Case for $200 Silver:
Profiting from a Run on the
World's Most Important Metal
Silver has been one of the best-performing assets of
the last decade, soaring from lows of $5.50 an ounce in 2004 to
almost $50 an ounce in early 2011. But thanks to the recent pullback
in commodity prices, silver is now trading in the $30s. And looking
ahead, we expect silver to rebound strongly, for reasons we reveal
In fact, several signals point to far higher prices. $200 an
ounce isn't out of the question, and I'll show you why.
explain why we're so bullish on silver right now...
Silver is about 17 times more common in the earth's
crust than gold... and over history, silver has been about 17 times
cheaper. It makes sense. You expect to pay less for something when
there's more of it.
But here's what few people realize: there is NOT
more of it. Not when you look how much silver we have on hand.
actually has five times more gold than silver in
That's because 80%-90% of all the silver ever mined has
been used up for industrial purposes. But 80%-90% of the
gold has been saved.
It's the same story below ground. Silver has the
lowest in-ground reserves of any major metal.
"In constant dollars, silver's purchasing
power averaged $150 per ounce (in 1998 dollars) for 600
years. Obviously silver is nowhere close to that 'value'
today. This provides one unbelievable investment
-- David Morgan, leading silver analyst
because 80%-90% of all the silver ever mined has been used up for
industrial purposes. But 80%-90% of the gold has been saved.
It's the same story below ground. Silver has the
lowest in-ground reserves of any major metal.
According to data compiled by New Scientist
magazine, at our current rate of use, all known silver reserves will
be mined out in 27 years. And if new technologies now on the drawing
board come to pass, we will run out in about 15 years.
Scarier yet, if the rest of the world starts using
silver at just half the rate we do in the U.S., it will be gone in
As that date approaches, we believe silver's huge run
up of the past few years will look like a blip on the chart.
We're Betting On Silver Over Gold
Everyone knows that gold costs more than silver... but believe it or
not, silver is actually more valuable.
Just look at the facts...
Silver fills every economic function gold does, plus a
whole lot more...
Gold is a great hedge against economic uncertainty. So
Gold shields investors from inflation... so does
Silver offers "safe haven" status, just like gold.
Gold serves as money around the world. Silver does too,
and in even more countries than gold.
Silver and gold have both been prized for thousands of
years. They both melt at around 1,000 degrees Celsius. They even
have the same atomic radius.
But there's one big difference: if gold
disappeared from the face of the earth tomorrow, most people would
barely notice. But if silver vanished, our lives would be severely
That's because silver is needed in just about every
electronic device modern society runs on -- from cell phones to TVs
to computers to cameras to MP3 players to iPads.
It's in every wall switch in your house. It's in your
washing machine, dryer, refrigerator and car.
We use silver in more of mankind's most useful devices
than any other commodity besides petroleum. So when it comes to how
valuable these two metals are to our society... silver beats gold
Yet gold is 50
times more expensive than silver.
Something doesn't add up here. We consume the
overwhelming majority of the silver that we take out of the
ground each year... while we pile up gold reserves... and
yet gold is still selling for 50 times the price of silver
-- $1,750 an ounce for gold versus just $35 for silver.
"Silver has more
uses than any other metal known to man ... in areas of
technology, medicine, electronic applications, clean water
applications, and you can get silver on your Band-Aids now
because it's an effective killer of bacteria."
-- Dennis Wheeler, CEO, Coeur d'Alene Mines Corp.
are two ways this will resolve itself. Gold can fall or silver can
rise. My money is on silver going up. Way up.
|| We got one strong clue of this in early 2011... when we
saw something that hadn't happened since 1997: The spot price for
silver rose higher than the price for future delivery. Usually,
futures prices are higher because of storage costs and other
The rare flip-flop meant that traders were willing to
pay a premium to get their hands on silver today rather than a few
months from now. This hints at shortage fears and is usually a sign
of even bigger gains ahead.
The last time this happened in the silver market was in
the late 1990s. That's when Warren Buffett first began accumulating
a huge silver position of 130 million ounces, which made him
hundreds of millions in profits a few years down the line.
