to nearly $15 occurred in impressive parabolic fashion.





Though futures and stock speculators that were long during this parabola saw legendary gains, those that didn’t heed the overbought warning signs were quick to lose much of these gains during the imminent and sharp correction to follow.



At Zeal we rode much of the 2005/2006 upleg and scored fantastic gains for ourselves and our newsletter subscribers. But much to the chagrin of the metals-markets perma-bulls, we saw the writing on the wall for an imminent correction. A correction that was necessary in order to stay the integrity of silver’s awesome secular bull and shed excessively greedy sentiment.



And of course the downside of a parabola is never pretty. Parabolas tend to breed equally sharp movements to the downside. And this sharp correction took silver to its June 2006 low under $10, a 35% loss in just 23 trading days. Stocks of course fared much worse.



After this sharp correction it was common perception that silver would either begin its next upleg off its major interim low or enter into a consolidation phase. A sideways consolidation would simply bleed off the resonating euphoria from the previous massive upleg.



Well for a period of about 8 months, it looked as though silver was off to the races as it carved a beautiful upward trend that in late February brought it to within 2% of its bull high less than a year earlier. But in late February the metals and stocks hit a wall, with the Chinese stock-market selloff acting as a catalyst.



Timing-wise, this Chinese stock selloff seemed to mark a turning point for silver. Its uptrend broke and it soon formed a downtrend that we seem to still be in today. But though silver’s initial uptrend from its June 2006 low indeed broke, it is important to view this in context and seriously consider the time horizon in question.



This upward trend channel was young, only 8 months old. And support on a less-than-one-year-old trend channel is not only non-secular in nature, but it lacks foundational strength. So giving a different look to this chart, the 8-month uptrend and 6-month-old downtrend can indeed be combined to form a 14-month consolidation.



As of now this consolidation could be drawn as an ascending wedge, illustrated by the transparent red lines. If silver was to drop further though, the support and resistance lines could simply be redrawn to form a horizontal trend channel illustrating a sideways consolidation. And there is quite a bit more wiggle room before silver approaches its major interim low under $10.



Again, it is important to consider this consolidation in the context of time. Though a 14-month consolidation is no fun for investors, let’s zoom out yet again to get an even bigger picture of today’s consolidation and see how it strategically fits into silver’s entire bull.





Charts indeed provide an excellent visual of market conditions, and technical analysis is very useful on many levels. But no two analysts will paint the same exact picture. Charts can be interpreted many different ways and lines can be drawn at various slopes depending on the message that is trying to be relayed.



When I look at the big picture of our silver bull to date, I see two massive uplegs capped by parabolic ascents. And these uplegs are followed by two long periods of consolidation led off by sizeable corrections.



The first massive upleg took silver to heights it had not seen since the late 1980s. And after silver reached its 2004 apex just over $8, a long consolidating wedge was formed that lasted for about 18 months before it finally broke out to the upside.



Several times during this 18-month consolidation silver knifed through its relative support zone, or below its 200dma. Relativity is a trading tool we use at Zeal that simply measures where silver is trading relative to its 200dma. I encourage you to read up on relativity if you are not familiar with it.



Now in bull markets, prices tend to soar above their 200dmas in uplegs and retreat to their 200dmas in corrections. This action causes the 200dma to rise on balance during the bull. And even during this 18-month consolidation higher lows indeed caused the 200dma to rise as the price of silver remained high.



Occasionally silver dipped below its 200dma and relative support zone, but as you can see this never lasted too long. Even as silver consolidated to bleed off the greed and prep for the next upleg, its price remained high compared to its lows in previous years. The sub-$5 grind in the years leading up to this upleg were history, as silver’s average price throughout the course of this first long consolidation was nearly $7.



These continually rising prices and a rising 200dma cemented the case that silver had followed gold and entered into a secular bull market. This was further reinforced as silver entered into its second massive upleg toward the end of 2005. And this latest upleg was something to behold. The price of silver more than doubled in just 7 months leading to its May 2006 peak near $15!



Well 14+ months later, our current consolidation is starting to look eerily familiar to the previous consolidation that led up to this latest massive upleg. From this higher-level view, I was able to reshape the support and resistance lines from the previous chart and draw a wedge similar to the 2004/2005 consolidation.



Again, today’s support failure is not the first time in this bull, or even consolidation, that it has happened. Now the extreme piercing of support I’ll admit does warrant some chatter. Panic selling a couple weeks ago brought rSilver to a low point of 0.88, or 88% of its 200dma. This is obviously the lowest point in this entire bull, trumping the previous low achieved in May of 2004.



But what does this new rSilver low truly mean? Does it mark the end of this bull market? Is it time to sell? I don’t think so! First, let’s consider where silver is today. Now judging by the prevailing sentiment, you’d think it was trading at $5 an ounce again. But close to $12 today, silver is still at levels that were unthinkable just a few years ago.



Even looking at this chart you can easily see that this consolidation is flagging on the high side of this latest massive upleg. This is testament alone that the bull is not over. On top of this, silver today is still 170% higher than its 2003 lows and 43% higher than the high from its previous upleg.



Just like gold, silver is still in the first half of a secular bull market that should see it go much higher. I don’t know how this lengthy consolidation will turn out or when the next massive upleg will begin, but this recent break in relative support does not damage the integrity of the bull.



Ultimately silver and silver-stock speculators should have come to accept volatility by now. This white metal is by far the more volatile of the PMs as it lies in a speculators’ market. Its market is less than a fifth the size of gold, so it doesn’t take a lot of capital to move this metal in either direction.



