In Jim Cook's Archive

New Buyers

Years ago when people asked what I did for a living their eyes would glaze over when I told them about precious metals.  Not anymore.  Almost everyone is interested in gold and silver.  Most people still don’t own any but they know enough to talk about it.  I’m not much for cornering someone at a social event and trying to convince them to buy silver.  So I talk very little about my business. However, a few people have expressed enough interest that I have put them on the list to receive our newsletter.

One recent acquaintance became interested in silver after reading our newsletter. He bought $100,000 of silver bars and plans to buy more.  When your friends and acquaintances buy silver from you it causes a renewed focus on the prospects for silver.  You want to get it right.  It would be uncomfortable if your friends lost money.  The profit we make on the transaction is not nearly as important as having confidence that there will be profits ahead in silver.

Nothing is for certain but I have a lot of reasons to believe that buying silver at this price level will be a winner.  Today I read about the huge increase in China’s auto sales for the year.  A car uses silver in 16 different places.  The steady modernization of Asia means an enhanced demand for silver.  Virtually all electrical and electronic devices use silver.   There is a host of other industrial uses which have caused most of the silver that ever existed above ground to be used up and gone forever.  Actually billions of ounces have been consumed while prices have failed to rise to reflect this diminished supply.  These low prices have caused more silver to be used and less to be mined.  This is how shortages evolve and we appear to be on the verge of one in silver.

One of our wealthy clients advised me last week that his delivery of bars into a Comex warehouse took much longer than normal.  It could be that growing investment demand has started to compete with industry for silver, aggravating the shortage. Certainly investment buying has become a huge new factor in the silver market; nor is it just investment demand in the United States. A recent interview with a coin dealer in China revealed strong buying on the part of Chinese citizens.  This is replicated in much of Asia.

Perhaps the most powerful reason to own silver is the sorry state of the economy and our relentless monetary expansion.  It’s not so much that this is good for silver as it is bad for stocks and bonds.  The past ten years shows a steady uptrend for silver while the values of securities were violently whipsawed.  A lot of people lost a lot of money.  Had they owned silver they would have been much better off.  The same boom and bust policies are being administered by the monetary authorities today so there is good reason to expect more of the same.

In reviewing the various factors that appear to be bullish for silver I have concluded that I should not have the slightest qualms about encouraging old friends and new acquaintances to aggressively buy silver.

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