How high will silver go this time? I'll give you my
forecast in a minute. Just keep in mind that 31 years ago silver
spiked to about $143 in today's dollars. And every supply/demand
factor I can find is exponentially more bullish now than it was back
The move I see coming gives average investors the
chance to make a small fortune. In fact, I think you have the
opportunity to amass a $200,000 nest egg on just a modest investment
now. I'll explain how in a minute.
Industry's Massive (and Growing) Silver Appetite
silver story isn't about earrings and teapots any more. Household
demand for silver, like flatware and candlesticks, hasn't risen in
10 years. Jewelry use has barely budged.
But thanks to our never-ending industrial appetite,
silver consumption keeps climbing. About 70% of the world's annual
silver output is gobbled up by industry. That percentage is rising
every year... and once that silver is used, it's rarely recovered.
Since 1999, consumption in electronics has increased
120%. And many new products contain such small amounts of silver
that they're not worth recapturing. More than half of all silver in
TVs and computers ends up in landfills.
Silver was also first used to kill bacteria in 2002 and
this use has already grown six-fold. Bacteria don't develop
resistance to silver, as they do to antibiotics. NASA uses silver
purification technology in its spacecraft. Scottish health
authorities use silver-based products to control killer
antibiotic-resistant infections in their hospitals.
But the biggest new kid on the silver block is solar
power. Because it is more reflective than just about any other
metal, silver is a key part of solar cells. It takes a staggering
amount of silver -- up to 2.5 million ounces -- to produce one
gigawatt (GW) of solar power. Silver use in solar panels began in
2000, and usage is up 640% since.
Solar generates about 40 GW of power around the world
now, so it's already a big silver user. But by 2020 solar power is
projected to be at 20 times today's level. The buildup has already
started and 130 million ounces of silver per year could be going
into solar power as soon as 2014. Considering the entire global
silver mining industry produces less than one billion ounces a year,
that's a huge chunk of the yearly supply.
Silver is also a critical component in cell phones. The
rising need for cell phones and computers for the 2.5 billion
citizens of India and China alone virtually guarantees that demand
for silver will steepen.
China's silver imports increased fourfold last year. In
2005, the Chinese exported 100 million ounces of silver. But by
2010, they were importing 120 million ounces.
We are already seeing shortages of physical silver
bullion around the world. On his CNBC show last December Jim Cramer
stated, "As someone who tried to buy U.S. coins in December, there
was a real scarcity. My dealer reportedly just couldn't get any
coins. Said there was a shortage. Very telling."
The basic problem is that we use more silver than we
Every day the world takes around 1.75 million ounces of
silver from the earth. But we consume over 2 million ounces.
Much Do We Have Left?
part might shock you.
According to research firm CPM, in 1900 there were 12
billion ounces of above-ground silver on the planet. By 1990, we
were down to 2.2 billion ounces. Today, we're down to about a
That's a drop of 92%. A vital material, prized by man
since the time of the Pharaohs, is literally disappearing before our
eyes... used up in industrial products. It has taken 65 years to
obliterate the silver inventory that it took the world 5,000 years
The U.S. government was once the largest stockpiler of
silver in the world. At the end of World War II, Uncle Sam held 4
billion ounces. But it has dumped billions of ounces of silver onto
the market over the years. Today, that silver hoard is gone.
"Gold will preserve your wealth. Silver
will make you wealthy."
--David Morgan, editor
of The Morgan Report
The Pentagon classifies silver as a strategic metal.
Many satellites, missiles, rockets and torpedoes can't function
without silver. The Department of Defense once had an inventory set
aside for this purpose. Now even this strategic stockpile is gone.
Contrast the dwindling amount of silver with the healthy situation
in gold. Since 1950, the amount of gold above ground has surged
600%, from 1 billion to 7 billion ounces.
Now are you starting to see why I'm so bullish on silver? I'm not
knocking gold, but my money is on silver right now. And it's not
just me who feels this way...
"Warren Buffett of Canada"
Says Silver Will Hit $125 -- for Starters
Sprott runs the biggest hedge fund in Canada. His funds have
generated such spectacular returns that he's called "the Warren
Buffett of Canada."
Sprott started his first hedge fund in November 200o.
Now, 11 years later, it is up 1,065%. Meanwhile, the S&P 500 gained
just 6.9% over this period.
