Tuesday, January 18, 2011

Buy Silver For Insurance

Our economy looks to be "tanking" sometime later this year. Now this assessment might be correct and it might be wrong, but considering all the debt that the Obama administration has added in the past two years, it would be a prudent measure to purchase "insurance"  in the form of silver just in case our paper money tanks. Tanks? Yes, tanks. There is every reason to believe that massive inflation is unavoidable because of the current spending by government, and if one has all their savings in paper money and inflation hits, can you spell "bankruptcy"? Now it is "fashionable" to purchase gold to avoid the devastation of runaway inflation, but remember that in 1933, the US government made it unlawful for a private citizen, of the United States of America, to own gold. Do you have confidence that this government, today, will do differently, should this "depression" continue? 

 I say, be safe, and use history as your example. This is why I advocate "investing" in silver. Silver also has hundreds of uses in industry, whereas gold is used mostly in jewelry items, and jewelry items are pure luxury items that in time of massive inflation will not be in demand. The price of gold reflects its scarcity, today it sells at near $1,400 an ounce. Silver, on the other hand, is priced at around $30 an ounce (Jan 2011). This difference in price makes silver available to "regular" citizens who have limited savings, but want to protect what little they have saved from government driven inflation. Now, a friend of mine in Alabama wrote to me recently. He said that he was afraid of silver based on what happened to his father in 1980. His father had invested heavily as silver when it had a massive "run up" because of the "secret" investing by the Hunt brothers from Texas (search: Hunt brothers silver disaster). By 1979, silver had run up to near $50 an ounce, and then in early 1980, retreated rapidly until by 1982, it was priced at around $4.80 an ounce. Now at its peak in 1979, at near $50 an ounce, this would amount to something like, $350 an ounce in today's money. So you can see that silver at $30 an ounce,  today, does not even come close to the "risk" that it was in 1979. And remember, I am not advocating "investing" in silver to make money, I am advocating using silver as insurance against massive inflation. And "investment" of 10-15% of your savings is all that should be used for the purchase of silver. And I recommend only physical silver. 

If gold was once made illegal by the government, why should I believe that silver, even thought there is no history of it happening, will fare any better?  The only reason is that the amount of available silver is huge compared to the amount of gold available. This huge amount makes it difficult for this government, or any government, to place restrictions on it ownership. This coupled with the fact that industry uses so much silver that any restrictions would cause serious problems in employment, something that  could cause riots and turn out any resident of the White House. The ratio between the cost of silver and gold, currently, is around 50 to 1. But in reality this ratio doesn't or will not hold. Why? Because of all the uses for silver as opposed to those of gold. Silver is in high demand in industry while gold is mostly used in the manufacture of luxury items and as a "store" of wealth. Silver has traditionally had a cost value ratio of 20 to 1 (silver to gold). If this ratio is correct, then when gold is at $1,400 an ounce, silver should be priced at $70 an ounce. So maybe $30 an ounce silver is not only good insurance, it might just be a good investment. Then to move one step forward. If gold should move to $3,000 and ounce (and this has been predicted by some rational thinkers), then silver would move up correspondingly, and have a price of near $150 an ounce. Of course this is all based on speculation, but watching the Obama administration work makes this type of speculation seem a forgone conclusion, to me anyway. So read and think, and maybe buy some silver as insurance from personal financial disaster should massive inflation hit. Remember that during the depression of the 1920's and 30's, a luxury automobile that had cost $10,000 or $20,000 prior to the depression could be purchased for $100. Building lots on Miami Beach, which had been going for $10,000 each, could be purchased for $100, and even at those prices there were few takers as there just was no money around. Study and Think, and protect yourself, because this Obama government will not be of any help to anyone other than those who have their "hands out", and will vote democrat. We are near the point of voting in socialism, while all the time disregarding the warnings from history. There is no such thing as a free lunch.   
Lord Howard Hurts

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