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Silver Threads Among The Gold
 Today
we offer a plan to help make you and your children potentially financially
self-sufficient on $1 a day. The plan is simplicity itself and takes advantage
of a natural phenomenon in the market that is as sure to happen as the rising of
tomorrow's sun. We speak of the current and future rise of the metal silver.
China will shortly reach $1 trillion in
holdings of U.S. paper debt. The U.S. federal deficit is out of control, the
perpetual War Against Terror is costing Uncle Sam an additional $1 billion a day
and an attack on Iran appears almost inevitable.
 As
worldwide anxiety over potential financial instabilities continues to rise,
savvy investors continue to move their money from equities into commodities.
The central banks of both China and Russia
have recently announced their intentions to increase their reserve holdings of
gold. If they do, all of the gold mined and refined over the past several years
will be removed from available above ground supplies
All of the above and much more virtually
guarantee a further decline in the dollar and a continuing surge in commodities,
in particular precious metals (gold, silver, platinum, palladium, rhodium) which
many leading analysts expect to rise for at least four more years, perhaps as
long as another decade or more.
With all the emphasis on gold these days,
why buy silver? There are many reasons:
1. Silver is more volatile than gold and tends to rise faster when the precious
metals are rising as a class.
2. Silver is less expensive than gold and can be accumulated more quickly, and
in smaller units of coinage.
3. Silver has historically traded at a ratio of roughly 1:16 to gold and is
currently far diverged from that ratio, a factor that will eventually cause a
'snap back' to its traditional balance, causing silver to rise more quickly and
proportionately higher than gold
4. Silver has never been confiscated by the U.S. government and is unlikely ever
to be. President Franklin Roosevelt confiscated gold in 1933, declaring it
illegal for citizens to own. Failure to turn in your gold could result in stiff
fines and a ten-year jail sentence.
Article 1, Section 1, Clause of the federal Constitution grants all law making
powers to the Congress, and therefore none (as in zero, nada, squat) to the
executive branch. FDR's Executive Order banning the ownership of gold had no
lawful force or effect upon citizens with the union states. Unfortunately,
America was already so dumbed down by then that most citizens dutifully turned
in their gold for the government's paper money. And there is far less reason to
doubt that most would do so again today.
5. Silver can be bought on a child's budget!
Here's the plan. Determine not to spend $1 a day for each person in your family.
Note that there is a difference between saving and not spending. Many families
strive to 'pay themselves first' by saving 5%-10% of their gross income and
putting it away in a savings retirement plan before they can touch it.
This is an excellent idea, however what we are proposing goes a step beyond. We
are adding the stipulation that the family NOT SPEND $1 per person per day on
top of whatever savings plan already may be in place. Doing so involves a degree
of personal sacrifice that most people are not accustomed to making.
To effect this plan, you simply commit not to spend $1 each day on things that
you don't really need: sodas, chewing gum, baubles, trinkets, Dunkin Donuts
coffee, etc. It is remarkable how much money the average family wastes each
month on trivial cash expenditures that will do nothing to move their retirement
planning forward.
Silver is currently trading at just under $12 per ounce. Daily price
fluctuations can be monitored at http://www.kitco.com. This means that each 12
days' worth formerly wasted discretionary cash expenditures is available to
purchase one new ounce of silver.
There are may ways to buy silver, including collectible numismatic and
semi-numismatic coinage from the 19th and 20th centuries, however it is not our
purpose today to provide a treatise on coin collecting. If you are not already
an avid collector thoroughly versed in rarities and grading systems, we suggest
that you consider buying ordinary bullion silver coins of the type currently
minted by various governments, including the one-ounce Silver Eagle coin that is
issued each year by the U.S. Mint.
A good likeness and description of one can be found
here.
As we write, gold is currently trading at
$602.70; silver is trading at $11.65. The ratio between the two is therefore
51.7. Were silver currently priced at its historical 1/16th the price of gold,
it would be sitting at $37.67 an ounce, or 223% higher.
During the last precious metals bull market of the late 1970's, a result of
President Richard Nixon ordering the gold window closed and removing all
financial moorings from the dollar which immediately began to fall, silver
started out trading far below its traditional ratio to gold.
Gold and silver peaked in 1980, with gold hitting an all-time high of $850 an
ounce and silver reaching an all-time high of $49.45 per ounce. The ratio
between the two therefore hit approximately 17:1 before prices began to
collapse, the precise point at which the public rushed in to begin buying.
Not spending $1 a day and thereby being able to acquire one ounce of silver
every 12 days (at current prices) would increase the jingle in your pocket by 30
coins per family member per year at current prices.
Those coins could easily be worth $100 each before the ultimate severe economic
correction that many expect is over. If gold reaches $2,000 an ounce as many
experts expect it will, silver could reach $117 for a potential 875% return on
investment.
A family of four that manages not to spend $4 a day could buy a new $12 silver
coin every 3 days; a rate of 30 coins per month or 360 in one year.
In January of 1976 silver was trading at $3.70 an ounce. Had you begun this plan
in 1976 and acquired 360 ounces of silver at that price and then sold at the top
in 1980 at $49.45 you would have pocketed $17,802. which today could buy you
1,528 ounces at current prices. If silver reaches $117 an ounce, those 1,528
ounces could one day soon be worth $178,784.
And all on $1 a day.
Of course the best part of all this is the opportunity its presents for private
financial planning, especially when your silver has been acquired, shall we say,
discreetly.
When you are ready to bequeath your silver to your children you invite them to
dinner (they will pick up the tab), shove the briefcase across the table and
say, 'Here you go, kids.'
We recommend not doing this until they are at least 50. |
