Buy Silver Bullion Coins

5 Reasons Why Buying Silver Is The Best Thing You Can Do With Your Money by: Dennis Beaman

I have nothing against gold. But if you want to get the most for your dollars, you need to start a regular silver saving strategy NOW! Here are 5 reasons for beginning as soon as possible:

1. When foreign investors realize the the U.S. Government is bankrupt, you can expect to see double digit inflation and double digit interest rates. Plus our double digit unemployment is expected to continue according to economist, David Wiedemer, author "Aftershock". You can expect a major loss if you are still holding U.S. dollars or dollar-backed assets when this happens.

2. Silver supplies above ground worldwide are at their lowest levels in 700 years according to silver guru Ted Butler. The U.S. Mint has had to purchase silver on the open market to mint its silver American Eagle coins and, recently, had to suspend minting due to a shortage. As the demand continues to increase, so will the price, stimulating more demand. When frantic buying sets in, expect the prices to go vertical.

3. There is about 5 times as much gold above ground as silver. Consequently, in our current bull market for precious metals, silver can be expected to out perform gold. Many experts agree on this and are bracing for an all out buying panic in the near future. Israel Friedman, friend and mentor to silver expert Ted Butler had this to say: (Based upon the estimate of only 500 million ounces of silver available for use)..."the first 100 million ounces of visible silver will disappear at a price of $60 to $100 an ounce. The second 100 million ounces will disappear at $250 an ounce, and the third 100 million ounces will disappear between $300 and the price of gold. We will be left with 200 million ounces of silver which the owners will not be taking profits at any price."

4. If any of the major worldwide currencies collapse, a barter economy may develop. Anticipating gold going to $2000 to $3000 an ounce in such a scenario would make most gold coins unacceptable for everyday purchases. Silver, on the other hand, though, would be much better suited for such use. Even at $200 to $300 an ounce, bags of junk silver would be useful for such a purpose. Pre 1965 dimes, quarters, and half dollars could serve the purpose should the unthinkable happen. Dimes contain approximately 1/10 troy ounce of silver, quarters contain approximately 1/4 troy ounce of silver, and half dollars contain approximately 1/2 troy ounce of silver.

5. Gold has not been used as money nearly as often as silver in history. It is possible that the holders of U.S. debt may demand gold and/or silver for payment. If that happens, the amount of precious metals the U.S. would need would cause such a silver shortage that there would be no calculation of how high prices could go. China is reported to be accumulating gold and silver and shifting just a small percentage of the $682 billion of U.S. dollars into gold and silver would also have an gigantic effect on those markets.

These are just 5 reasons why many, many people knowledgeable in silver are predicting silver to outperform gold, platinum or palladium in the near future. Other reasons, which will be covered in later posts are the industrial demand for silver, the mining problems of silver, and the trading of ETF's or Exchange Traded Funds which affect the price of silver as well.

Why Are Silver Sales Soaring?
Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

The U.S. Mint just reported another record, but this time it wasn’t for gold. The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986.

While this is certainly bullish, there’s something potentially more potent developing in the background. Namely, how this matches up with U.S. silver production. Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.

Yikes.

This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

To be sure, mine production is not the only source of silver. In 2009, approximately 52.9 million ounces were recovered from various sources of scrap. Further, the U.S. imported a net of about 112.5 million ounces last year. (Dependence on foreign oil? How about dependence on foreign silver!) So it’s not like there’s a worry there won’t be enough silver to produce the Eagle you want next month.

Still, why so much buying? The silver price ended the quarter up 15.5% from its February 4 low – but it was basically flat for the quarter, up a measly 1.9%. We tend to see buyers clamoring for product when the price takes off, so the jump in demand wasn’t due to screaming headlines about soaring prices.

I have a theory.

For some time, silver has been known as the “poor man’s gold.” Meaning, silver demand tends to increase when gold gets too “expensive.” The gold price has stubbornly stayed above $1,000 for over six months now and spent much of that time above $1,100. You’d be lucky to pay less than $1,200 right now for a one-ounce coin (after premiums), an amount most workers can’t pluck out of their back pocket. But Joe Sixpack just might grab a “twelve-pack” of silver.

What would perhaps lend evidence to my theory is if gold sales were down in the face of these higher silver sales.

