– Warning! Really really long post! –
(Frequently Asked Questions)
Silver Stock Report
by Jason Hommel, July 12th, 2008
What’s so special about silver, anyway?
Why will silver go up in price?
Where can I buy silver?
What is a good price for silver, how much should I pay?
What kind of silver should I buy?
How much money do I need to buy silver?
How do you know that the silver you buy is real?
What about confiscation?
Should I buy rare coins?
I have some old silver coins; what are they worth, and where can I sell them?
How much silver is in my U.S. silver coins dated 1964 or earlier, and what are they worth?
How do I store silver?
Where can I get someone else to store my silver for me?
How do I buy silver in my IRA account?
Where can I buy silver in Europe?
How can I avoid the VAT tax when buying silver, because I live in Europe?
What are the capital gains taxes on silver, and what will they be in the future?
When do I sell silver, what for, how do I take profits if there is no paper money, and what is the exit strategy?
Who will buy or could afford 100 ounce bars of silver after the price goes way up?
What are the supply/demand fundamentals of silver?
Where can I learn more about the exact supply/demand fundamentals of silver?
Where can I learn more about silver, in general?
What is this I hear about a silver “surplus”?
Won’t increased silver mining make silver worth less? http://www.silverstockreport.com/2008/cpmgroup.html
Why do you like silver more than gold?
How do I begin to learn more about investing?
What does this investing term or word mean?
Should I wait for silver prices to dip, before I buy?
What is the historic value of silver and gold?
How and why will the world ever go back to using silver and gold as money, and what will it be worth?
How will silver or stocks be valued if there is no paper money?
How do I buy silver stocks?
Where can I learn about investing in stocks?
How do I buy futures contracts or options?
How can I know the price of silver tomorrow, in India?
What is the best silver stock to buy right now?
I’ve heard you engage in “pump and dump” or “front running”. Care to comment?
What the hell does God have to do with silver?
Why isn’t the silver price higher?
Can you explain how silver prices are manipulated again?
How long can they continue to manipulate silver prices?
Why can’t they manipulate silver forever?
Why can’t the CFTC stop the manipulation?
Who can we sue to stop the manipulation?
What is the exact track record of your portfolio performance?
How do I subscribe/unsubscribe to the look at your portfolio?
Like gold, silver has all the properties of money, it is easily tradeable, transportable, divisible, interchangeable, genuinely recognizable, verifiable, lasting, rare, and a luxury item. Silver also has many properties that make it much more desirable than gold, such as, it is much more electrically conductive & reflective.
The two main reasons silver will go up in price are:
1. There has been way too much paper money created in the last 30 years, and the rate of paper money creation is increasing at increasing rates, up to 20% per year.
2. Silver is more rare than ever due to the irretrievable consumption of silver by industry. It is probable that refined .999 pure silver is more rare than gold.
I highly recommend that you buy silver from your local coin shop. http://find-your-local-coin-shop.com/
You can also try ebay.com
If you are living outside the U.S., you might try a jewelry shop, and ask them who their suppliers are.
Or, you might want to look up “industrial silver suppliers”.
A final source are not the miners, but rather, the refiners, but they typically deal only in very large volume, and not with the public. http://www.lbma.org.uk/good_delivery_silver.html
More difficult and less reliable ways to acquire cheap silver are through placing newspaper ads, attending estate sales, antique shops, or through opening up your own coin shop.
Prices vary from dealer to dealer, and from time to time, and from product to product. So shop around. Typically, good prices are within about 5% over the price of silver, all costs included such as shipping and commissions, and the spread.
I don’t think the kind of silver matters as much as the price. Get the most physical silver in your hands, at the least price. Paying less for “unallocated” silver in a “pool” can be quite costly in the event of bankruptcy. The main point of silver is that it is payment in full, and protects you from the bankruptcy of another, but only if you buy physical silver and take delivery.