From a fundamental perspective there have been no structural changes to silver’s smashingly bullish fundamentals. In fact, silver’s fundamentals should continue to buttress the future of this volatile metal and the stocks that will bring it to market today and tomorrow.



Silver’s fundamentals today are ultimately the same as they were when its bull began. Suppliers continue to struggle to meet market demand and silver investment continues to rise. In fact, its indispensable industrial applications are still seemingly immune to rising prices. This of course makes sense since only small amounts of silver are used per unit of a finished product. The silver cost per unit is usually trivial compared to total manufacturing costs.



This is supported by a recent GFMS study that marked 2006 as the fifth consecutive up-year for silver’s use in industrial applications. This was led by both China and Japan showing greater than 10% year-over-year growth with the US up an impressive 6%. And this all comes on the heels of the major industrial opposition to last year’s launch of the famed silver ETF.



SLV has proven to be wildly successful for this silver bull since it went live last spring. So much so that this ETF was a big catalyst to the flurry of speculative excitement that gave fuel to silver’s parabolic rise.



The opposition to SLV was afraid that an ETF would reduce the silver on the market and cause prices to rise. In a sense they were right, but the reason their opposition was thwarted by the SEC simply boils down to their selfish ambitions, they want cheap silver. Silver is indeed an industrial metal, but the successful launch of this ETF proves that its precious aspect should not be taken for granted.



The success of SLV has shown that there is a wider market for silver as an investment than originally thought. Since its custodian’s initial silver investment of about 21m ounces in April of 2006, the amount of silver in trust has grown to greater than 141m ounces. This is an incredible increase of 570% in just over a year since this ETF went live!



Another report out of GFMS really bolsters silver’s fundamentals. This report identifies 10-year growth for world silver fabrication through 2005 of 37% for industrial uses and 61% for coins. And though it shows silver’s use in photography down by 22% over this time, there are some interesting facts that come out of this.



Most interesting is that 2005 marked the first time that silver demand for jewelry was greater than its demand in photography. This is important because 60% of the silver used in photography is recycled, whereas a very small amount of silver is recycled from jewelry. Steady jewelry demand and shrinking photography demand can be spun in positive fashion. And because of the differing recycle rates, this trend could end up creating more overall demand for silver.



So with silver’s still-excellent fundaments and a technical picture that is not as scary as people think, opportunities still abound for investors. And I believe silver stocks remain the best vehicle for speculation and investment. The explorers, developers and producers tasked with bringing this metal to market offer spectacular leverage to the price of their underlying metal.



But since three-quarters of the silver that comes to market is just byproduct revenue for some of the major global mining conglomerates, it is the other one-quarter that comes from primary silver companies that warrants our capital. These primary silver companies are what stock traders can use to directly leverage silver. They live or die by its secular price trends.



With the abuse that the commodities stocks have taken of recent, silver stocks in particular, there are now excellent buying opportunities available to layer in for the next run-up in silver. At Zeal we periodically publish research reports that among many things help feed our newsletter trades. And this spring we published a report profiling our 20 favorite silver stocks.



In this report are detailed fundamental profiles of the silver stocks we believe have the highest probabilities-for-success to prosper in silver’s next upleg. Many of these stocks have been sold off with the markets and are now at or near oversold technically opportune buy points. If you would like to have this valuable report at your fingertips please purchase it today.



The bottom line is though silver appears to be weak, especially compared to gold, this shouldn’t come as a surprise due to its hyper-speculative nature. Even with silver in the midst of a mini-downtrend and relative support at a bull record low, there is still no reason to panic.



The uptrend and downtrend that have followed the major interim low off silver’s May 2006 top should be considered in strategic context. These separate trends are turning out to just be tactical noise in what is panning out to be a long consolidation similar to the one following silver’s first major upleg.



Investors now have the opportunity to become true contrarians and deploy speculative capital into the much-feared silver-stock environment. If silver’s last two uplegs and consolidations tell the story of what is to come, then legendary gains could be just around the corner.

[Mike Mazzone of Palatine]

http://www.fxstreet.com/futures/news...5-0806f3183e43

Silver's poor performance prompts UBS to lower price forecast

Fri, Aug 31 2007, 11:01 GMT
http://www.afxnews.com

LONDON (Thomson Financial) - Silver's poor performance amid market turmoil has forced investment bank UBS to revise lower its price estimate for the metal.

The bank had once said it thinks silver would outperform gold.

UBS Analyst John Reade said today, however, that because silver has fallen in absolute terms and dropped relative to gold UBS now sees prices at 12.60 usd in one month and 13.50 usd in three months.

The bank had previously seen silver fetching 14.30 in one month and 15.50 usd in three months.

"While silver should be dragged higher by the positive move we expect in gold, we no longer believe that silver will outperform gold, except for short unsustained bursts."

Gold has seen some sharp falls since the beginning of this month as worries over a global credit crunch sparked some risk aversion but is now trading at around the same level as it started at in August. Silver on the other hand has lost some 8 pct over the same time frame.

"Silver's nasty habit of sharply falling during corrections in precious metals may have resulted in serial cardiac arrests for silver bulls."

Gold is trading at around 667 usd while silver is at around 11.89 usd.

anealla.safdar@thomson.com

as/ejb

COPYRIGHT

Copyright AFX News Limited 2007. All rights reserved.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.