His uncanny foresight into the markets has made Sprott
a billionaire. Right now, Sprott is making an extraordinary bet on
silver. He's got 25% of his flagship mutual fund -- more than $340
million -- in silver bullion. (He only has 7% in gold.)
Why? Because he says "We'll certainly see a three-digit
price" for silver. Earlier this year he said it was "a very
reasonable prospect" that silver will be trading at $125 within two
How High Will It
It's sometimes easy to forget that silver is actually a tiny
Investors hold 250 times as much money in gold as they
do in silver.
other words, all the investors' silver in the world is worth just
0.4% of what their gold is worth.
If gold investors start warming up to silver, watch
out. It will be like watching Niagara Falls going through a garden
If gold owners decide to switch just 0.4% of their gold
into silver, they will be bidding for 100% of the available silver.
It's hard to imagine how far the bid price on silver would shoot up.
But let's try. Just how high could it go?
Let's look at history. The last time silver went
parabolic was in 1979-80, when inflation surged to more than 10%.
Silver spiked to $52.50/oz.
today's more bullish fundamentals, the metal trades for less
than it did way back in 1980. And if you adjust for
inflation, it's not even close. In 1980, silver hit $143 per
ounce in today's dollars.
all the reasons I've gone into, that $143 figure could go much
higher. Although it's just an estimate, looking ahead I could see
silver becoming 1/15 the price of gold.
Right now, silver is dirt cheap relative to gold. In
fact, silver's price has rarely been this low compared to gold.
Which is odd, considering that silver supplies keep shrinking while
gold supplies keep rising.
As I mentioned, you can buy 50 ounces of silver for one
ounce of gold. That puts the gold/silver ratio at 50:1.
In the precious metals boom of 1979-1980 this ratio
bottomed at 17:1. Even though gold was soaring at the time, silver
Eric Sprott keeps a close eye on the gold-to-silver
ratio. On May 18, 2011 he said "I think it goes to 16/1. It might
very well overshoot that."
Why not? In ancient Egypt, silver cost more than
gold... and there's no reason it couldn't happen again. Silver is
already more valuable and scarce, as I've said. And I think the
price will start catching up in 2012.
"My outlook for gold, silver and
platinum has become even more bullish. I’m now expecting
precious metals to hit the following prices:
||$3,200 gold (80%
higher than now)
(220% higher than now)
(225% higher than now)"
-- Peer Leeds in Forbes,
September 21, 2011
could happen at any time.
You see, silver isn't like most metals, which are
spread around the world. Silver mines are concentrated in
just six countries. Mexico, Peru, China, Australia, Chile
and Bolivia accounted for 66% of mankind's silver production
of these countries suffers strife, floods, nationalization,
revolution or war... it wouldn't take much to constrict the supply
of new silver to market... and ignite a fire under its price.
Take Bolivia, where the country's socialist president
Evo Morales has already threatened to expropriate silver mines.
Bolivia is home to the world's largest pure silver
mine, operated by Idaho-based Coeur d'Alene Mines (NYSE: CDE).
Nationalizing other people's businesses is nothing new for Morales.
He took over privately-owned gas fields and refineries in 2006. And
he seized the Vinto tin smelter from Zurich-based Glencore in 2007.
If he makes a grab for Coeur d'Alene's mines, silver will likely
spike in response.
When you step back and look at the big picture,
deteriorating economic conditions here at home are also bullish for
silver. When people realize that Uncle Sam is broke... that Social
Security, Medicare and other government transfer programs are
insolvent... all precious metals will be squeezed higher.
When it sinks in that the Fed doubled the money supply
in two years... that inflation is virtually inevitable... and that
rising interest rates could crush stocks... the rush into precious
metals will hit full stride.
If my analysis is correct and gold heads to $3,000 an
ounce and the gold/silver ratio drops to 15:1, silver will be at
$200 per ounce. If you buy 1,000 ounces of silver now on the cheap,
you could be sitting on $200,000 that nobody can take from you. You
won't have to worry about the Fed, our massive government deficits,
or our entire dysfunctional political/economic system. In fact, that
very dysfunction becomes your ally, driving your silver position
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||Chelsea Property Group (CPG)
||Mills Corp. (MLS)
||Whole Foods (WFMI)
||CME Group (CME)
||CPFL Energia (CPL)
||Silver Wheaton (SLW)
Two Best Ways to Profit From Silver
Please understand that we don't sell silver, but we
cover it intensely in our research... and we think there is plenty
of upside left for silver investors.
