Silver Phase Transistion

Paper, Plastic, or Silver

By: Michael "Woody" O'Brien ChFC


http://news.silverseek.com/SilverSeek/1293213212.php

-- Posted 24 December, 2010


My lovely wife enjoys shopping, but not as much when I’m shopping with her.

In the past her angst was limited to me prodding her NOT to buy made in China, but to instead make every purchase a hard-target search to buy American - especially online.

(see: http://www.americansworking.com/index.html).

Then her eyes rolled when I refused to have anything I purchased put into a plastic shopping bag. I've told 1000 retail clerks, "plastic comes from oil, that causes wars, that kill innocent people, and I won’t be a part of that global crime spree."

However, now my wife must endure my new retail teachable moment. I now ask businesses at which we shop if they want to be paid in worthless paper dollars or real silver money, while holding up a new, 1 troy ounce silver round.

The reaction of most people who have never eyeballed (or even held) a pure ounce of precious metals in their hand is enlightening. People’s eyes light up like a Christmas tree when offered payment in silver.

Many small, owner-run local, small businesses are THRILLED to be asked to take silver as payment for services. I have had my Hummer serviced, bought hunting equipment, food direct from an organic farmer, and even a solar power generator paid with precious metals.

Just as important, I am conditioning these same merchants to look at me as a preferred, hard-money customer – especially when the dollar falls.

"Where did you get that silver, and how can I get some?" is also a very common question. Apmex.com and eBay is my standard reply.

Why is offering people you do business with the option to pay in silver so important?

It's actually quite simple. If you are in a movie theater, and 3 people walk out, you will barely notice it. But if 10 people dash out, the rest of the crowd will start to think they know something and head for the exits.

People who own silver know the reasons why it keeps going up, but they are not usually very chatty about telling others. For the bull market in precious metals to power forward to the next level, it's in the enlightened self interest of every bullion investor to start offering to pay others in metals.

One man named John Chapman, aka: Johnny Appleseed, made eating apples mainstream in America in under 20 years.

Imagine what 1 million silver bullion owners can do in 12 months trying to mainstream silver as payment for goods and services.

Try tipping a waiter with a ½ ounce silver round or silver war nickels and explain why. Give silver bullion Christmas, birthday, graduation and thank you gifts. My clients LOVE getting silver rounds as my thank you for their referral of new gold stock mutual fund clients.

The allure of precious metals is thousands of years old; it's nearly in our DNA. If you have never seen the way people's eyes light up when holding a real silver round, try it. You will be shocked by what you witness.

With the vast majority of Americans having never held a 1 ounce, of any precious matal in their hand, there is much work to do. There are hundreds of millions of teachable opportunities in the lives of bullion owners that NEED to be seized.

Consider this your marching orders from Silver General Woody O’Brien: get off your silver ASSets and stop JUST accumulating silver, and start giving and spending it as money. Start letting others feel silver as indestructible tender in their hands.

Become a silver enabler. Help people reconnect with that precious metals DNA in all of us that craves real money in the palm of our hand.

Max Keiser’s prediction of $500 silver can come to pass, and crush bankster criminals like JP Morgan like a bug on a windshield, if just one thing happens:

Current owners of bullion treat silver as the proverbial candle of Matthew in verse 5:15:

"Neither do men light a candle and put it under a bushel, but upon a candlestick, that it may shine to all that are in the house".

At this moment in history, Silver can do more than just save your wealth and others you teach about it. Silver (and gold) can save the world from more decades of bankster war and debt slavery.

The protesters in Europe and Alex Jones are on point: the world faces a choice between the banksters or us. Choose!

I vote we keep the guillotines in storage and bankrupt the banksters with silver rounds before jailing them (the real terrorists) at Gitmo!

Michael "Woody" O'Brien ChFC

It is moving up a little.........

GOLD 12/27/2010 22:38

1390.40 1391.40
+6.30

+0.46%

SILVER 12/27/2010 22:38

29.52 29.54
+0.24

+0.82%


PLATINUM

12/27/2010 22:37

1743.00 1747.00
+8.00

+0.46%

PALLADIUM 12/27/2010 22:01

770.00 776.00
+3.00

+0.39%

The Collapse of Price Fixing Will Keep Silver Prices Rising

By: Peter Cooper



Reliable market estimates suggest that there around two billion ounces of gold held above ground in bullion, and only one billion ounces of silver.

