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THE REAL REASON TO INVEST IN SILVER… It’s The Fundamentals

by Steve St. Angelo, SRS Rocco:

The best reason to own silver is based upon underlying market fundamentals. However, most of the markets today aren’t being valued by fundamentals, but rather on Fed and Central Bank interventions. This has destroyed the ability for investors and markets to properly value most assets.

I, as well as many precious metals analysts have received some ridicule for getting it wrong on the price movements of gold and silver since 2012. Of course, no one was complaining when the silver price moved up from an average $6.67 in 2004 to $35.12 in 2011.

Sure, we precious metals analysts deserve some criticism for not foreseeing how much monetary printing the Fed and Central Banks would do as well as the massive corruption and deceit conducted by the top banks in the world.

For example the recent announcement that Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks.  And… this is just what we know about.  How about the stuff we don’t know about?

NOTE:  If you haven’t checked out our new PRECIOUS METALS INVESTING PAGE, please do.

People need to realize the financial markets and global economies are in serious trouble.  When I took a drive to a major city this weekend, I noticed that Nissan is financing cars for 0% for 84 months.  I imagine there are plenty of other auto dealers doing the same thing.

When I was a youngster, the normal financing for vehicles was for 24-48 months.  Anyone financing a car or truck for 60 months was a real REAL LOSER.  Today, you are a LOSER if you ask the car salesmen for a 24 month plan.  The last new vehicle I purchased, I put down 60% of the settled price and financed the remainder for 24 months.  I gather I was a LOSER back then too because they said that sort of payment plan was rare (most put very little down and financed as long as they could)… and this was only a little more than ten years ago.

I don’t buy new cars anymore.  I drive an old beat-up Ford ranger.  Oh sure, I could go buy a brand new car for cash, but why??  I’d rather own physical precious metals and drive a beat-up old car.

Anyhow, my point is this…. the majority of Americans are living a very highly leveraged pay-for-it-later-&-later lifestyle that isn’t sustainable.  The U.S. economy has been propped by one bubble after another for the past 3+ decades.  However, the present bubble since 2008 is much worse.  It’s a bubble being propped up by extreme leverage by getting Americans to buy things they can’t afford for nothing down with and longer and longer payment plans.  This has DISASTER written all over it.

So, it’s extremely hard today to forecast what the market will do based on fundamentals when most Americans have thrown sound financial planning out the window.  That being said, we can look at some underlying fundamentals that offer the precious metals investor some important clues.

World Silver Bar & Coin Demand Explodes Since 2008

One of the fundamentals that tells us something just isn’t right in the financial markets is the explosion of Silver Bar & Coin demand since 2008.  As we all remember, 2008 was the year the engine stopped and the wheels came off the economy.  This was due to the mortgage-backed housing bubble that allowed many Americans to buy houses they couldn’t afford.  Furthermore, if Americans weren’t buying homes they couldn’t afford they were using their homes as an ATM machine.  Basically, they were extracting the supposed equity from their home to buy more garbage they didn’t need.

So, to keep the U.S. and world economy from imploding and entering into a new Great Depression, the Fed and Central Banks starting the digital printing presses and pushed Trillions of Dollars (liquidity) into the system.  This had a profound impact on the value of most assets… such as silver.  The price of silver jumped from $13 in 2007 to a high of $49 in 2011.

Savvy investors realizing the Central Banks were insane, starting to purchase record amounts of physical silver.  If we look at the chart below, we can see the difference between the two periods:

World-Physical-Silver-Bar-&-Coin-Demand-2000-2015

From 2000 to 2007, total world Silver Bar & Coin demand was an estimated 375 million oz (Moz).  However, from 2008 to 2015 it nearly quadrupled to 1,422 Moz or 1.42 billion oz. The World Silver Survey only provided Silver Bar & Coin demand since 2004.  So, I had to estimate the figures for 2000-2003 as they only provide Official Coin sales.

Regardless, this is one of the fundamentals that gets better every year…… just like a gift that KEEPS ON GIVING.  Even though the price of silver has declined from a high of $49 in April 2011 to $17 currently, demand for physical Silver Bar & Coin continues to be in record territory.  For example, Silver Eagle sales will likely reach 19 Moz by the end of April compared to only 15.9 Moz during the same period last year.

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12 comments to THE REAL REASON TO INVEST IN SILVER… It’s The Fundamentals

  • Eric

    But we aren’t investing. Silver is the money of gentlemen.

    http://youtu.be/2Te8qg9xzCo

    • Howard Roark

      Nice find! Thanks, Eric.

      • Eric

        “The word we use for wicked is liberal.”

        I hate calling them liberal. Samuel Adams was a liberal. Thomas Jefferson was a liberal.

        These are not liberals. They are progressive bolshevik commie sissy boys!

        Where are the real men and womb-men?

  • KRELL427

    Borrow another truck and back it up as well.

  • anon

    This is the article that convinced me to “invest” in silver:

    The Silver Bullet And The Silver Shield
    http://dont-tread-on.me/?p=425

    I now recognize, however, that like gold, silver is REAL MONEY – has been for thousands of years – and is less of an “investment” than INSURANCE, or a form of financial/wealth protection in the event of currency collapse.

    • KRELL427

      That has to be one of the best articles written on silver,I also like the fact that in this era silver is even of more importance when you factor in its use for electronics,solar,antibacterial and other continually growing aplications .what is its true value?

  • Minuteman

    The Silver Bullet and the Silver Shield convinced me as well. In 2008 I was working in support of a mineral exploration contract in remote Alaska. From time to time I would get news from the outside world see that all hell was breaking loose and gold was $600. I though, man do I wish I got on that train before it was too late. I didn’t finally ‘wake up’ until 2009/2010. I read TSBATSS in early 2011 and shortly thereafter, I started buying Ag. I have no regrets in my decision….

  • Troy

    I told a super rich farmer to buy some physical silver when it was at a little under $14…he bought near $300,000 worth of eagles…and tonight the guy just sold near all of it. I told him to save a bunch of it, but he didn’t listen..he did give me a $100 bill though. He figures making $20,000 in a month was good enough.

    • KRELL427

      Just goes to show you most people are only thinking immediate profit not long term value. One day he will look back at what could be one of his biggest mistakes ever. That would be like Noah finishing his Arc and a someone comes up and offers him more money than it cost to build,Noah has a big smile holding his money and then a big drop of rain hits his forhead.

    • Eric

      Silver is definitely NOT a trade. $300,000 worth of eagles sounds like its about 5/8 of a ton (20,000 ounces). I’m just curious how he took delivery of 40 monster boxes so quickly. I would be surprised if he actually bought PHYSICAL. Sounds more like he bought a futures contract or the SLV, and then turned around and sold it at the push of a button.

      A lot of farmers are used to buying futures contracts to hedge their production. If he made a paper/digital trade, ask him if he’s aware that the CME doesn’t settle in physical metal and open interest far surpasses the inventory levels of the registered silver category. Then show him the evidence that DB just admitted to manipulating prices.

      I don’t bother telling people who don’t ask anymore. Especially older people who have been living it up beyond their means. They deserve what they get. That’s the only way they learn. You should tell him that corn isn’t money.

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