{"id":55809,"date":"2014-08-11T16:28:40","date_gmt":"2014-08-11T20:28:40","guid":{"rendered":"http:\/\/countingpips.com\/?p=55809"},"modified":"2014-08-11T16:28:40","modified_gmt":"2014-08-11T20:28:40","slug":"top-7-reasons-im-buying-silver-now","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/08\/top-7-reasons-im-buying-silver-now\/","title":{"rendered":"Top 7 Reasons I\u2019m Buying Silver Now"},"content":{"rendered":"<div id=\"inves-709543783\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">August 11, 2014<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><h4><span style=\"font-size: small;\">By Jeff Clark, Senior Precious Metals Analyst, <a href=\"http:\/\/www.caseyresearch.com\/go\/v63w8-2\/PIP\">CaseyResearch.com<\/a><br \/>\n<\/span><\/h4>\n<p>I remember my first drug high.<iframe loading=\"lazy\" src=\"http:\/\/trk.caseyresearch.com\/f\/?content_id=950&amp;code=PIP&amp;editorial=top-7-reasons-im-buying-silver-now-1\" width=\"1\" height=\"1\" frameborder=\"0\"><\/iframe><\/p>\n<p>No, it wasn\u2019t from a shady deal made with a seedy character in a bad part of town. I was in the hospital, recovering from surgery, and while I wasn\u2019t in a lot of pain, the nurse suggested something to help me sleep better. I didn\u2019t really think I needed it\u2014but within seconds of that needle puncturing my skin, I WAS IN HEAVEN.<\/p>\n<p>The euphoria that struck my brain was indescribable. The fluid coursing through my veins was so powerful I\u2019ve never forgotten it. I can easily see why people get hooked on drugs.<\/p>\n<p>And that\u2019s why I think silver, purchased at current prices, could be a life-changing investment.<\/p>\n<p>The connection? Well, it\u2019s not the metal\u2019s ever-increasing number of industrial uses\u2026 or exploding photovoltaic (solar) demand\u2026 nor even that the 2014 supply is projected to be stagnant and only reach 2010\u2019s level. No, the connection is\u2026<\/p>\n<h3><strong>Financial Heroin<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">The drugs of choice for governments\u2014money printing, deficit spending, and nonstop debt increases\u2014have proved too addictive for world leaders to break their habits. At this point, the US and other governments around the world have toked, snorted, and mainlined their way into an addictive corner; they are completely hooked. The Fed and their international central-bank peers are the drug pushers, providing the easy money to keep the high going. And despite the Fed\u2019s latest taper of bond purchases, past actions will not be consequence-free.<\/p><div id=\"inves-3496047807\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>At first, drug-induced highs feel euphoric, but eventually the body breaks down from the abuse. Similarly, artificial stimuli and sub-rosa manipulations by central banks have delivered their special effects\u2014but addiction always leads to a systemic breakdown.<\/p>\n<p>When government financial heroin addicts are finally forced into cold-turkey withdrawal, the ensuing crisis will spark a rush into precious metals. The situation will be exacerbated when assets perceived as \u201csafe\u201d today\u2014like bonds and the almighty greenback\u2014enter bear markets or crash entirely.<\/p>\n<p><strong>As a result, the rise in silver prices from current levels won\u2019t be 10% or 20%\u2014but a double, triple, or more.<\/strong><\/p>\n<p>If inflation picks up steam, $100 silver is not a fantasy but a distinct possibility. Gold will benefit, too, of course, but due to silver\u2019s higher volatility, we expect it will hand us a higher percentage return, just as it has many times in the past.<\/p>\n<p>Eventually, all markets correct excesses. The global economy is near a tipping point, and we must prepare our portfolios now, ahead of that chaos, which includes owning a meaningful amount of physical silver along with our gold.<\/p>\n<p>It\u2019s time to build for a big payday.<\/p>\n<h3><strong>Why I\u2019m Excited About Silver<\/strong><\/h3>\n<p style=\"margin-top: 10px;\">When considering the catalysts for silver, let\u2019s first ignore short-term factors such as net short\/long positions, fluctuations in weekly ETF holdings, or the latest open interest. Data like these fluctuate regularly and rarely have long-term bearing on the price of silver.<\/p>\n<p>I\u2019m more interested in the big-picture forces that could impact silver over the next several years. The most significant force, of course, is what I stated above: governments\u2019 abuse of \u201cfinancial heroin\u201d that will inevitably lead to a currency crisis in many countries around the world, pushing silver and gold to record levels.