Silver Investment – The Sole Quantum of Solace
|January 28, 2013 |||Comments Off ||
Some Silver Investors must be wondering why hang on to their metal at this point? Perhaps the most compelling answer is inflation, since an increase in the money stock will eventually lead to higher Silver Prices. In fact limitless QE was in Fashion in 2012 which is leading to limitless Debt Limit expansions now. This practice of mindless ultra loose monetary policy will now surely show effects as Hyper Inflation rears its ugly head. Central banks around the world must keep printing or electronically generating money to meet the hundreds of trillions of dollars in unfunded liabilities, promises and obligations. Inflation will boom once this massive Quantum of mindless Solace finds its way into the markets. Raw commodity prices will hit the roof. Another factor to consider is the out of control deficit spending that trumps any revenue collected from taxes. Then you can take into account the interest that needs to be paid on the ever-increasing sovereign debt burden, which has resulted in the largest debt-to-GDP ratios ever seen in peacetime history.
The Race to Debase on the Road to Financial Repression:
Central banks are currently faced with a progressively desperate need to improve exports as a growth engine, while at the same time reducing the purchasing power of their national currency in order to melt away sovereign debt. This rather dubious method of debt reduction is often called financial repression, especially when referring to debt liquidation practices in emerging market financial systems. Nevertheless, the term seems increasingly applicable to the post-2008 financial crisis debt reduction practices of many developed countries. Central banks engaged in this race to debase their respective fiat currencies have widely telegraphed their policy objectives well into the future. Some central bankers, like the Fed’s Bernanke, have even resolutely stated that they are not at all concerned with inflation.
Why Buy Silver Now?
Notwithstanding a more than ten year bull market, precious metals — and especially Silver — remain the most under-owned they have ever been in modern times. Furthermore, despite their intrinsic value, industrial uses, scarcity and beautiful nature, they remain largely abhorred and ridiculed as an investment by the mainstream financial press. Basically, Silver is cheap and is priced well below its historical inflation adjusted high. Relatively active price management has resulted in an artificial perception of sufficient physical supply, when it is really paper silver that is being supplied, not the metal itself. Although quite effective in terms of adjusting market sentiment, paper Silver Price Manipulation is ultimately a futile exercise, and the physical metal’s supply will eventually determine the retail price.
Silver’s Supply and Demand Status:
Two powerful sources of demand are simultaneously competing with each other for a dwindling real supply of physical silver. First of all, most of the silver produced in the world has been used up in industrial processes, which require a much higher cost to recover the silver from that source. Silver is also a strategic commodity, with very few above ground stock piles remaining and new uses being discovered every day. In addition, silver is mined primarily as a byproduct of other metals — making it exceedingly difficult to predict new supply coming on the market. As a result, the silver users that are responsible for the majority of demand employ just-in-time delivery to maintain their inventory. This makes them quite vulnerable to market panics that can quickly send silver prices sharply higher. Basically, silver and Precious Metals remain — as they have always been — a safe harbor in a world where the laws of supply and demand have been violated and subverted to the point where they have now remained broken for decades. Physical Silver offers an easy way for individuals to add a universal monetary component to a disaster kit — which is why silver investors are buying it while they can, reports silver-coin-investor.com.
Silver Investing and the Sanctity of Savings:
A basic issue with Silver Investing for many people is that the actual metal is scarce, valuable and increasingly vulnerable to explicit and implicit confiscation. Yet silver is not only an investment vehicle. It also acts as an alternative savings vehicle to saving wealth in fiat currencies. Silver remains both literal and symbolic of the principles here. Furthermore, the physical possession of silver requires a different kind of investor strength and resolve, and it involves directly confronting market risk, storage risk and confiscation risk. Investment suggests the anticipation of making a profit, and that certainly has been the recent trend for those lucky to be holding silver. Most market observers acknowledge that silver will eventually trade to its intrinsic value based on the bullish underlying fundamentals. Appealing investment qualities of silver investing include its various industrial properties and its strategic important as a scarce and valuable commodity with inelastic demand.
Will it matter if the thousands of ounces of silver used in each Tomahawk missile cost multiples higher in US Dollar terms when the government paying for these weapons has an essentially infinite ability to create the necessary number of monetary units used to buy those ounces? This highlights the role of silver as a monetary asset or one more akin to an alternative savings vehicle.
The Sanctity of Savings:
People are now living in an economically challenging time period where savings and capital are needed most, and yet the reward for or return on savings is at its lowest point in recent history. Saving requires self-respect, sacrifice, strength and stamina. Savings — like capital formation —is precious to the wider economic community. In a system where the promises to pay are generally adhered to, savings should be rewarded over time by an accumulation of capital. This process would grant the saver more options and freedom than they otherwise would have had. Investment implies trading or taking risk in return for an anticipated profit, but savers are owners.