Over time there has been far more silver mined than gold, say around 45 billion ounces, but it has almost all been consumed by industry. Much more of the five million ounces of gold mined by mankind remains.

Undervaluation

At current prices then the total silver market is worth $30.6 billion and gold $2.8 trillion. Any investor ought to spot the undervaluation there. That is what happens when a commodity trades at a lower price than three decades ago.

It is as though silver has been kept in some kind of communist, controlled economy. And indeed, that essentially is what happened after the 1980 silver price crash. Several banks colluded to keep the silver price locked down and in a world of its own, trading silver to profit their own books.

Earlier this year the bank’s position finally became untenable. Regulators began to publicly acknowledge a legion of complaints from investors and found them impossible to deny any longer. And the banks, fearing action largely liquidated their short positions over the quiet summer months.

Price fundamentals change

Silver prices have jumped from $17 to $30 since then. However, while this kind of price spike is always vulnerable to sudden corrections, there is a change in price fundamentals here.

The real lesson is that the artificial price fixing regime is over. Communism has collapsed and price controls are off. The logic is actually for very much higher market prices, not a retracement as some now expect.

History shows that once price fixing regimes collapse prices quickly inflate, and they then never go back to former levels. The gold rush of the 2000s is going to be nothing to the silver rush of the 2010s.

The silver market is incredibly small to absorb the scale of investment likely to come its way as other asset classes lose their appeal thanks to rising inflation and interest rates. For the gold-to-silver price ratio to get back to its historic average then silver prices must treble; and that will be on top of the rise to come by following the gold price up and up.

Market psychology
http://news.silverseek.com/SilverSeek/1293778920.php
And while precious metals have been growing in investor appeal for the past decade, there has been nothing yet like the over confidence of the late phase of an investment bubble. We saw that in dot-com stocks and later in residential housing.

At the moment many investors in gold do so out of fear and with little enthusiasm, and they hardly touch silver. Only when the broad masses get the bug and greed over powers this market will it be time to get out. That hardly seems to be the case right now.

Wall Street Journal Aids Silver Price Suppression

By: Jason Hommel, Silver Stock Report


-- Posted 30 December, 2010 | Share this article | Discuss This Article - Comments: 3 Source: SilverSeek.com

(Through misinformation, lies and omission! Plus, the year in review, and price predictions for 2011)

I'm called upon by my regular readers to refute, rebut, and rebuke this bad article on silver from the Wall Street Journal.

Price of Silver Soaring
Investor-Fueled 74% Gains Dwarf Gold; Race to Open Mines
By CAROLYN CUI And ROBERT GUY MATTHEWS
DECEMBER 26, 2010

Regarding (RE) the WSJ comment: "unexpected surge in investor demand."

Really? Unexpected, you say? But precious metals bulls have been predicting explosions in the price for ten years based on irrefutable fundamentals and unsustainable market manipulation!

How can investor demand be unexpected when the price of precious metals has been going up continuously for ten years now since the year 2000? Don't investors like to buy things that are rising in price? Don't investors also try to predict things that will rise in price, and buy them before they really rise? Does the WSJ know anything at all about investing?

Unexpected? Really? When the numbers of silver Eagle 1 oz. coins produced by the US Mint has been increasing steadily for the past 3-4 years, up from 10 million oz. to nearly 40 million oz. this year? How can a single year's investor demand be unexpected, when its increase is already a steady trend?

Regarding the WSJ comment: "Prices are rising despite oversupply."

What oversupply? What do you even mean by oversupply?

Here is the dictionary definition of oversupply:
http://www.thefreedictionary.com/oversupply
"A supply in excess of what is appropriate or required."

Ah, the WSJ is no longer reporting fact, but throwing out opinion now.

There is no oversupply, and can never be any oversupply of things such as gold and silver, since they have the least diminishing marginal utility of all things on earth, since they are money. Nobody ever complained that they had too much money.

But what does the WSJ mean by oversupply?

The supply & demand numbers produced by such surveys as http://www.silverinstitute.org/ who the WSJ quotes as a source, have "sum up" categories called "Implied Net Disinvestment" and "Implied Net Investment".

http://www.silverinstitute.org/supply_demand.php

When investors are buying, this is often called a surplus, or as the WSJ says, an "oversupply", and when investors are selling, that is called a deficit.