<\/p>\n<p><strong>At no time in history have governments printed this much money.<\/strong><\/p>\n<p>And not one currency in the world is anchored to gold or any other tangible standard. This unprecedented setup means that whatever fallout results, it will be of historic proportions and affect each of us personally.<\/p>\n<p>Specific to silver itself, here are the data that tell me \u201csomething big this way comes\u201d\u2026<\/p>\n<p><strong>1. Inflation-Adjusted Price Has a Long Way to Go<\/strong><\/p>\n<p>One hint of silver\u2019s potential is its inflation-adjusted price. I asked John Williams of Shadow Stats to calculate the silver price in June 2014 dollars (July data is not yet available).<\/p>\n<p>Shown below is the silver price adjusted for both the CPI-U, as calculated by the Bureau of Labor Statistics, and the price adjusted using ShadowStats data based on the CPI-U formula from 1980 (the formula has since been adjusted multiple times to keep the inflation number as low as possible).<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 436px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/SilverPriceFarFromAnyInflationAdjustedLevel.png\" alt=\"\" \/><\/p>\n<p>The $48 peak in April 2011 was less than half the inflation-adjusted price of January 1980, based on the current CPI-U calculation. If we use the 1980 formula to measure inflation, silver would need to top $470 to beat that peak.<\/p>\n<p>I\u2019m not counting on silver going that high (at least I hope not, because I think there will be literal blood in the streets if it does), but clearly, the odds are skewed to the upside\u2014and there\u2019s a lot of room to run.<\/p>\n<p><strong>2. Silver Price vs. Production Costs<\/strong><\/p>\n<p>Producers have been forced to reduce costs in light of last year\u2019s crash in the silver price. Some have done a better job at this than others, but check out how margins have narrowed.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 435px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/SilverPriceDeclinedSharplyRelativetoProductionCosts.png\" alt=\"\" \/><\/p>\n<p>Relative to the cost of production, the silver price is at its lowest level since 2005. Keep in mind that <em>cash<\/em> costs are only a portion of all-in expenses, and the silver price has historically traded well above this figure (all-in costs are just now being widely reported). That margins have tightened so dramatically is not sustainable on a long-term basis without affecting the industry. It also makes it likely that prices have bottomed, since producers can only cut expenses so much.<\/p>\n<p>Although roughly 75% of silver is produced as a by-product, prices are determined at the margin; if a mine can\u2019t operate profitably or a new project won\u2019t earn a profit at low prices, the resulting drop in output would serve as a catalyst for higher prices. Further, much of the current cost-cutting has come from reduced exploration budgets, which will curtail future supply.<\/p>\n<p><strong>3. Low Inventories<\/strong><\/p>\n<p>Various entities hold inventories of silver bullion, and these levels were high when US coinage contained silver. As all US coins intended for circulation have been minted from base metals for decades, the need for high inventories is thus lower today. But this chart shows how little is available.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 435px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/SilverInventoriesAreMostlyHeldinETFs.png\" alt=\"\" \/><\/p>\n<p>You can see how low current inventories are on a historical basis, most of which are held in exchange-traded products. This is important because these investors have been net buyers since 2005 and thus have kept that metal off the market. The remaining amount of inventory is 241 million ounces, only 25% of one year\u2019s supply\u2014whereas in 1990 it represented roughly <em>eight times<\/em> supply. If demand were to suddenly surge, those needs could not be met by existing inventories. In fact, ETP investors would likely take <em>more<\/em> metal off the market. (The \u201cimplied unreported stocks\u201d refers to private and other unreported depositories around the world, another strikingly smaller number.)<\/p>\n<p>If investment demand were to repeat the surge it saw from 2005 to 2009, this would leave little room for error on the supply side.