National Inflation Association
We have just entered a new decade. The most important thing you need to know entering 2010 is that silver is the single best investment for the next decade. In our opinion, investing into silver is the only sure way to tremendously increase your purchasing power over the next ten years.
Throughout world history, only ten times more silver has been mined than gold. If you go back about 1,000 years ago between the years 1000 and 1250, gold was worth ten times more than silver worldwide. From year 1250 to 1792, the gold to silver ratio slowly increased from 10 to 15 and the Coinage Act of 1792 officially defined a gold to silver ratio of 15. The ratio remained at 15 until forty-two years later when the ratio was increased in 1834 to 16, where it remained until silver was demonetized in 1873.
The gold to silver ratio remained between 10 and 16 for 873 years! It is only over the past 100 years that the gold to silver ratio has averaged 50. History will look back at the artificially high gold to silver ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. Next decade, the fiat currency experiment will end badly in a currency crisis. The wealthiest people will be those who bought silver today and were smart enough to research and pick the best silver mining stocks.
While the vast majority of the gold ever produced remains sitting in vaults, 95% of the silver produced has been consumed by industry for thousands of applications in such tiny amounts that most of it will never be recycled and seen on the market again. Nobody knows the exact above ground supply of silver today, but most likely it is somewhere in the neighborhood of 1 billion ounces. That’s a total worldwide market value of only $17.4 billion, when the world has over $7 trillion in foreign currency reserves, mostly in fiat currencies that they (we) will need to diversify out of due to rampant inflation.
Besides the fact that the world has been ignoring the monetary value of silver, silver prices are artificially low due to a large concentrated naked short position
Naked shorting definition: An investment technique in which an investor sells shares short before actually borrowing the shares or before determining if shares can be borrowed. The practice is often illegal, but the SEC has allowed its use under certain circumstances. Naked shorting has been attributed as the cause for several instances of market manipulation. (www.InvestorWords.com)
It’s not a coincidence that the day silver reached its multi-decade high of over $21 per ounce in March of 2008, was the same day Bear Stearns failed. Bear Stearns was a holder of a massive short position in silver. In our opinion, this was likely a naked short position because there is nobody in the world who owns such a large amount of silver for Bear Stearns to have borrowed.
The reason why we believe the Federal Reserve was so eager to orchestrate a bailout of Bear Stearns, is because Bear Stearns was on the verge of being forced to cover their silver short position. Because the silver market is so small and tightly held, if Bear Stearns was forced to cover their short position, silver prices could’ve potentially rose to $50 per ounce or higher overnight. The world would’ve seen how economically unstable our country is and confidence in the U.S. dollar would’ve rapidly deteriorated.
JP Morgan still holds the silver short position they inherited from Bear Stearns. The concentrated naked short position in silver today is the largest short position in the history of all commodities, as a percentage of its market size. Eventually, JP Morgan will have to cover this short position or it could jeopardize their existence.
The best evidence that the short position in silver is naked and not backed by real silver, is the differential between what silver trades for on the Comex and what real people are willing to pay for physical silver on eBay. Every hour on eBay, there are dozens of one ounce silver coins selling for approximately $25. That’s about a 43% premium over the current spot price of silver. With so much demand for physical silver, we doubt the silver shorts in the paper market will be able to manipulate prices downward for much longer. A major short squeeze could be right around the corner and silver could take off in a way that shocks even those who are most bullish.
short squeeze definition: A situation in which the price of the stock rises and investors who sold short rush to buy it to cover their short position and cut their losses. As the price of the stock increases, more short sellers feel compelled to cover their positions.
All Things Considered – John’s Commentary:
There is nothing in this article I would take issue with. It states clearly the widely known naked position on the COMEX. There are volumes of information written on market manipulation of the commodity exchanges, and the involvement of the major bullion and central banks. Silver has always been the most volatile, provided the greatest upside and performed the best in any bull market in the metals. The gold:silver ratio will add to this greatly. All things return to their mean, and silver will return to a 16:1 relationship with gold – at a minimum
Action to take now: The gold:silver ratio must decline and will. Accumulate and hold silver in preference to gold. Wait to swap silver for gold when the ratio declines. I will alert you well in advance of the timing of that event. Keep building your position in physical silver bullion. Avoid any form of silver that does not carry a very, very low premium. Remember, silver all looks the same when you melt it down.
What to invest in now: SILVER: Pre-1965 90% silver coin sells for $18.63 per ounce, only a $0.82 premium over today’s spot price of $17.81. That includes insurance and free overnight shipping! $1,000 minimum face value and wire transfer only. Smaller amounts are only slightly more.
GOLD: Mexican 50 Peso coins are very inexpensive today at only $49.50 over spot price insured and delivered overnight – minimum of (20) coins. Smaller quantity is only slightly more.