So, apparently, the WSJ is saying that when investors are buying silver that's "oversupply". And thus, when they describe that action as an "oversupply", they are really saying that silver purchases by investors are "inappropriate". Thus, they reveal their bias, with one word.

RE: "Many analysts expected those factors would keep a lid on prices in 2010."

But most silver analysts are employed by LBMA bullion banks who have a vested interest in manipulating silver prices downward, since silver is the Achilles heel, or arch enemy, of the banking system. Thus, "mainstream" silver analysts have never gotten a single year's prediction correct in the last ten years of the bull market in silver and gold. They always "predict" prices for next year that are within about 5% of current prices, and never any higher. Meanwhile, silver prices have risen from $4.15/oz. in 2003 to $30.60 now in 2010, which is a cumulative return of 637%, which, over 7 years, is an average annual gain of 33%. They never come close to predicting such gains.

Check my math, here:
http://www.smartmoney.com/compoundcalc/

Have any of the mainstream analysts predicted a silver price gain of 33%, for the following year, or even close, in the last 7 years? Never. Thus, they are worse than useless, they are purposefully deceiving, or willfully ignorant, as is this WSJ article. That should be no surprise, and neither should silver's price rise.

RE: "What they didn't expect was an overwhelming flow of money into the market from investors eager to ride a commodities rally."

Overwhelming flow of money into silver? Really? Let's see, there is $14,000 billion to $18,000 billion of paper dollars in the US banking system, which does not count dollars in overseas banks, and the rest of the world is printing up paper money like crazy for competitive devaluations. Meanwhile, the US government has an annual deficit of $1500 billion or more, depending on how you count, if you count off budget items, it could be as high as $3000 billion depending on who you read. Meanwhile, a tiny $3 billion pours into silver, which is a paltry 2% of 1% of the money in the US banking system, and a mere 10% of 1% (or 1/1000th) of new US money creation.

I wouldn't call that an overwhelming flow of money into silver. I'd say that's only a tiny trickle, wouldn't you say?

RE: "This is a story almost entirely about investment," says Stephen Briggs, senior metals strategist at BNP Paribas.

Well, the silver story, in the future, will be almost entirely about investment, but today, investors are still buying only a tiny fraction of new silver mine supply, with the rest being consumed by industrial applications of all sorts, from fabrication, to photography, to jewelry, silverware, and coins and medals.

From the silverinstitute.org:

2009 mine production: 709.6 million oz.
2009 Implied Net Investment: 136.9 million oz. (oversupply, or investor buying)

But let's pause here, and examine the numbers more closely.

Sprott wrote an excellent silver report that reveals that ETF silver demand is not counted in the "demand" numbers for silver!!!
http://www.industrymailout.com/Indus...678qz%3D3f9465

Fraudulent supply/demand numbers, omitting investor demand, or calling it a "surplus", is part of the manipulation of silver prices.

But this implies a few other things, too.

Either the exchange traded funds are not actually going out into the market to buy silver which means they are mostly all fraudulent, or, their net purchases are more than offset by investors or refiners dumping 1000 oz. silver bars (the only acceptable form of ETF silver) to dealers who sell it directly to LBMA banks. We've never had to dump any silver bars in the last 2 years of our precious metals business.

RE: Investors from the U.S. to China turned to "hard" assets such as copper and other commodities in part as a hedge against inflation worries.

No, copper has never been a key inflation hedge. Gold and silver are. In fact, recent reports show that JP Morgan has been buying all the world's warehouse copper, up to 90% of it. So, JP Morgan owns the copper, not investors, so this statement is just a bald faced lie.

RE: Exchange-traded funds backed with silver have enabled investors to invest in a market that traditionally was harder to participate in.

I don't know what's so hard about buying $15,000 worth of silver at $30/oz. It's only 500 troy ounces, which only weighs 35 pounds, and comes in a box the size of 9 inches by 9 inches by 3 inches high. Even 60 year old ladies carry such boxes out of our store all the time. That's one of the world's easiest commodities to buy. Contrast with WSJ's beloved copper, at $4.40/pound, which means $15,000 of it would weigh a staggering 3409 pounds! That's why copper is not remotely a viable inflation hedge, and has never been used as commodity money, but only as token money. Even 1 troy oz. of copper, at $4.40/oz. divided by 14.8 troy oz/pound is only worth 29 cents per troy oz., but would cost you about $4 each for minting costs and distribution, and perhaps $5-10 each for widespread marketing via MLM plans.

