Can I still make money investing in silver?

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Answered by: Kelly, An Expert in the Metals Investing Category
Absolutely! Investing in silver for wealth preservation or increase is, in fact, the best strategy you can pursue. With the Federal Reserve inflating the currency, with Chinese holdings of US debt, and with the precarious state of the economy, most alternative experts recommend precious metals. For high net worth individuals, gold is the way to go, but for most of us, investing in silver is the better approach. It's more affordable, it's easier to obtain, and it has a million uses to drive up value.

The first objection you might hear is that silver is in a bubble. It isn't true. Here's the secret - it can't be. A bubble happens when supply overwhelms demand. The dotcoms issued stock to match demand, but there is no limit on the amount of stock that can be issued. At some point, the market saturated. Supply overwhelmed and the market vanished.

Precious metals are different for two reasons. First, they are a physical item and cannot be infinitely produced. The supply has a fixed limit, with a multi-year lag. Above-ground for silver) and in-ground supplies are dwindling. Second, gold and silver ARE money. While a money bubble is possible, it's unlikely, especially when combined with money that cannot be willfully printed. The gold/silver bubble warning has been thrown about since 2002. Since then, gold has steadily climbed 500% and silver over 1000%, making them hands-down the best investments of this century. Their slow rise shows they are not in a bubble.

The second objection is the Hunt Brothers narrative. But the lesson is backward. The Hunt Brothers manipulated the price of silver up. When their game was blown, the price collapsed. The reverse has occurred in recent years. The CFTC found that three super-massive commercial banks were illegally manipulating the price of silver downward. This manipulation is ending, but will take several years to unwind. Meanwhile, sovereign wealth funds, especially in China, are pushing the price upward to it's natural place. Adjusted for inflation, the 1980 high of silver would now be over $400. Silver has a long, long way to go. And anyone in investing will tell you that the short squeeze is the highest driver of prices. Silver is now in the biggest short squeeze of all time.

There is nowhere near enough physical silver in the world to cover the outstanding short positions. One insider testified under oath that the short positions were about 100 times the amount of physical silver in existence. Silver, being the most useful industrial metal, has been used up. There is now less than a third the amount of above-ground silver as there is gold. Silver traditionally traded at 16:1 against gold. Lately, it has been 70:1 or more. In the last year, that has reverted to 35:1 and will continue to narrow.

The day is coming soon when the COMEX, which sets the market price of silver, will be unable to deliver. The coming suspension of the normal contractual physical delivery mechanism of COMEX silver futures contracts and LBME supplies willset off a worldwide rush for physical silver at precisely the same time the key device of the manipulation, the ability to short in massive quantities, is destroyed. Investors and industrial users will rush to buy real silver and the shorts will be unable to sell short into real physical buying. The days of selling short more silver than is available in the world will be over, suddenly and forever. Silver will blow past $100 without pausing for breath. Don't believe me? Take yourself back two years and talk about $45 silver.

There are a number of ways of investing in silver - ETF's, physical, bars, old coins, Eagles, mining companies, and futures. We can provide a suitable strategy for your risk/reward level. What's your approach to investing in silver?

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