‘Once in a Lifetime Entry Point for Silver’

by | Feb 6, 2010 | Precious Metals | 14 comments

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    The National Inflation Association believes “this is a once in a lifetime entry point for those wishing to go long silver at a bargain basement price.”

    (Video follows excerpts and comments)

    Here are some notable takeaways from George4Title of the NIA:

    • Silver price decline is a result of massive manipulation by JP Morgan.
    • Silver movements do not reflect the true supply/demand of the metal. According to George, there is no physical silver that can be purchased at these prices.
    • US Mint has record sales of silver eagles; More eagles sold in one month than in the entire year of 1996.
    • People aren’t willing to sell their physical silver, and there is only one way to play the silver market and that is through paper trading (i.e. stocks, ETFs)
    • Gold and silver will break out from the current deflationary spiral

    Silver Considerations

    While we agree with the NIA that silver is an excellent long-term investment, we feel it is important to point out that just because the fundamentals suggest the price should be $30 or more for an ounce of silver doesn’t necessarily mean that it is going to happen in the near-term.

    The silver market, like the stock market, is going to move up and down for a variety of reasons including precious metals market sentiment, the value of the US dollar, overall market sentiment, market momentum, technical factors and fundamentals.

    If silver and gold reacted only to fundamentals, then the prices would already be at record, inflation-adjusted highs. But, we live in a world where fundamentals don’t always matter. Consider the recent ten month stock market rally. The fundamentals for the US economy are abysmal, but that did not stop us from experiencing a record rally which has led to some companies being grossly overvalued at over 50 times their earnings. Over the long run, the fundamentals for silver will win out, but there may very well be massive swings in both directions as the long-term trend plays out. Uncertainty always leads to volatility, and if there is anything that can be said about the global economy, it’s that it is at an unprecedented level of uncertainty.

    It is our view that looking at the precious metals market through blinders can be very dangerous to your portfolio, especially if you are looking to make short-term profits. Without a doubt, gold and silver are currently inversely tied to the fluctuations of the US Dollar. They have not decoupled from the US dollar or broader markets, which suggests that they have not yet become the last resort safe haven for capital. Looking at the longer term trend starting from 2001, it is obvious that precious metals prices have been reacting to what can be viewed as a loss in confidence in the public sector’s (government) ability to manage our economy, however, not everyone is on board the safe haven train just yet. This is clear by recent action in silver. As markets around the globe collapsed, the dollar rose and precious metals saw a significant decline.

    We are not in the business of predicting specific price entry points, but we caution readers about this being a once in a lifetime entry point for the metal. If global markets correct or collapse, then it is likely that silver and gold will drop with them.

    That being said, it is important to note that we, like the NIA, believe that at some point gold and silver will decouple from the broad markets and the dollar itself. This will be similar to gold’s decoupling from broader markets in the 1930’s (charts). But this will only occur once the majority of gold buyers are buying not because of inflation fears (driven by dollar movement) but because global investors lose confidence in their governments and the economic and political stability of their respective countries.

    Silver: To Buy or Not to Buy

    While we cannot say for sure this is a once in a lifetime entry point, we do agree with the NIA that acquiring silver will be a worthwhile long-term investment.

    No one can predict, with any certainty, what the price of silver will be a month, a year or five years from now. Global capital flows are dynamic and tend to surprise. If you are a trader who buys and sells on an hourly, weekly or monthly basis, then our advice is probably not for you. If you are an investor focused on long-term preservation of wealth, then we continue to recommend acquiring silver on a regular basis. Whether the price is $10 an ounce, $18 an ounce or $15 an ounce, if you believe silver is going to eventually reflect the fundamentals, then the best approach may be dollar-cost-averaging, with an emphasis on buying during pull-backs and corrections. Choose a regular schedule for when you are going to purchase your silver, and continue adding to your position. If you buy 10 ounces at $18 and the price collapses to $10 and you purchase another 10 ounces, you’re average price per ounce amounts to $14.

    We’d suggest to our readers who are interested in owning silver that they consider a variety of investment approaches for precious metals that include holding the physical asset, as well as stocks and ETFs.

    First, we’d recommend the physical metal in the form of one ounce coins (Silver Eagles, Maple Leafs), one and ten ounce bullion bars, or junk silver (Quarters, Kennedy Half Dollars).

    The NIA video indicates that silver cannot be bought at the current spot price, and they are correct to an extent. In 2008, when the price of silver collapsed with the broaded indices, silver premiums went through the roof. While the spot price of the metal was $10, the premium was as high as $2.49 an ounce. Premiums have since come down, but they are still trading at a hefty $0.79 to $1.50 per ounce depending on what you are buying.

    For lower volume buyers of government mint coins and name brand bars, we recommend APMEX for easy online purchases. For higher volume purchases, consider Tulving.

    For purchases of 90% coins (junk), we recommend Ebay.com and buying from sellers with high ratings.

    While it is quite difficult to buy right at the spot price (the broker has to make a commission, right?), you may still be able to acquire silver at 5% to 15% premiums, which isn’t too bad.

    All of the above mentioned organizations will give you the opportunity to purchase silver at a decent price.

    Once you have a physical reserve of the metal, consider precious metals stocks and ETFs like Hecla Mining, Ivanhoe, Kinross, Newmont, El Dorado Gold, GDX ETF and GDXJ ETF.

    (Disclosure: Long Hecla, GDX, GDXJ)

    NIA Video:


    It Took 22 Years to Get to This Point

    Gold has been the right asset with which to save your funds in this millennium that began 23 years ago.

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      1. Is there a reputable online site where you can order silver coins?  Any recommendations?