RE: In recent months, concerns about inflation, the European debt crisis and the U.S. Federal Reserve's recent moves to boost the economy have driven investors to hard assets, also benefiting silver prices.

Really? I agree. But then, why was silver's move so "unexpected" as the WSJ first wrote, to most analysts? Shouldn't this have been easily foreseen?

RE: The craze has reached the coin market.

Craze? Craze you say? What do you mean, craze?

http://www.thefreedictionary.com/craze
1. A short-lived popular fashion; a fad.
2. A fine crack in a surface or glaze.

Ah, only two definitions for the noun form. Clearly, they don't mean the second. Ah, they imply silver demand by investors is not only inappropriate, but will be short lived, and that it's now popular.

Wait, when only 1/1000th of new money is moving into silver, why and how is that popular? When only 2% of 1% of actual money in the banks, or, less than $2 out of every $10,000 sitting in banks is being invested into silver, how can that be accurately described as popular? No, silver is very unpopular now, still.

Let's be honest. If even 1% of paper money in US only banks, were to be invested into silver, it would be 50 times greater than the investment demand today, which would be as much as $180 billion dollars, moving into the silver market that only produces 700 million new oz. by the mines each year. $180 billion divided by 700 million implies no silver buying from anywhere else in the entire world, and no silver buying from any kind of industrial application, which implies a lowest possible price of $257/oz., at this "1% demand" level, which would still be, long, long before silver ever gets to be "popular".

That's a shamefully inaccurate description, calling silver coin buying a "craze", which also implies things such as:

verb: 1. To cause to become mentally deranged or obsessed; make insane.
verb, intr. 1. To become mentally deranged or obsessed; go insane.

The reason why that word "craze" is particularly objectionable to me is that silver buyers are returning to rational thought. People who think used, dirty, printed paper is valuable are the ones who have lost their minds.

RE: "Silver's reliance on investors to prop up the price could cause it to tumble suddenly."

"Silver's reliance on investors"? No, Investors rely on silver!

But seriously, I agree, silver's price is increasingly reliant upon investors who sell paper money for silver, and at some point that will ultimately halt completely. For example, after silver hits $1 million per ounce, the price could suddenly tumble to either $900,000 per oz., or it could simply stop trading in terms of paper money altogether, as paper money might just not buy anything at all at some point. It is far more true to say that paper money's value relies more on confidence than silver.

But really, the main point with silver is that today's value is certainly not dependent on investors, but rather, industrial demand, which is far larger, and more stable. As China alone continues to develop and surpass the total consumption level of Western nations, their population will consume silver as does the western world. That would be 6 tenths of an oz. of silver, per year, per person, because silver is an essential part of switches in electronic devices. If China consumed that much silver, times 1.3 billion people, that's 780 million ounces, which is more silver than is currently produced annually by all silver mines in the world. If the world is going to ever run out of things like cheap oil, or copper, it will certainly run out of cheap silver, first.

RE: "He forecasts an average price of $30.10 per troy ounce next year "

Yes, the analysts never predict a price 33% greater, which, as I calculated above, is the average annual gain in silver so far in this bull market. Next year's "average" is always today's price, and always paired with a warning about silver moving down. In less than two days, next year's average price was exceeded this year!

RE: "But he cautions, "The number is only going to be achievable as long as fresh money keeps moving in."

And why wouldn't it? We know that the USA alone will print from $3000 billion to $4000 billion next year. So why wouldn't at least $4.5 billion move into silver next year? Perhaps it's more likely that $400 billion will move into silver next year, and silver's price will be $1000/oz.? Well, maybe not, but a more conservative estimate might be about $10-20 billion, which could drive silver to $50-100/oz., as that's how this trend is developing.

RE: "Silver's all-time high was set in January 1980 at $48.70 an ounce, or $129.32 when adjusted for inflation."

Perhaps the worst lies of all. What do they mean by "inflation"? The CPI index that does not count food, fuel, housing, tuition, or medical expenses? What does CPI count these days? What's left? Imported clothing, goods made in China, and computers?