The U.S. Mint reported a decline in gold bullion sales of 20.8% this past quarter vs. the same quarter in 2009. Further, other world mints have seen sharp declines in gold bullion coin sales as well: the Austrian Mint reported an 80% drop in sales for the first two months of the year and the Royal British Mint a 50% decline in gold coin production for the first quarter.

What’s even more dramatic is the difference in the dollar value of the sales. Gold Eagle sales in the U.S. dropped $10,263,500 from a year earlier – but silver sales increased by $61,855,290. So, not only did silver sales make up the drop in gold sales, they exceeded them by $51,591,790.

Is the rush into “poor man’s gold” underway?

Why the answer to that question is significant is that a shift toward silver for this reason could signal we’re inching closer to the greater masses getting involved in the precious metals arena. And that – for those of us who’ve been invested for awhile now – would be music to the ears. Because when they start getting involved, the mania will be underway, and from that point forward, it’s game on.

I’m not saying the mania is starting, and I actually think we could see another sell-off before things take off for good. Gold could dip to $1,000 and maybe even $950, with silver going to the $14-$15 range. But as clues like these begin to build up, we’ll know we’re getting closer. (And any drop to those ranges would clearly be a major buying opportunity.)

Everyone talks about gold, myself included, but a meaningful portion of one’s precious metals portfolio should be devoted to silver. The market is tiny, making the price potentially explosive. Remember that in the ‘70s bull market gold advanced over 700%, but silver soared over 1,400%.

Don’t be a “poor man” by ignoring gold’s shiny cousin.

While buying silver is a must, it’s the silver stocks that will truly soar in a mania. And I’m convinced we recommend the two best silver producers in the world. Get their names and our suggested entry points with a risk free trial to Casey’s Gold & Resource Report... click here.

Interest in buying silver as the precious metal best suited to hedging against inflationary government debt levels around the world, and a consequent imminent bond crisis, is growing among investors.

Articles on ArabianMoney.net about investment in gold and silver typically receive ten times more page views than items about investment in UAE stocks, for example. This does not necessarily mean that precious metals are actually the better investment but it does say a lot about investor sentiment and likely future momentum.

Silver bulls

Besides the bulls have a good case, and are still not leaning on an extreme position to justify buying precious metals. There is none of the top-of-the-market distortions of US economic data as seen in the stock market right now.

If you look rationally at 10 years of rising precious metal prices then the story to date has been one of slow but sure growth, leaving gold prices four times higher and the actually the best performing asset class of the past decade, apart from silver which is up six-fold, albeit with far greater volatility along the way.

There is no 80 per cent price spike in the past 13 months like US stocks. When markets spike it is almost always the time to get out. Gold and silver just are not there yet or even close to it. Indeed, the fundamental drivers of gold and especially silver prices are still in place.

Consider inflation, is it really under control? In the UK inflation is running at around 3.5 per cent against GDP growth of 0.4 per cent, so in real terms the economy is contracting by three per cent. Then again we hear reports of 20 per cent salary hikes in Chinese coastal cities and a bubble in Chinese house prices.

US stock market and silver

And surely the biggest forward predictor of inflation has to be the surging US stock market. Share prices are being pushed up by a monetary bubble with very little real evidence to support a strong economic recovery (see previous article). Once this bubble pops, up will go bond prices again, but for how long can that last?

Not for long surely if the laws of supply and demand mean anything. All over the world governments face mounting deficits due to their bailout packages and a shortfall in taxation from the worst recession since the Second World War. This means a gigantic government borrowing program is in progress.

We know this much for a fact and do not have to speculate. Now what normally comes with increased government borrowing? Higher inflation is the answer. This slowly, or not so slowly, devalues the debt burden of high bond issuance over time. The bond owners get a haircut to pay for government excesses.

Higher interest rates lower bond prices

Of course, what happens is that bond buyers wise up and demand higher and higher rates of interest to fund government debt. So you end up like in the late 1970s with high interest rates and high inflation. That also means lower bond prices as interest rates rise.

So you get a lot more buyers for gold and silver which are very tight markets on the supply side. In the late 1970s the gold price rose eight-fold from 1976-1980, and silver rose a staggering 25-fold. Silver is in shorter supply than gold, and so does better as prices take off.

ArabianMoney editor Peter Cooper’s latest book predicts $5,000 an ounce gold and is flying off the shelves at Amazon.com. You can order from the link on this website.