<\/p>\n<p><strong>4. Conclusion of the Bear Market<\/strong><\/p>\n<p>This updated snapshot of six decades of bear markets signals that ours is near exhaustion. The black line represents silver\u2019s decline from April 2011 through August 8, 2014.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 435px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/140811SilverBearMarketOver.png\" alt=\"\" \/><\/p>\n<p>The historical record suggests that buying silver now is a low-risk investment.<\/p>\n<p><strong>5. Cheap Compared to Other Commodities<\/strong><\/p>\n<p>Here\u2019s how the silver price compares to other precious metals, along with the most common base metals.<\/p>\n<table style=\"border-bottom: 3px solid #F17C14; font-family: Arial; font-size: 13px; line-height: 15px;\" border=\"0\" cellspacing=\"1\" cellpadding=\"4\" align=\"center\">\n<tbody>\n<tr style=\"color: #fff;\">\n<td colspan=\"5\" valign=\"bottom\" nowrap=\"nowrap\" bgcolor=\"#F17C14\"><strong>Percent Change From\u2026 <\/strong><\/td>\n<\/tr>\n<tr style=\"color: #666;\">\n<td><strong>\u00a0<\/strong><\/td>\n<td align=\"center\"><strong>1 Year Ago<\/strong><\/td>\n<td align=\"center\"><strong>5 Years Ago<\/strong><\/td>\n<td align=\"center\"><strong>10 Years<br \/>\nAgo<\/strong><\/td>\n<td align=\"center\"><strong>All-Time<br \/>\nHigh<\/strong><\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Gold <\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-2%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">38%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">234%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-31%<\/td>\n<\/tr>\n<tr bgcolor=\"#E2E2E2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Silver<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-6%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">35%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">239%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-60%<\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Platinum<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">3%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">20%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">83%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-35%<\/td>\n<\/tr>\n<tr bgcolor=\"#E2E2E2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Palladium<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">14%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">252%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">238%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-21%<\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Copper<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-4%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">37%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">146%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-32%<\/td>\n<\/tr>\n<tr bgcolor=\"#E2E2E2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Nickel<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">32%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">26%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">17%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-64%<\/td>\n<\/tr>\n<tr bgcolor=\"#F2F2F2\">\n<td valign=\"bottom\" nowrap=\"nowrap\"><strong>Zinc<\/strong><\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">26%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">49%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">128%<\/td>\n<td align=\"center\" valign=\"bottom\" nowrap=\"nowrap\">-47%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>Only nickel is further away from its all-time high than silver.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>6. Low Mainstream Participation<\/strong><\/p>\n<p>Another indicator of silver\u2019s potential is how much it represents of global financial wealth, compared to its percentage when silver hit $50 in 1980.<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 436px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/SilversShareofGlobalFinancialWealthIsTiny.png\" alt=\"\" \/><\/p>\n<p>In spite of ongoing strong demand for physical metal, silver currently represents only 0.01% of the world\u2019s financial wealth. This is one-twenty-fifth its 1980 level. Even that big price spike we saw in 2011 pales in comparison.<\/p>\n<p>There\u2019s an enormous amount of room for silver to become a greater part of mainstream investment portfolios.<\/p>\n<p><strong>7. Watch Out for China!