Instead, if we count inflation as the monetary base, as M3, which is no longer published, we might observe that M3 was $1.8 trillion in 1980, and nearly $18 trillion today, an increase of ten times as much, thus, the true inflation adjusted high is not $129.32/oz., but rather $500/oz.!!!
http://news.silverseek.com/GoldIsMoney/1293724137.php

cont........
See, another part of the lie is the false specificity of that .32 at the end of their $129.32, to make it sound so official and supremely accurate, but it's not remotely accurate.

And neither is my estimate of $500/oz. That's a low ball figure. Is money M3? What is M3? M3 included short term bonds. Well most of the bond market is now all "short term" bonds, given that they stopped selling the 30 year bond, and given that interest rates are all so low, all bonds are priced at the near equivalent of actual dollars. And the bond market is far larger than the $18 trillion estimate of M3. The bond market could be $25 trillion to $35 trillion, who knows? Data on that is hard to find.

Much of the bond market is as fraudulent as the paper promises in the silver market. A lot of people don't buy bonds anymore, they just place bets on the direction of interest rates, by buying futures on bonds, or options on bonds, which is an even more fixed and rigged game than the silver price.

Which brings us to derivatives, the bets on bonds, called "interest rate derivatives", which are estimated to be as high as $400 trillion or more.

If that is money, then the inflation that has taken place since 1980 is just off the charts, and will ultimately drive silver prices to far higher than $500/oz.

RE: "This year investors are expected to pile a record $4.5 billion into the silver market, accounting for 24% of the world's total demand, says GFMS Ltd., a metals consulting firm in London. That's the highest level, in dollar terms, in decades. Silver's relatively small market size�$19 billion compared with $170 billion for gold�has also played a role in amplifying the impact of investors, according to GFMS."

Silver's price is moving so fast, it was up nearly $1/oz. in the few days since this WSJ article. Silver's market size, at 700 million oz., times $30/oz., is already $21 billion, not $19 billion, but this is a tiny quibble of a fact.

The point is that $20 billion, or even $4.5 billion, in a world where $3000 billion of new money is being printed annually by the USA alone, and perhaps as high as $8000 billion worldwide, is really, really, really small, even if it's a record number. But the WSJ article never makes comparisons like this, it just warns that $4.5 billion is a lot, "the highest level in decades", and the word billion is a lot, in terms of real things, but it's not a lot in terms of dollars, which are not real things.

RE: "The strength in silver prices has prompted a flurry of development around the globe and pushed anticipated production in 2010 to 733.2 million ounces, up 3.3% from 2009 levels, and up 14% since 2006."

Ah, did you think they said that new silver mine supply will increase 3.3%? No, that's anticipated production. It may be less! They write as if this 3.3% increase is a lot and will act to reduce prices. However, new paper money in the USA alone is about 3 Trillion / 15 Trillion, or 20%! And world population growth is about 1.1%.

RE: "The market is set to see a surplus of 64.4 million ounces in 2010, says Barclays Capital, which could curb prices."

Wait, wait, wait. Silverinstitute.org says the 2009 "surplus" is 137 million oz. of implied net investment, while Barclays says the 2010 surplus will be 64.4 million oz.? Ok, if investors were buying 137 million oz. in 2009, and even more in 2010 to explain the current rise, how will 64.4 million be enough to satisfy them, without the price moving up?

Less silver certainly won't curb prices, unless, by using the word "curb" Barclays is implying a chart formation that looks like a straight line up before leveling off, somewhat like a curb on the side of a road. But Barclays is not implying that, for sure.

The article notes that a few silver mines will be increasing production. No mention is made of any mines that will be decreasing production, or closing altogether, which, of course, happens all the time in the mining business. Mines are depleting assets, and run dry.

That sums up what I needed to refute in the article.