You can buy one silver dime for about a dollar fifty, $1.50 U.S. But in many cases, to avoid sales tax, such as in California, you have to buy a minimum of $1000. Some popular and very busy internet dealers have minimum order sizes of $10,000 to $50,000.
Silver coinage is very easy to discern and detect. It is heavier, and has a distinctive ring to it. But most telling are the edges. You can’t see any copper at the edge. If it were easy to counterfeit silver, don’t you think the U.S. government would have produced better looking coinage?
There is another way to detect a 100 oz. bar as being silver. Suspend it with some string, or on a small canister, and bang it with a wooden spoon. It should ring like “riiinnnnngggg”. A lead filled bar would not ring.
I don’t think confiscation is likely. The real confiscation is through inflation, right now. Confiscation is always a voluntary recall. They never search “house to house”. The silver market is too small to matter to the budget of the U.S. There is no reason why they would confiscate now, since they are minting and selling American Silver Eagle coins. Also, many congressmen own silver, because they know what their other congressmen are doing to the money. Congressmen don’t want to make criminals of themselves.
Confiscation July 3, 2008
I don’t recommend rare coins as an investment. I’ve heard too many stories of people who bought $100,000 to $300,000 worth of rare coins, and cannot sell them without taking a 50% loss or more. Buy silver for the weight, not the image. Silver is about substance, not appearance.
I don’t study rare coins, so I don’t know. Look up the coin dealers, or look for a “numismatic” coin dealer. Shop around. Maybe pay to have them professionally graded. Maybe sell them on ebay.
Silver half dollars, quarters, and dimes contain .72 of an ounce of silver for every $1 face value of coins. Stated another way, they contain 72% of an ounce of silver in two half dollars, or 4 quarters, or 10 dimes. Such coinage also contains 10% copper, for hardness, but the copper is not worth anything.
So, count up the coins, as they are. If you have $23.70 worth of coinage, and if it is all silver, here’s how to value it: $23.70 times 0.72 times the current silver price = approximate value. Coin dealers will pay you less than the spot price when buying from you, especially if you have an odd amount. In fact, you can sometimes buy $1000 face value bags at 1% under the spot price.
I recommend that you get a safe, and bolt it to the floor, or wall. Also, consider hiding the safe. If it’s hidden, they can’t steal what they can’t find. For very long term storage, you might want to make a hidden wall somewhere in your house.
There are many such services, but I don’t recommend any of them. I don’t use them myself. They often operate like a bank, and can go bankrupt.
Here are a few:
Any major brokerage should be able to buy silver for you. However, this defeats the purpose, if you think about it. I use my IRA to invest in silver stocks, instead.
Again, you should seek out any or all of the largest banks. Or try here:
www.mp-edelmetalle.de in Germany
www.24carat.co.uk in UK
www.atsbullion.com in UK
www.royalmint.com in UK
www.silverexchange.co.uk in UK
www.goldavenue.com in Switzerland
www.monnaiedeparis.fr in France
If you want to take delivery of your silver, you will have to pay the VAT. The VAT is supposed to be refundable when you go to sell it.
I would not recommend any of the large banks who offer to hold your silver for you. You might want to try some of the bullion holding vault services mentioned above, or try the silver exchange traded funds, such as SLV or CEF.
Or, you might want to consider having your own revolution, as we did in America in 1776, to avoid having to pay those horrible 1% tax rates. Or, you could more simply move to America.
I cannot legally give tax advice, and I cannot predict what tax rates will be in the future. I like to think philosophically.
Philosophically, that which is taxed is discouraged. Thus, if they tax silver too heavily when it is sold, that would tend to discourage sales, which would tend to drive up the price.
Selling silver is often not a reportable transaction, for tax purposes. So, philosophically speaking, if a tree falls in the forest, does it make a sound?
