Tuesday, July 20, 2010

Silver & Gold

Investment thoughts: Silver has remained flat for 2010, yet I cannot shake the feeling, based on historical knowledge, that will not last. Consider that the Chinese have more than tripled the amount they buy since 2004.

While many have turned to gold as an asset saving measure, others have turned to silver, and I believe that will only increase.
90+%of all the gold ever mined still exists as coinage or jewelry, 90+% of all the silver ever mined is gone, used for industrial purposes, such as medicinal and photographic applications. The biggest fact I hang my hat on is the historic ratio gold and silver have maintained throughout history. In most decades, gold has been priced at a ratio between 9 times to 16 times the price of silver. Today that ratio is almost 70 to 1. that means one of three things have a great likelihood of happening;

1.) That gold is overvalued;and will fall in price, dramatically
2.) That silver is undervalued; and will increase in price, dramatically, or

3.) It's a combination of the two.

Anyway you slice it, the price of silver has little chance of falling.

For investors, this could be a bonanza.
Many experts are continuing to predict gold’s rise towards $2,000. Which means a realistic target price for silver should be between $100-$125/ ounce.
Already, that’s over a 500% gain over today’s price of $18...
Pressures on the availability of silver will only enhance what I believe will be silvers' rise.

Silver is used for so many of today's high tech industries from medical equipment, to compact disc production to photography. It is one of the most conductive metals found on Earth, so its continued importance in technological advances is all but guaranteed.

There are many ways to invest in silver; bullion, ETFs, Mining stocks, junior mining stocks.
I like many of the junior miners for their potential, the most attractive of them can be found on the Toronto Stock Exchange.

Editors note: I apologize to my many readers for not posting more often. Since the death of my wife, my life has dramatically changed, both in daily surroundings and financially. If I could find a way of making this site profitable, I would continue to do it. But my responsibilities dictate I devote energies elsewhere. Good luck to all of you and thank you so much for reading, it has truly been my privilege and honor.


Saturday, January 2, 2010

Ahh, some people are thinking, as sent to me from a reader;
Anonymous said...

the top 25 banks have a combined marekt cap of 8 trillion. these banks have 208 trilion of dirivative exposure.
i expect the majority of these is ultra safe. but, let's say 20% have SOME risk. if this risky group takes, let's say, a 25% hit, that exceeds the cap. then what?

I am going to ignore the typos and give this guy an 'A' for paying attention in class. Unless all of us start asking the questions that must be answered by the banks and bankers, they will continue to force the taxpayers (that means you and me) to reimburse them for bad bets they made.

Let's take what "Anonymous" wrote and break it down.

1) $208 Trillion in derivative exposure is only what they show in level 1 accounting rules, that does not include what is held by shell corporations in offshore accounts tallied in level3 accounting rules.

2)To assume most of the derivative exposure is "ultra safe" is just that, an assumption. I believe we have not seen the worst of this crisis yet. Remember this, the peak for resets of option ARM loans does not come until spring of 2011. Guess what that $208 Trillion in derivatives is built on, yep, those once considered "prime" option ARM loans that will reset and recast at a time when the housing market could well be 50% lower in value than when those loans were first originated. In order to refinance, your house must appraise at or above the amount you are wanting to borrow or refinance. My guess is we will be looking at tens of thousands of families walking away from their homes, which means those loans become non-producing, which means any CDO or CLO or CMO or any other derivative built on those loans remaining in the producing column, goes boom and more than likely becomes a 100% loss. That is where the CDS that AIG was writing comes in. More taxpayer money to the banks that created derivatives they KNEW would go bad, and we know they knew because they turned right around and immediately bought a CDS on a CDO they just sold to some dupe (bank, or worse, a pension fund), even though they no longer had any financial tie to that CDO.

3) There is great likelihood all of those banks will require massive bailout monies again. What happens to you if you take all of your savings, go to Vegas and lose it all? Should the guys that get paid millions of dollars a year get off scott-free when they do the same thing thing, With Other People's money? Isn't that why we built prisons? Bailout my arse, throw their arse in to a cell, and make sure their cell mate is big and lonely. We'll see how many of their successors will play fast and loose with the law and other people's money. I'd bet we wouldn't have another financial crisis, ever, if we would enforce the laws we have now.

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