The article makes no mention of any of the following of this year's major news items in silver:

THE YEAR IN REVIEW

1. No mention of the fact that JP Morgan was sued by at least 25 firms for manipulating the silver market. (A new lawsuit against JP Morgan on behalf of SLV investors was just filed, two days after the WSJ article). http://news.silverseek.com/SilverSeek/1293546686.php
2. No mention of the BIS reports showing that world banks have a net derivatives exposure of $137 billion of "over the counter" "other preciouse metals" liability, which is a short position, mostly in silver. Links:
http://www.bis.org/statistics/derstats.htm
http://www.bis.org/statistics/otcder/dt21c22a.pdf
3. No mention that the BIS changed their own reports, reducing the number for June, 2009, from $203 billion, down $100 billion, to $93 billion, after the US Justice department said it was investigating JP Morgan for silver manipulation.
4. No mention that JP Morgan admitted to being short silver, and wanted to placate internet criticism by attempting to cover their silver.
http://silverstockreport.com/2010/jp...ver-short.html
5. No mention that the CFTC's Bart Chilton admitted that one large trader had 40% of the silver market at the COMEX.
6. No mention that the CFTC has been investigating silver manipulation for over two years.
7. No mention that the CFTC just delayed imposing position limits on silver.
http://silverstockreport.com/2010/cftc-delay.html
8. No mention of the recent rumor that JP Morgan has two of the CFTC commissioners on their payroll.
http://www.youtube.com/watch?v=uPg4qTNTP-E&sns=fb
9. No mention of Andrew McGuire's CFTC testimony of a prediction in advance of a JP Morgan silver manipulation.
10. No mention of Jeff Christion's CFTC admission that the LBMA is leveraged 100 to one with nearly zero actual physical metal backing up most "physical" accounts.
http://www.bullionbullscanada.com/in...ary&Itemid=131

MY PRICE PREDICTION FOR SILVER: At least a high of $40/oz. by next year, 33% higher than $30 this year.

If the past seven years is any guide, silver's price should continue at pace, if not outperform, the past seven year's average gains of 33% per year. Someday, silver could really blow up much faster than that. Frauds do collapse suddenly. The dollar is fraud. Fractional reserve banking is fraud. Fractional reserve banking in silver is fraud. Most of the financial world is fraud today. Silver is not a fraud and is the opposite of fraud. Silver is not a promise to pay, silver in your hand is evidence that you have been paid in full.

=====

But let's assume, for the benefit of the doubt, that Carolyn Cui is just a very bad researcher on silver, and was not intentionally omitting all the major news items on silver in the past year.

How honest is she? Or the WSJ for that matter?

Here's a WSJ article on silver from May, 2008.

Fundamentals Begin to Weigh On Silver
New Mines' Output, Economic Weakness Could Crimp Prices
By CAROLYN CUI May, 2008.
http://online.wsj.com/article/SB121098087701600147.html

Ah, not very accurate, and not a very good warning. The WSJ should have warned that the dollar would fall, and that people could protect their purchasing power by buying silver. Did they? Sadly, no. They have never gotten it right on silver in this entire bull market, and are as woefully wrong today, as they were two years ago.

Excerpt: Barclays analyst Suki Cooper, who targets silver's average price at $15.20. "Silver's fundamentals look less compelling this year and are more likely to push prices lower," she wrote in a research note.

Laughable! Exactly as I predicted, these buffoons always predict "same as last year" prices, and are never bullish.

Excerpt: CPM Group, a New York-based commodities research firm, expects demand for silver to hold up this year, and its price to average $18.25.

=====

I've seen better reports on silver from CAROLYN CUI. I've even written to her a time or two. So I can conclude that she is not ignorant, but willfully ignorant, or being misleading on purpose. Perhaps if she does not "toe the line" she will be out of a job, but if your job involves lying, you should probably quit.

So, what should we conclude, and what should we do, in the order of most importance?

1. Buy silver. Buy real silver that you have carried, lifted, and stored in your own vault.
2. Do not trust the Wall Street Journal, or CAROLYN CUI or ROBERT GUY MATTHEWS ever again.
3. Cancel your subscriptions to the Wall Street Journal.
4. Write nasty letters to the WSJ's advertisers, and boycott them (just kidding, don't waste your time).
5. Subscribe to the free newsletter at the Silver Stock Report.
6. Share this report in your own blogs online, or on facebook.
7. Write your own refutations of future mainstream hit pieces on silver, exposing their intentional lies and misinformation, and lack of information.
8. Write to Write to Carolyn Cui at carolyn.cui@wsj.com and Robert Guy Matthews at robertguy.matthews@wsj.com and ask them for their honest answers and justifications to the accurate information presented here, just for the fun of watching them squirm.

