Also see new article at:
Best of David Morgan
Best of John Mauldin
Best of Roger Arnold
Best of Mogambo Guru
Best of Robert Prechter
Best of Bob Bishop
Best of Bill Buckler
Best of Doug Noland
Best of Jay Taylor
The CFTC has responded to Mr. Butler’s allegations. He strongly disagrees with their conclusion that there is no manipulation in the silver market. He is pleased that the CFTC has begun to discuss these substantive issues. This confirms the serious nature of the matters raised by him. He will have a thorough response in our next newsletter. The silver situation is becoming exceedingly interesting. Mr. Butler theorizes that physical silver is in shorter supply than ever. The next newsletter will be a barn burner.
FRIENDS LIKE THESE (REVISED)
By James R. Cook
My friend Ron called to tell me he had a paper loss in the stock market of $300,000. He emphasized that it was paper loss. A loss is a loss, I told him. Despite this setback, his faith in the resumption of a bull market remains unshaken.
Joe called me later. He told me he had lost over $200,000. Then he said that our mutual friend, Al, was out around $500,000 and Rudy had lost even more than that. The same day I called Howie. He told me he was out $400,000. Another friend of ours, Dave, was down $800,000 and Dale had lost $2,000,000. I told him that another of our friends, Bob, had lost $600,000. All of these acquaintances have one thing in common. Despite the fact they’ve lost a lot of money, they still haven’t sold a share.
Another friend told me about his fishing buddy who spent all his time in the boat calling his broker. He had ten million in the market, plus five million on margin. Today he’s down to one million.
Finally, I heard about an 87-year old widow whose husband was a friend of mine. She had most of her money in the market. She sold all her stocks last Monday. She had lived through the depression and claimed her family sometimes didn’t have enough money for food. Apparently she got out with most of her original capital. It appears that you have to live through a depression before you become gun-shy of the stock market.
The economic statistics are bound to weaken in the next few months. The durable goods numbers (down almost 4%) were a prelude. That won’t help the stock market. If the market drops from here, real estate, collectibles and the dollar could take some serious hits. The fact that none of my investor friends are selling no doubt typifies the actions of most investors. When I mentioned the possibility of long-term structural problems in the economy, two of them got indignant. This is America, the markets will bounce back, they told me emphatically.
Why then is the market falling when so many investors remain committed? For one thing, they likely ran out of money to keep pouring in. The stock market needs more money to go up. For sure the corporations, who have been big stock players, are out of the game. The foreigners have slowed down their contributions and are probably taking some off the table. Margin money has collapsed by half, or more. Mutual fund redemptions are rising dramatically and a few individual investors have finally decided to get out. One thing for sure, those who are still in and those who are on the sidelines aren’t likely to put big money in any time soon. They’re too bruised and cautious. All these factors suggest that any current market upswings are bear traps.
None of my friends have paid any attention to our advice to put 10% to 20% of their net worth into gold and silver. Some of them have a little gold they bought from us years ago, but none have taken us up on our advice to purchase silver. In fact, only a few people in the country have responded to our multi-million-piece mailing campaign and bought silver. It’s been a slow process. Gradually we’re making converts. The silver story is just too good to be ignored. Lately it’s gotten easier and silver sales have taken off. After the NASDAQ run-up in 1999-2000, nobody wanted to hear about precious metals. They only wanted stocks. Now the mindset has changed. People are more willing to listen to alternatives. It’s a major change.
I wish my friends would listen. They don’t have to believe the negative spin I put on the economy, but they need to accept these warnings as being possible. That’s all. If you believe that a depression is something that could happen, you’ll play some defense instead of all offense. The best defensive strategy is gold and silver. They protect you just in case my views prove correct. They’ll keep you solvent if and when the crisis occurs.
Rest assured there’s a strong possibility that I’m right. Booms are followed by busts. You’ve heard that before. Accept the fact that it’s quite likely true. We’re going to have a bust. Where does this notion come from? It’s an economic premise generally accepted by every historical economist. The boom couldn’t get started without artificially low interest rates, easy money and credit. A boom comes from businesses expanding in a way that wouldn’t have happened if the market wasn’t sending them false signals caused by rapidly expanding levels of money and credit. Low interest rates make it attractive to borrow excessively and to build up overcapacity. When this process ends and contraction begins, then comes a bust. The greater the boom, the greater the extent of the bust. We had the greatest boom in decades. The bust will be a humdinger and, for a number of reasons, it could turn into a severe depression. In fact, I believe it will alter America like nothing since the Civil War.