I plan to sell most of my silver after silver and gold become money again, and when I feel that I have found another asset that is trading far below the cost of production. When silver and gold are money, silver trades for gold, and gold for silver. So, I might trade some of my silver for gold when the ratio narrows from the current 50:1 down to 10:1 or 5:1 or less.
As the price of silver moves up, there will be many more traders of silver. For example, at the top of the real estate market in Florida in recent years, one person in 50 was a real estate agent. When one person in 50 is a precious metals broker or dealer, when it is very easy to sell, that might be the time to sell. Silver and Gold are always very liquid, and will always be liquid assets because of their intrinsic value, and special properties. There will always be someone much wealthier than you, who will want to buy your silver, such as industrial users, refiners, brokers, or bankers, and most people will never deal with them directly, but will sell it back to the coin shops, who will, in turn, sell it to new customers.
These are merely rough estimates, or even just guesses:
600 million ounces mined
250 million ounces recycled
50 million ounces sold by governments
Total: 900 million ounces
400 million ounces for industry and electronics
250 million ounces for jewelry
175 million ounces for photography
75 million ounces for investment demand
But those are my estimates for what is “current” for 2008.
Investment demand is tiny, yet potentially huge.
Intrinsically, silver is a private form of wealth, so there is no real way to know exactly. Two groups produce solid research, via surveys and estimates:
There is no such thing as a “surplus” of silver. Nobody is storing “unwanted” or “excessive” silver on pallets outside of a warehouse due to lack of space. The word “surplus” is used only in an “accounting” sense, and it means “investment demand”.
There is no Silver Surplus January 29, 2008
In theory, yes. In practice, no. Annual increased silver mining is offset by old mines shutting down. Also, newly increased investment demand for silver is far higher than total new silver mine production. There is no silver surplus.
Forgotten Near-Term Silver Producers May 26, 2008
About 160% of gold mined each year is purchased by investors. That extra 60% is from central bank selling and leasing.
In contrast, about 7% of silver mined each year is purchased by investors. The rest is consumed and lost by industry.
Silver is a much smaller market, silver is more rare, harder to buy, harder to find. If “smart money” is buying gold, then the smartest money is buying silver.
Silver vs Gold Aug 1, 2004
I tell people to start thinking about investing in many areas of your life. It all compounds for the good, or bad. Health, learning, etc.
18 Biblical Guidelines on how to Manage Money (and your time).
There area also many other investment advisers in our industry.
Dictionary of words used by investors: such as “bid”, “ask”, “spread”, “premium”, “contango”, “backwardation”, and more!
If you don’t have any silver, I think it’s more important to get some immediately, no matter what the price. Some silver, is better than none. You don’t have to buy all at once. Money is good because it is divisible.
People have been asking me if they should wait for a dip, ever since silver was $5 per ounce.
Waiting for a dip is the wrong strategy in a market that is going up, and is expected to go up. The longer you wait, the more you will pay, typically.
Due to the many reports of silver not being available at all, I expect it will typically get much harder to locate, find, and buy silver in the future.
it’s a very broad question.
In the bible, in the book of Judges, Chapter 17, verse 10, you could hire a priest (like a lawyer) all year, for food, shelter, one suit, and ten shekels of silver, which is about 2.5 ounces of silver.
In 1430’s in Florence, Italy, a man could live very comfortably on 16 ounces of gold per year, and bank clerks earned 2-5 ounces per year, and a maidservant earned just over 1 ounce of gold, and a multi million dollar mansion would sell for just over 100 ounces of gold. (8.88 florins per ounce)
The 600 year silver chart is a popular chart, but it needs to be updated.
In the U.S. in the early 1900’s a day’s wage varied from about a silver dollar to a silver quarter, to a silver dime, depending on the work. Skilled miners in my hometown of Grass Valley, California, a historic gold mining district, earned $1/day.
Paper money always fails, eventually, and returns to its intrinsic value, which is about the value of used newspaper, no matter how many zeros they print on the paper, that does not increase value.