Rick Rule Very Bullish On Silver For 2011

By: Peter J. Cooper



The perennial star of the Agora Financial Forum held each year in Vancouver (click here), veteran stock broker Rick Rule came out strongly in defense of silver as a top pick for 2011 in an interview on King World News.

Asked whether silver shortages would continue he said: ‘I suspect it’s true. One of the things that happens at least in the near-term, shortages and the price rises that they cause ironically exacerbate shortages. Meaning that more people are attracted to speculations in silver as the price goes up. The price of course has gone up because of that attraction.

ETF buying

Specifically the amounts of silver that have been bought by the ETF’s and by Sprott Physical Silver, have driven up prices. But the silver they have taken off of the market has not been as easily available to mints that have themselves faced increased demand from retail coin buyers. It’s been very aggressive buying demand that’s really changed the price of silver.’

Then this veteran precious metal watcher turned to pricing: ‘Gold and silver are in some senses unlike other markets in that they are driven by both of the primary investment motivators in the world, that is greed and fear.

The fear buyer buys gold and silver as a consequence of his or her fear about economic conditions, and the resulting price momentum encourages the greed buyer. The greed buyer’s buying in the short-term validates the suspicion of the fear buyer, and you have what are called echo bull markets. I think what you have now is a classic example in silver of an echo bull market.

If you remember the markets in the late ’70’s, the 1977 to 1980 bull market, these echo, or hyperbolic bull markets can continue for an amazingly long period of time.’

Of the prospects for a big spike for sliver he concluded: ‘If past is prologue, that’s very possible. The other interesting thing about silver is on the supply side. So little silver is produced as a consequence of silver mines, that is primary silver mines. So much more of it is produced as an adjunct of the mining of other metals, lead, zinc, copper, gold and things like that. What’s interesting about that is that increases in the silver price do not necessarily result in an increase in supply of silver because their production is tied to other metals.

Base metal connection

Now, it’s also true that the price of base metals are also up, and in a normal market we would see as a consequence of that increased base metals production. What’s interesting about the market that we are in is that we are still credit constrained. Meaning that although the banks have ample liquidity for short-term lending as a consequence of quantitative easing, they don’t have enough on their books to make long-term project loans.

These are the types of loans necessary to build great big base metals mines which would increase the amount of base metals and hence increase the supply of silver. So we are in a very interesting supply/demand situation where near-term demand is strong, but the fact that the demand is strong and the fact that the price of silver is rising has not and may not for a while increase supplies. It’s a very, very imbalanced market in my view.’

ArabianMoney notes that our leading local commentator in Dubai, Jeff Rhodes, CEO of International Assets has also made silver his pick of 2011 as he explained to listeners of Dubai Eye. Jeff is a veteran precious metals trader and claims to have made the last trade in gold at its previous all-time high in 1980.

He is nervous about tensions in the Korean peninsula and points to a complete distrust of paper currencies, particularly the dollar and euro. His view is that even with a 74 per cent increase in 2011 silver is still incredibly undervalued

http://news.silverseek.com/SilverSeek/1293458683.php

http://jessescrossroadscafe.blogspot.com/

James Turk has alerted King World News that silver is in backwardation. Turk spoke with KWN saying, “Silver is in backwardation which is an extremely important development. Most are aware that when backwardation occurs, the spot price is higher than the futures price. Backwardation happens regularly in most commodities, but it is rare in the precious metals.”

January 21, 2011

James Turk - Silver in Backwardation, Set to Explode
Silver is in backwardation not just in the short-term, this time it is extending twelve months forward!


The last time this happened Eric was in January of 2009. Over the next few weeks silver rose from about $10.50 to $14.50, a roughly a 40% move higher. The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return. I think we can expect a similar event to repeat over the next few weeks.


A similar type of move would clearly put silver well above its previous high. What this backwardation shows is that there is a disconnect between the physical and the paper markets in silver. As I said previously, the silver shorts simply cannot hold the paper price down here any longer without seriously discrediting the paper silver market as a price discovery mechanism.


Gold is not in backwardation, nevertheless the demand for physical gold is extremely intense. With the sentiment indicators at very low levels, it suggests we are about to see a stunning short covering rally in gold.”