The only good aspect of such a depression will be to force the government into shrinking. The money won’t be there for their worse-than-useless projects and outrageous subsidies. Taxes will be raised by the socialists (liberals and leftist democrats) who will come to power. They’ll try a lot of foolish economic programs that waste money and make matters worse. But, you can only raise taxes so far and it won’t be nearly enough for the states and Feds to pay for everything they’re on the hook for. The screams that arise from unfunded social programs will be loud and long. When all the government insurance and financial guarantees are called on, it will be the end of cradle to grave promises of a life without struggle.
So, what’s going to bring about this downsizing of government and capsizing of commerce? We’ve said it before. A runaway expansion of money and credit has ruined our economy. Savings are at the worst level ever. Profits and capital spending are in the tank. Deep-seated structural problems in the economy preclude better times. The loosest monetary policies in our history have failed to work. There’s terrible days ahead. Consumer spending must collapse. The dollar’s sure failure spells doom for stocks and bonds. Credit will seize up and paralyze the capital markets followed by a raging epidemic of bankruptcies and a collapsing housing market. Governments across the nation will see bankruptcy and defaults on their bonds, which will turn this last bastion of security into financial quicksand. Then, in the depths of depression, inflation will rage. A shell-shocked nation will languish in melancholy and dispirited contemplation of what went wrong. Blame will become the national pastime.
I believe we are going to experience one of the most difficult periods in our history. Protect yourself. Add up your net worth. Keep 10% at a minimum in precious metals. Is there one chance in ten that I’m right? Believe me, there is. What we suggest is more than reasonable. But even if we’re wrong, you still have a superb asset and perhaps a large profit. It’s all so reasonable. Why aren’t my friends paying any attention?
The one thing that Ted Butler fearlessly projects is higher silver prices. He doesn’t talk about a double or triple in price as much as a tenfold increase. Over the long term he sees silver rising to $50 or $100 an ounce. Short term he expects a temporary price explosion and then the price settling in at a higher level and appreciating from there. He’s spent the better part of two decades learning the supply and demand dynamics of silver. He’s certain about a dramatic silver price rise.
To emphatically make such optimistic price projections you must either be flaky or extremely self confident. Nobody knows the silver situation like Ted Butler. He has confidence in his judgment because of a superior knowledge and understanding of silver. He’s quite conservative in other aspects of his life, so for him to go so far out on a limb can only be the result of his deep understanding and certainty about silver. When he says the price will go up many times over, it’s a view worth respecting.
That’s why we urge you to buy silver now. Ted Butler says that quite suddenly silver won’t be cheap anymore. A lot more people will buy it at $10.00 than will at $5.00. You should be in on it at today’s levels, not after it goes higher. Buy some bags of silver coins or some bars now. Call us at 1-800-328-1860.
Here’s our suggestion for a $50,000 silver portfolio:
- 5 – Bags of 90% silver coins ($5,000 face value – 3,575 ounces of silver)
- 10 – 100-ounce silver bars
- 500 – Canadian Silver Maple Leafs
- 500 – Circulated Silver Peace Dollars
- 1 – Bag of Brilliant Uncirculated Dimes, Quarters or Half Dollars
This portfolio fluctuates daily, but at $4.60 silver works out to approximately $50,000. It’s a fantastic collection of silver items with world-class potential. Call us and order this treasure in silver.
For those who would prefer to store their silver, we recommend 1,000 ounce bars stored in your name at the best silver storage facility in America (HSBC Bank USA in midtown Manhattan). This is the old Republic Bank where we have stored silver for almost 30 years. A precious metals expert I consult with told me it’s the only good major storage site he knows of in the U.S.
Call us today at 1-800-328-1860 and get silver now.
Investment Rarities Incorporated has prepared this material for your private use. Although the information in this publication has been obtained from sources which Investment Rarities Incorporated believes to be reliable, we do not guarantee its accuracy and such information may be incomplete or condensed. All opinions expressed in this publication are those of Investment Rarities Incorporated and are subject to change without notice. Predictions or projections can be wrong and financial advice can prove to be unprofitable. Gold and silver can go up or down in value. Gold, Silver and coins are not necessarily a medium appropriate for every individual. All rights reserved. ã 2002 Investment Rarities Incorporated.