<\/strong><\/p>\n<p>It\u2019s not just gold that is moving from West to East\u2026<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 435px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/SilverFuturesTradingVolumeinChinaHasExploded.png\" alt=\"\" \/><\/p>\n<p>Don\u2019t look now, but <strong>the SHFE has overtaken the Comex and become the world\u2019s largest futures silver exchange<\/strong>. In fact, the SHFE accounted for 48.6% of all volume last year. The Comex, meanwhile, is in sharp decline, falling from 93.4% market share as recently as 2001 to less than half that amount today.<\/p>\n<p>And all that trading has led to a sharp decrease in silver inventories at the exchange. While most silver (and gold) contracts are settled in cash at the COMEX, the majority of contracts on the Shanghai exchanges are settled in physical metal. Which has led to a huge drain of silver stocks\u2026<\/p>\n<p style=\"text-align: center;\"><img decoding=\"async\" style=\"width: 600px; height: 433px;\" src=\"http:\/\/d1w116sruyx1mf.cloudfront.net\/ee-assets\/channels\/article_default\/ShanghaiExchangeSilverInventoriesatRecordLowLevels.png\" alt=\"\" \/><\/p>\n<p>Since January 2013, silver inventories at the Shanghai Futures Exchange have fallen a remarkable 84% to a record low 148 tonnes. If this trend continues, the Chinese <strong>exchanges <\/strong>will experience a serious supply crunch in the not-too-distant future.<\/p>\n<p>There\u2019s more\u2026<\/p>\n<ul>\n<li>Domestic silver supply in China is expected to hit an all-time high and exceed 250 million ounces this year (between mine production, imports, and scrap). By comparison, it was less than 70 million ounces in 2000. However, virtually none of this is exported and is thus unavailable to the world market.<\/li>\n<\/ul>\n<ul>\n<li>Chinese investors are estimated to have purchased 22 million ounces of silver in 2013, the second-largest amount behind India. It was <em>zero<\/em> in 1999.<\/li>\n<\/ul>\n<ul>\n<li>The biggest percentage growth in silver applications comes from China. Photography, jewelry, silverware, electronics, batteries, solar panels, brazing alloys, and biocides uses are all growing at a faster clip in China than any other country in the world.<\/li>\n<\/ul>\n<p><strong>These are my top reasons for buying silver now.<\/strong><\/p>\n<p>Based on this review of big-picture data, what conclusion would you draw? If you\u2019re like me, you\u2019re forced to acknowledge that the next few years could be a very exciting time for silver investors.<\/p>\n<p>Just like gold, our stash of silver will help us <em>maintain our standard of living\u2014but may be even <\/em>more practical to use for small purchases. And in a high-inflation\/decaying-dollar scenario, the silver price is likely to exceed consumer price inflation, giving us further purchasing power protection.<\/p>\n<p>The bottom line is that the current silver price should be seen as a long-term buying opportunity. This may or may not be our last chance to buy at these levels for this cycle, but if you like bargains, silver\u2019s neon \u201c<em>Sale!<\/em>\u201d sign is flashing like a disco ball.<\/p>\n<p>What am I buying? The silver bullion that\u2019s offered at a discount in the current issue of <em>BIG GOLD<\/em>. You can even earn a free ounce of silver at another recommended dealer by signing up for their auto accumulation program, an easy way to build your portfolio while prices are low. <a href=\"http:\/\/www.caseyresearch.com\/go\/v6386-2\/PIP\" target=\"_blank\">Check out the low-cost, no-risk <em>BIG GOLD<\/em> to capitalize on this opportune time in silver.<\/a><\/p>\n<p>&nbsp;<\/p>\n<div id=\"xvMdV95u77zU\" style=\"clear: both;\">The article <a href=\"http:\/\/www.caseyresearch.com\/go\/v63t7-2\/PIP\" rel=\"permalink\">Top 7 Reasons I\u2019m Buying Silver Now<\/a> was originally published at <a href=\"http:\/\/www.caseyresearch.com\/go\/v63w8-2\/PIP\">caseyresearch.com<\/a>.<\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>By Jeff Clark, Senior Precious Metals Analyst, CaseyResearch.com I remember my first drug high. No, it wasn\u2019t from a shady deal made with a seedy character in a bad part of town. I was in the hospital, recovering from surgery, and while I wasn\u2019t in a lot of pain, the nurse suggested something to help [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-55809","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55809","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=55809"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55809\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=55809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=55809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=55809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}