I'll send you a free copy of
my new report Our Two Favorite Ways to Profit from the Coming
You'll see why you should consider adding to your own silver
position... and our favorite ways to invest in silver right now.
One of the stocks you'll find in this report has a
remarkable deal going on. Its silver costs are fixed at $4.09 per
ounce, yet it can sell its silver at whatever the market bears...
$20, $30... even $40 or more per ounce.
Somebody else foots the bill to find and extract the
silver, and then hands it to this company for next to nothing. It's
the perfect business model -- allowing the company to convert 82
cents from every dollar in revenues into pure profit.
Because the firm's expenses are basically fixed, any
rise in the silver spot market drops straight to the bottom line.
Even a small move in silver can lead to a big jump in profits.
We've already bought and sold this stock once for a
gain of +106.4%. Now it's back down in price again, following
the recent drop in silver, and it's once again a top-rated "buy" in
I can't go into details on all our favorites or I'd be
here all day. Instead, why not just send for a free copy of this new
All I ask is that
you sample our monthly natural resources newsletter -- Scarcity &
Our monthly newsletter focuses exclusively on the
rarest and most valuable assets on the planet – silver, gold, oil,
natural gas and other natural resources. These critical inputs are
in short supply, yet worldwide demand is exploding.
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Our own subscribers are already making good money in
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Vince B. of Honolulu, Hawaii, says he's "up over 500%
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As you'll see when you get your first issue of
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|The 3 Best Energy Stocks to
|The Most Promising Rare
Earth Metals for Investors
|The Best Commodity Play for
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|The 3 Best Stocks to Own if
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|This Oil Company is a Prime
|These 2 Companies Should
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|Two Water Stocks You Could
|How to Become an Oil Baron
|These 2 Stocks Could Profit
from the Nation's Next Big Energy Source
|This Energy Company Is
Trading at Least 50% Below Its Real Value
recommendation in Scarcity & Real Wealth is based on this
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companies meeting those needs and you will have a great chance to
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So far, the readers following my work seem to be happy
Laurent R. of Webster, New York says that the stocks he bought
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also include a silver American Eagle
in your welcome package.
The Silver Eagle is the most popular silver coin issued
by the U.S. Mint. Demand is so high that the Mint had to suspend
sales of these coins several times already this year. So I can't
guarantee that you will get one of these coins. It depends on
how many people take me up on this offer before you do.
This is the real thing, so I'm sure these coins aren't
going to last long. If you wanted to buy this coin at your local
coin shop, you would
almost certainly pay more than $40, after markup and taxes. If
you bought it online or through mail order, you'd have to pay for
shipping on top of that, too.
Important: You need to provide us with a physical
mailing address to send your coin, and someone must be there to sign
for the coin upon receipt. It takes about 14-30 days to arrive
from the day you place your order. Note: this
coin will be shipped from First Federal Coin, a well-respected
national coin dealer that our company has been working with for more
than a year.
U.S. Mint sold more of these coins in 2011 than any other year in
its history. In fact, the mint was forced to suspend sales several
times in 2011 due to fluctuating prices and supply problems.
We've managed to get an allotment of 5,000 coins from
First Federal Coin Company. And while we were able to secure a
supply for this offer, it's not open-ended. Once they're gone, we
can no longer make this offer available.
One reason American Eagles are so popular is because
they are the only silver coins allowed in an IRA. They are also a
great choice if you like your privacy. When you sell bullion you may
be required to be report it to the IRS on form 1099B. But you never
have to report the sale of Silver Eagles, no matter how many you
Scarcity & Real Wealth
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For the next 30 days, you can take the time you need to
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If you don't, no problem. Simply contact our customer
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If you prefer, just keep the coin and we'll call it
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As I mentioned, the best price I could find for this
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All the best,
Publisher, Scarcity & Real Wealth
P.S. -- One last thing: Order today and I'll
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