As silver and gold continue to go up in price, they will attract ever more investment, especially as more and more people understand true value, and as more and more people want to preserve savings, and grow their wealth.
I think a silver dime containing 7/100ths of an ounce, or even 1/10th of an ounce of silver in the future could be worth a week’s wages, due to the scarcity of silver.
Today, stocks can be traded for dollars or Canadian dollars. I expect that in the future, stocks could be traded for fractional ounces of silver, or gold. When silver and gold are money, everything is valued in terms of silver and gold.
You need a broker, or an online brokerage account, to buy stocks. Generally, you need $2000 to open a brokerage account. With $10 trades, that’s a 1% comission on $1000 trades, so I think all trades should be for $1000 minimum, otherwise, you can pay too much in commissions.
How I Pick Stocks
Don’t just buy “penny stocks”, buy low market cap stocks, with a lot of value!
How to Trade the Pink Sheets
How to Trade Canadian Stocks in the U.S. using the pink sheets.
(This is not about which stocks to buy, just “how to trade” them!)
I don’t recommend that you buy futures contracts or options. I think paper investments are designed to separate you from your money, and that futures and options are too much like gambling.
I Don’t Trade Futures April 4, 2008
The Moral Failures of the Paper Longs Jan 22, 2003
Fekete Answers Me & the Debate Continues June 19, 2008
Surprisingly, I get many such emails from investors in India, who think I can predict prices on a daily basis. That’s not how things work, and that’s not how I do business. I don’t provide daily updates, nor daily predictions. It’s hard enough to get the overall trend right that will last for decades. Also, the market for silver and gold is worldwide. The price in India is about the same as it is here. Well, generally, it’s just a bit higher, just enough to encourage imports into India.
Thank you for reading this far. My favorite stock and top holding as of July, 2008, is Silver Eagle. To stay current with my current thoughts and holdings, please consider subscribing to the look at my portfolio.
It is illegal to do “pump and dump” and “frontrunning”. I do neither one. Since this is a trust issue, you might want to hear me verbally speak on it.
Korelin Economics Report
September 28, 2007, 9 min
How to Write and avoid “Pump and Dump” Feb 21, 2006
Woah, why are so many people who have a problem with me mentioning God so hostile, even religious people are so hostile, at times?
I could write on this topic for days. I believe my morality should be practiced in all aspects of my life, especially the monetary realm. Theft is wrong, and it hurts the thief the most. Idolatry is wrong because it’s a waste of time at best, and a deception at worst. Enslaving others through usury is wrong as it’s uneconomic, unproductive, exploitative, cruel, and so on.
Silver is honest money, it is real property, it is payment in full, not a promise to pay, and not a future contract. Silver is the antidote and solution to the many ills of our modern economy with too much debt, shaky banks, fraudulent companies, and excessive taxation and regulation.
The Bible speaks of an economic system that is compulsory for all men, rich and poor, free and slave, marked by the 666 mark of the beast without which no man can buy or sell. Some might think that would be a kind of “cashless society”, but cash is not the opposite of a compulsory economic system. The opposite of the 666 system is the system of honest weights and measures of silver and gold, which are the provision of God to help men deal economically with other men in a peaceful, non compulsory way. For more, seewww.bibleprophesy.org
I’m glad you recognize that silver should be higher. Clearly, not everyone does. If everyone did, the silver price would already be higher. It is my estimation that less than 1 person in 1000 is even interested in silver, and that most of those who are interested in silver do not understand or agree with the main things that I think are keeping the silver price low. For example, economists in 1971 said that when gold would no longer back the currency, that the gold price would collapse. Clearly, that did not happen, as gold prices moved from $35 to $850 over the next ten years. But in the long run, the economists were right. Lack of monetary demand caused the gold price to sink far below the inflation adjusted price of $35/oz, by the time gold hit $250/oz. in 1999, which was about $20/oz. in 1971 dollars. The same thing happend with silver, only the price changes were more extreme. It is my belief that since silver is not used as money, there is less demand for silver than there would be otherwise, and that until paper money is no longer used by a majority of the people of earth, silver will not see its much higher true value realized.