      2. The two I mentioned in the article are  APMEX.com for low volume buyers and Tulving.com for higher volume. (I’ve never bought from Tulving because i am just a middle class grunt, but a close friend I recommended Tulving to had a very good experience with them and they come highly recommended by others at the silver/gold forums)

        Apmex is pretty solid regarding price premiums if you compare them to places like NWTmint.com.

        I also like ebay.com, but only for junk silver because you can buy 10 or 20 or 40 coins at a time.

        When pricing junk silver, I like to use the Coinflation.com calculator at: http://www.coinflation.com/coins/silver_coin_calculator.html

      3. 20smoney try : http://www.cmi-gold-silver.com  Not only do thay sell both thay have excellent info on the web site as well . the Company is located  in  Phoenix Az . Good Luck !

      4. to 20smoney: try BULLIONDIRECT . use nucleo exchange, open auction style, no tax , low “over” . its kinda weird because there is no phone customer service and its so easy to get started. great online service, you can sign up in 5minutes buy thru nucleo exchange, send a check reg mail . I and others are 100% satisfied

        The biggest problem with online bullion dealers…Apmex, Monex, etc. is the shipping charges they apply to your order.  Yes, while they may sell low, example .79 over spot, the shipping (depending on the size of your order) equates to an exorbitant premium.  Best bet for the blue collar silver buyer (like me!) is local coin shops.  Most numismatic dealers will carry some bullion; private mint rounds and bars and Silver Eagles(out of mint tubes…not certified).  We have several coin shops in my area and each payday I’ll buy several pieces.  Most of us on SHTFplan aren’t viewing silver as an investment anyway.  We see it as a potential replacement currency when the fiat cash is only worth using on your backside.

      6. Eric, good point about the shipping.

        I think local dealers are pretty solid as well for two reasons:

        1) no shipping cost and prices similar to online dealers
        2) no paper trail

        The shipping cost vs. premium issue really comes into play if you are a lower volume buyer… if you buy under 20 one ounce coins and pay $20 for shipping, you just got nailed for $1 an ounce premium on top of the listed premium. If you are buying higher volumes, however, it may be worth it, depending on what you can get at a local dealer.

        My favorite silver acquisition method is still roll searching… Free silver, no premiums!  Though it can be depressing if you go through 200 coins and find nothing.

      7. Oh yeah!  Bring back the silver conversation.  So from the last time when we had this silver discussion, I’ve been buying silver from ebay (Power Sellers ONLY) and from APMEX.  APMEX does charge high for shipping (esp. credit card charges) but it ain’t bad if you buy in bulk since it’s a flat rate.  I like that APMEX website is simpe and easy to use and they have a wide array of silver coins. 

        Ebay is just ok.  By the time, you finally purchase the silver, it can come to around $20/oz and basically the same price as if you went with APMEX. 

        I recently been using Gainesville and they have the best prices (price over spot) AND shipping charges. 

        This is all from my personal experience.  Also, on Friday i purchase AGQ (double-long silver).  If there are two commodities I am bullish on in this world, they are silver and oil.

        Good luck y’all!

      8. I agree that this is a great entry point for silver, or gold for that matter. Hold it until Israel nukes Iran, and then sell your basis and keep the balance.

        You can give a man a fish to feed him for a day, or you can buy a fishing pole, teach him to fish and feed him for a lifetime. If you live west of the Rockies or in West Texas, buy a good metal detector, a gold pan, a couple of screens, and a few accessories for your preparations  ………..

      9.  Long time view/reader… 1st time “commenter”…
        I’ve tried finding local coin shops and I’m very frustated!  Closed most of the time, very little inventory, High fees/charges, etc.
        Does any know of good reputable dealers in the San Jose, Ca. / Bay area?
        and Marc, great posting/site… I’ve pointed about a dozen friends to this site! Very “eye opening”!!!

      10. A good site for PMs is TMG, http://www.silver50.com . Dan has several very nice 1 0z rounds that are copies of the Mercury dime, Buffalo/Indian head nickel, and the Peace Dollar. The rounds can be seen here: silver50.com/SilverRounds.html

        For small amounts Dan recommends going to BidOnMetals.com.

        I am nothing more then a satisfied customer. Dan ships out fast.

      11. Comments…..Try Dillion Gage.  They charge a 4.5% premium over spot, and a flat rate of $25 for Registered (Insured) Parcel post.  Hold shipment for 14 days after your check clears.  I’ve made 3 purchases thus far ($12k, $9k, $5k) trying to average down.  Purchases included Englehard and J&M Silver 100 oz bars, Suisse 1 oz Gold Bars & Gold Eagles.
        Shipping is $25 Flat fee (regardless of size/weight of your order).  Obviously, if you are buying 100 oz silver bars, you get your money’s worth.  Best way to maximize weight/cost ratio is include a 100 oz bar with every order of gold 1-oz eagles.

      12. Can someone tell me what’s the BEST silver mining company to buy since they’ve fallen a bit?!

      13. I am a fan of Hecla Mining. US based silver mining company. (I forget how I found this one originally, but it is also reco’d by Howard Katz, one of our contributors here at SHTF Plan)

        Also, I like Silvercorp, which is Canadian based on the Toronto exchange. They do a lot of mining in China. (this one was recommended to EuroPacific customers by Peter Schiff.)

        I also like gold miners, but to distribute my risk a little bit, I went with a Gold Junior ETF (GDXJ).

        Disclosure: Long Hecla. Long GDXJ.

      14. Thanks mac!  I’m always looking for better exposure into the silver mines.

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