RUFF ON SILVER
Newsletter and book author, Howard Ruff, recently wrote about silver as follows:
“The Silver Lining in every cloud” is the symbol of optimism. It is right up there along with gold and platinum for jewelry or wedding rings. Silver has been by far the most commonly used monetary metal; silver coins are far more common than gold in much smaller denominations. It is the most common coinage used as money (the British pound sterling); Silver coins have been standard currency in many nations in all ages of time, much more even than gold. It has been used more often than gold for coins because many silver deposits are much shallower than gold, so they have been easier and cheaper to mine, even by primitive methods.
But never before have government silver coffers been so bare.
“Silver is used in more applications than any other commodity (aside from petroleum).”
Those are the words of Theodore Butler, an independent silver analyst. I agree with Butler that, despite the insanely profitable gold bull market, silver may not be just twice as profitable as gold in the next few years, but even more than that. Why?
Butler says, “silver is in huge short supply, and the shortage is getting worse by the day; the silver inventories which depressed the price for more than sixty years are gone!” More about that in a moment. He’s certainly right if you are talking about silver at today’s price!
Unlike gold in the 70s when Jimmy Carter decided that rising gold was an embarrassment to the dollar and announced gold sales from Fort Knox to depress the price, government can’t decide to dump their silver onto the market to artificially suppress the price – because they no longer have any! Silver is still the poor-man’s gold, and the time is not far away when the investment world finally wakes up to the shortages, and soaring demand will make it difficult to find any investment silver at any price this side of $100 an ounce.
In the inexorable law of supply/demand, price is the great equalizer. There is plenty of silver available — at the right price – and $14 to $17 is not the right price. At increasingly higher prices, silver jewelry and sterling silver will come out of the wood work. I remember back in the ‘80s when I put out my famous silver sell signal, Investment Rarities, which at the time was my only recommended dealer, made millions buying down and melting and salvaging all kinds of silver – sterling silver and bags of coins – as investors who believed me that the silver bull market was over, were melting down even heirloom sterling silver. The same thing will happen again, but at much higher prices. And silver will come out of India and China in the form of jewelry to be melted down, but again, at much higher prices. At these prices, with their economic boom over the last decade, the newly created middle-class Indians and Chinese are buying gold and silver jewelry.
Says Butler, “If you could find a commodity which was considered a precious metal and was far more rare than gold, wouldn’t today’s crazy price discrepancy ($12.50 silver and $700 gold after the time he said it) seem utterly ridiculous?” I agree. But not necessarily for the same reasons as Butler.
When the world discovers the supply-and demand fundamentals, silver will be the star for investors. The safest money will be made in physical silver held in your possession. Someday soon, the users who need it may not be able to buy physical silver at anywhere near today’s price because there won’t be any available in the empty warehouses. If they need or want some, they may have to buy yours or metals from India or China – at 0a much higher price!
(This excerpt was taken from Howard Ruff’s new book, “How to Prosper During the Coming Bad Years in the 21st Century.)