Silver prices are manipulated, in my opinion, in various ways. The biggest fraud of manipulation is paper money, which diverts investment demand away from real silver. But there are many other frauds, too. Fractional reserve banking, futures contracts and options, and silver certificates are all a form of manipulation, in my opinion. Also, news stories and college textbooks are also manipulative to the extent that they contain lies about silver, which deceive market participants.
One of the markets commonly complained about is the COMEX futures contracts. I believe these “investment instruments” are deceptive, and divert investment demand away from real silver, as many potential silver investors are willing to hold silver promises instead of real silver. So, less silver is purchased, as a result, and thus, the silver price is lower, as a result.
Manipulations work to the extent that people think that they can still get real silver if they wanted to. As long as “everything is fine” then people will tend to trust paper promises. So, manipulations can continue until they run out of silver to deliver. Then, people start to wake up to reality, and decide they want to get silver, when silver is harder to get. Then, silver prices can move up very, very quickly.
Manipulations typically continue, then, until a default, which is a failed delivery. Many failed deliveries have already happened, if you count the numerous delivery delays that have taken place from some of the largest mints in the world, the Perth Mint, the Northwest Territorial Mint, and the U.S. Mint. But apparently, these are not well publicized in the mainstream media channels, which seem to be more devoted to celebrity news, or news of the housing crunch and brokerage difficulties.
A failed delivery to an industrial user could cause a panic. Industrial users must have real silver, not paper silver, or they will shut down production, which would cause them to go bankrupt. Therefore, once industrial users cannot get silver easily, they may begin to stock up on silver. This could cause further panic for real silver, driving up prices.
All price suppressions fail, because they encourage excess demand at the price that is too low.
However, silver is an investment, and as such, it has a price curve that is reversed. As silver prices moved ever lower, investors were repulsed by silver. Today, as silver prices move higher, silver investors are attracted to silver.
This is why paper money will fail, too. Because they can’t manipulate silver forever.
I honestly don’t know what I would do if I were the CFTC. I believe the existence of silver futures contracts themselves are price manipulative, and the only way to solve that problem, legally, would be to shut it down. However, that is no true solution, since, Biblically speaking, people have the right to enslave themselves with usury, and others have the right to enslave others with usury, even if we would rather avoid it. Essentially, prohibition does not work.
But there is another view, which is that the futures markets in silver are particularly manipulated due to the excessive positions, and concentration of positions, among 4-8 traders.
But I don’t think the CFTC wants to stop that kind of “excessive” manipulation. Keeping silver prices, and gold prices, low, tends to support the dollar, which is in the interests of the government, and the people who have a monopoly on the power to print money to loan to the government, at interest, the Federal Reserve.
Even if you could sue, I think it’s a waste of time, because the Judges of the land earn their money from the Government, who pays them in dollars, which remain strong, as long as the manipulations against silver and gold continue.
I don’t think we need to ask the government for help. I think we need to promote the benefits of “cheap silver” to other people.
Government help would only hurt in the long run. For example, when Andrew Jackson fought the banks and won, he “imposed” law that forced people to buy property with gold and silver only. This caused a “manipulation” of gold and silver prices that was too high, because there was demand that came from government edict or “fiat”, rather than popular market forces. So, afterwards, precious metals prices collapsed. All manipulations and use of force in the market eventually fail.
I don’t think it’s important, and would be a waste of time to track. Negative people could complain that I got my stock cheaper, and I’m thus “gaming” prices higher. Or they could complain that since I bought at higher prices, I’m just trying to protect my losing investment. A stock is not “good or bad” depending on my buy price. A stock is good or bad depending on the current market price as compared to real value as established by the market.