Weakness in the metals can end as quickly as it began. When the metals turn, this next move should be breathtaking.

http://kingworldnews.com/kingworldne...o_Explode.html

The Value Case for Silver

By: Dr. Jeffrey Lewis


-- Posted 21 January, 2011 | Share this article | Discuss This Article - Comments: 1 Source: SilverSeek.com

The prices for commodities can change quickly and wildly, and in many cases, investors can hold commodities for years without any realization of profits.



The wild cyclicality is what has kept many out of the commodities markets, and it is the reason why so many value investors choose to ignore commodities as a broad investment alternative. In respectful disagreement, making the case for a value investment in silver is a cakewalk at worst.



Securities and Commodities



Stocks and commodities are nothing alike, except when they are. The world's most popular and most highly regarded value investors (many of whom don't have a favorable opinion of commodities) have laid down investment traits that, contrary to their viewpoints on silver, make it a very attractive value investment.



Among the basic tenets of value investing are that companies are boring and operate in boring industries. Ideally, value investing companies are those that many people take objection to, and that very few investors own.



Rumors are excellent, even preferred, and it would be best if the investment were in a low-growth industry. It has to be a product that people will keep buying indefinitely, and under the best case scenario, the company is buying itself back through share purchases.



Drawing Comparisons



Compare the above commonly adopted value-investing tenets to silver.



Silver is not only boring, but mining silver is a pretty dull exercise. Most investors still take objection to silver, and few, despite the recent surge, own physical metals. There isn't a single industry with more rumors than metals production, and in fact, several organizations are dedicated to uncovering such hidden evidence of backroom deals and price manipulation.



People will continue to buy silver indefinitely, as it is in every electronic known to man, as well as prized for its beauty. While silver ounces cannot buy back other silver ounces, it is safe to say that the supply of silver is being depleted, just as shares of stock are depleted in buybacks.



Silver is the ultimate value investment because it always has intrinsic value, even if it has no intrinsic price. And where even the most unlevered companies can go belly up when the markets turn, silver can't go to zero, nor can it disappear. Where executives, auditors, and others have violated the public's trust in making their companies appear more valuable, all evidence in the silver market points to lies intended to make silver less valuable.



Commodity Similarities and Differences



Silver's commodity cousins are what keep it in check. While the world can produce a near infinite amount of corn, wheat, sugar, etc., all the silver (and gold…don't forget about gold!) is already on earth. No more can be produced, and eventually, the only silver that will be left is that which we can economically recover.



The take home here is that silver is a value play. The metal virtually defines what the world “intrinsic” really means, both in and out of the financial world. Very few own it, everyone uses it, and it is very, very limited in supply. Whether it goes to $5,000 or $25,000 per ounce isn't important. Understanding that it will not lose value in the long-term is what is important.



Dr. Jeffrey Lewis

http://news.silverseek.com/SilverSeek/1295593200.php

Last weekend`s Silver Market update turned out to be pretty much correct as while silver did drop to new lows for this correction it ended the week with a strong blast of upside energy that is believed to mark a reversal to the upside.

On our 8-month chart we can see that following failure of support at the $28 level, silver worked its way lower but certainly did not collapse and then, after making a new low in the early trade on Friday, it suddenly surged to close at the high for the week, leaving behind a pair of candlesticks on Thursday and Friday that are together known as a "Bullish Engulfing Pattern" and which noramlly signify an upside reversal. During the week it became clear that there are a lot of buy orders clustered around the $25 level, which is kind of sad really, as Friday's action suggests that it won't drop back to that level and that therefore these would be buyers will be left on the station watching as the train pulls out without them. The breach of the $28 level just over a week ago is thought to have been the handiwork of The Cartel seeking to shake people out the better to cover their shorts - they didn't fool us though as we had this gambit flagged in last week's update. Before leaving this chart a final point to note is that silver is now quite heavily oversold as made clear by the MACD indicator at the bottom of the chart.



Another important development last week was a further significant reduction in the Commercial short and Large Spec long positions that we can see on our COT chart below, so that they are now well below the levels prevailing last July that preceded the massive Fall rally in silver. What does this mean? - first of all it makes further significant declines in the silver price highly unlikely and secondly it makes another thumping great rally very possible and it is likely to get underway very soon..



The conclusion to all this is that anyone with a sizeable silver short position is probably going to find themselves in a very unenviable predicament before much longer.




http://news.silverseek.com/CliveMaund/1296414902.php