CRISIS! CRISIS! I HAVE ALL OF THIS MONEY, WHAT DO I DO!
I have been in the financial industry for over 15 years and have followed financial markets and geopolitical events while doing so for over 15 years, and would like to share with you some conclusions I have found based upon my research, analysis, exposure as well as some strategies I am using to maximize my holdings during a time the financial system is going through a reset. Now, I'm not cheering misery here, I am merely trying to survive a financial hurricane by shuttering the windows, shopping for food before the flood and not just survive, but prosper from the information I have researched. Today's focus will be on the gentleman's metal: Silver.
Since the Presidential Working Group on Financial Markets was established under the Reagan Administration in 1986, the allegededly free markets have been manipulated full time by a small, government based trading manipulation system, making true market indicators very difficult to read. Unemployment figures? Since the government has changed their unemployment reporting categories for the U3 and U6 figures, the 25% true unemployment rate only appears to be around 6%. John Williams of Shadowstats.com does a fine job breaking down the statistical analysis here. So, with all of this manipulation of measurables and Fedgov manipulating true market prices, what can I do to ensure my financial well-being when they can no longer rig the markets?
The following are the asset classes I have found to be the safest, at a time where the Dow Jones Industrial Average, S&P 500 and other market indices are at record highs, awaiting a bursting of the bond market, stock capitalization and monetary inflation cycle.
Gold and Silver
Moreso silver than gold, but if you measure the stock market in gold rather than manipulated and overprinted USD, the indication of a collapse having already happened can be more clear. I found this site to be particularly interesting for viewing the markets in gold, rather than fiat HERE. Why silver over gold? The past 60 days, the gold to silver ratio has bounced between 65 and 75 ounces of silver to one ounce of gold, per this chart courtesy of goldprice.com. Why is this important? Per an article written for financialsense.com,
- 9:1 is the ratio of silver to gold annual mine production
- 6:1 is the estimated ratio of economic gold to silver in the ground (USGS)
- 5:1 is the estimated physical ratio of all silverware, silver/gold jewelry and other stocks above ground (according to CPM Group)
- 1:1 is the year-to-date ratio of investment dollar demand.
- 1:3 (more silver than gold) is the physical ratio of gold and silver coins/bullion
Ok, so with the mine production at 9:1, why is silver being priced at 65 to 1? Could this be an arbitrage opportunity? YES! Add to the fact that silver is used much more heavily in industry (bandages and medical equipment, solar panels, photography and electronics) which when disposed is done so at such a small portion per product, that most of this silver will be unrecoverable/unmineable! Per the following CHART, you will see that 35% of industrial use of silver is electronics (small parts, unmineable in a landfill), and 10% being uses for photography (the glaze cover that photographs have on them, also mostly unrecoverable due to the small amounts) as well as part of the remaining percentage used to create bandages, silver nitrate, etc. for medical purposes, due to its antibacterial properties.
So, let's go ahead and pare that ratio of 9:1 conservatively and say... oh, 6:1. With the 5:1 ratio above for all physical ratios for investment/collection purposes, once silver meets its natural equilibrium, arbitrage between these two metals will net you around 12 times more than your counterpart gold bug.
WHAT TYPE OF SILVER SHOULD I GET?
I try to diversify my silver holdings in three categories: Junk Silver, Coined Silver and junior miners of silver and silver contract companies.
Junk silver is any US dime, quarter or half dollar produced before 1965, as Lyndon Baines Johnson passed the Coinage Act of 1965.
The act debased all dimes and quarters of their silver content from being 90% silver to zero, while debasing half dollars from 90% to 40%. They abolished all silver out of the half dollar after 1970. Thanks, Mr. "great society".
So for purposes of smaller trading for bread and other supplies during crisis times, these small dime and quarter denominations can be helpful, when people most likely don't have exact change.
SILVER COINS
For longer term investment, I also purchase silver coins, also known as silver "rounds" as well as certified 1 oz bars. The value of the coin including the verification of the silver content by the company's respective governments verifies, much like the junk silver, to add a level of trust to a transaction. I found that the lowest overhead and cost that I order from is www.sdbullion.com. They have coins from Austria, Canada, the US, China and several other countries of verified silver along with some of their coins have a cool theme, such as ...
JUNIOR MINING STOCKS
With the suppression of the gold and silver markets admitted by Deutsche Bank and the short options of the COMEX with their SLV and GLD ETFs being leveraged at an over 542 paper silver to 1 true ounce, once this game is up, junior and established miners should look to outperform the market. I have already made over a 500% increase on CDE (Couer Mines) and AG (First Majestic Silver) each, now I am playing my hand at another up and coming gold, silver and uranium miner with a great management team in place and some good projects in Alaska, Canad and Brazil called Brazil Resources (BRIZF). It's a long hold, with expected return between a year or two from now, but I am diversified enough in the miners to be able to wait out the timeline.
I hope that my article was helpful to you, and these notes shouldn't be used as legal or financial advice, but rather just to share what may be considered a personal protection strategy. Upvote and follow for more articles on similar topics!