Silver is best hedge against inflation

sunshine silver bars bullion
Thanks to gold’ selling about 50 times the price of silver, you may be perplexed to hear that silver is more precious than gold. It seems an obvious contradiction, but the meaning is exactly that silver has a high demand by industry, while gold has limited demand, except for jewelry and some off-hand uses like electronics. In terms of its necessity in a modern society, silver bullion has the highest value and most utility. An ounce of silver is more valuable to industries because of its wide array of uses.

For 60 years, more silver has been consumed by industry than gold produced. It’s the circumstance most optimistic about a product. Again, silver is in greater demand by industrial users in the world that is gold. However, gold is selling at fifty times the price of money. It makes one wonder if this is merely irrational exuberance of gold or something else.

For the past 60 years silver has been dumped on the market without much regard to price. The U.S. government sold the stocks of five billion ounces. This money was used by the industry and is gone forever. A few years ago, the U.S. Mint announced that they were to buy silver on the open market.

This is the only part of the story. You may be shocked to learn that there is more gold around than silver on the earth. Approximately five times more gold is documented in supplies above ground than silver. In addition, there are fewer years of silver production remains underground to be mined than gold. These powerful events are not currently reflected in the price. However, one day they will. Therefore, the possibility of profit exists in silver like no other time in history. Nothing in the world has the opportunity to increase your net worth as silver bullion.

Why I Would Manipulate Silver, IF
(IF I were a central bank!)
Silver Stock Report
by Jason Hommel, July 8th, 2009

Goldman Sachs has admitted that they have a computer program that can be used to manipulate markets.

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,”

For over ten years, has gathered information and admissions from central bankers and major bullion banks that the price of gold on the world market is manipulated lower than it should be. Well, one more admission is close enough for me to be counted as one more proof.

Many people are paid to deny such manipulation of course, because the people who are doing the manipulating are earning a lot of money from their ability to print money at will, without it showing up in a rising gold price.

One of the more preposterous denials of manipulation is that keeping silver down in a rising market would simply cost too much, as nobody could afford the losses.

That’s just propaganda, of course. Losses on bad trades, such as being short the silver market, must be taken by somebody.

But my strength lies in running the numbers, using estimates, and exaggerations, to prove the point.

At the most, I’ve seen the silver market with a total open interest of up to 800 million ounces. This is a rare top, of course, but it can be used to determine a hypothetical maximum of “total losses” for being short silver during the entire bull market.

Silver has moved from a low of about $4.15/oz. in early 2003. Since then, silver topped out at about $21/oz. in the spring of 2008.

Using those three figures can give us a maximum total estimate of COMEX paper silver losses, assuming 5 unreasonable and exaggerated things.

1. That the short position was all put on, and initiated, entirely, at $4.15 — which it wasn’t, it was put on starting at the former top in 1980 of $50/oz, and major bullion banks have always been short, ever since.

2. That the short position was completely covered at the top of $21 — which it wasn’t, and it got much bigger at the top, and again, after that top, around $16/oz, as the banks sold 41 times more paper silver as was purchased by physical silver investors in a month, which helped to push the price down to $8/oz, which was very profitable for part of their position.

There’s no question about it, the markets can be very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.

We were looking once again at the S&P 500 and many people have said the market has gone up, not on the fundamentals, but on the perception that things are going to be better. Perception is one of the most powerful elements of the market. We would say that perception trumps both the fundamental and technical.

So what’s going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?

In this new short video, we outline several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.

As always, the videos are free to watch and there is no need to register.

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