Silver is Honest Capital:
Silver is a scarce natural resource with considerable intrinsic value. As such, Silver is honest capital. Taking physical ownership of silver requires self-awareness and responsibility. It is not easy. Above all, Silver investing and ownership requires honest thinking about us, our capabilities and our limitations. The protection of honest capital thus requires clear and rational thought about the world, its dangers, its opportunities and the nature of risk. Since savers provide the capital which makes that activity possible, they make the satisfaction of society’s desires possible. As capital grows cumulatively, today’s capital stock lays the foundations upon which tomorrow’s prosperity is built. Furthermore, the decisions that people of today’s generation make with their capital and savings are what they will leave to tomorrow’s generation. It seems best to leave capital of true intrinsic value to your heirs, rather than paper promises.
If China likes Silver, maybe we should too:
Silver’s drawing more and more attention as an investment these days, especially from China. That appetite has made silver bulls giddy and lifted prices closer to a record. “Investment demand, not industrial demand, is what drives silver prices right now,” said Mark Thomas, author of email-alert service provider SilverPriceAdvisor.com. “World investment demand is starting to really pick up.” Chinese citizens are “now buying silver because gold topped out in 2011 and silver is much more affordable,” said Thomas, a Silver Bull who has recently tripled his exposure to the white metal. And Silver is starting to outshine Gold. As of Thursday’s settlement on the Comex division of the New York Mercantile Exchange, silver has outperformed gold, with futures prices trading 5% higher this year, compared with a 0.4% loss in gold, and some analysts are touting the white metal’s prospects to achieve a record high this year. Silver is “facing just as good a year, if not better, than the yellow metal,” said Jan Skoyles, head of research at The Real Asset Company, a precious-metals investment platform provider. Silver is undervalued next to gold, has a finite and rapidly decreasing supply and it’s more accessible in greater quantities than gold, she said. All of these factors are “falling into place and becoming more acute, which therefore has driven up Silver Investment demand.”
At just under $32 an ounce, Silver’s just a fraction of Gold’s per-ounce cost of nearly $1,670, making it more affordable to the masses. And in what some traders saw as a good sign of investment demand, the United States Mint earlier this month said it temporarily sold out of 2013 American Eagle Silver Bullion coins and suspended sales until the week of Jan. 28. “The increased demand for Silver Coins, as well as record holdings in silver-backed [exchanged-traded products], indicate that increasing numbers of people are looking to protect themselves with wealth-preserving assets,” said Skoyles. Holdings in silver global ETPs stood at more than 600 million ounces as of Jan. 18, compared with just over 300 million in late 2008, according to data from ETF Securities. Investment interest in China is a standout and is expected to see further growth in the years ahead, reported marketwatch.com.
Precious Little Time for Silver Investment before it slips away – Forever
Currencies are caught up in a global race to debase their value, as central banks and treasuries around the world attempt to manage unprecedented levels of national debt. Gold remains solid and incorruptible as the constant hard monetary check and secure asset, while Silver seems more like a chameleon. Silver is both a key to technological prowess and advancement, but it has never completely lost its role alongside gold as an investment asset. These precious metals will eventually rally as market pressures overcome the manipulation, although the timing of this rally remains the big issue. As much as market forecasting has improved over the years, humans still cannot make consistently accurate market predictions in any time frame. The price management seen in these asset classes arises from the fact that the market still uses a false and debased yardstick for measuring wealth in the form of the US Dollar. Most investors continue to ignore the Precious Metals, and opt instead to cling to the status quo investment classes of stocks and bonds. The more such markets attract reasonable valuation questions, the tighter the grip the manipulators need to maintain.
On the surface, investing in precious metals appears relatively simple, and yet as soon as one comes to terms with the many good reasons for doing this, the decisions involved become quite complicated — almost to the point of absurdity. Suddenly, you have an “investment” that must be stored, could be confiscated or stolen, and comes in a variety of forms, along with a slew of largely debatable reasons for holding each form. In summary, this complexity tends to leave almost every metals investor with a feeling of initial remorse, just as they start to experience the true volatility of precious metal prices. Sadly, most people simply cannot come to terms with all of this, or they will, but only when it is too late, and they have already missed the big market moves. Currently due to the illusions of Economy improvisations created by many vested interests, the perception on the surface, which is regularly reinforced by the status quo, is that there is all the time left in the world to buy metals. Nevertheless, the return to some semblance of balance — where the law of supply and demand is finally allowed to manifest itself in precious metals market pricing — will likely occur in a violent transition that is nothing like anything anyone has ever witnessed or could even imagine. More over with biggest support factors for Gold price hikes seemingly being withdrawn & the increasing need of a safe haven investment – Silver now remains the single source proving the much needed Quantum of Solace. Do not plan on being able to just hop aboard the trend in such a dramatic situation. Silver Demand has already started proving itself around the world as physical demand – The real demand outpaces supply.
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