Is The Silver Sky Falling?

The spot price of silver took a bit of a tumble recently, sending silver-futures prices down to $35.28 an ounce from nearly $50 in just five trading days. The prime culprit was the COMEX, which increased its margin requirements 84% during the week. Margin calls came in fast and furious, forcing many small speculators to sell their positions to cover. The COMEX (sometimes called the CRIMEX), claims the increased margin requirements were instituted to decrease the "volatility" in silver futures trading. Others say it was a last ditch attempt by the troubled trading entity to avoid default, due to woefully inadequate silver reserves on hand to cover paper positions.

No matter what you chose to believe the question still remains: Is the silver sky falling?

Firstly, the bullish long-term financials of silver have NOT changed. See Why You Must Buy Silver Now!

Secondly, the paper spot price of silver may have been manipulated downwards, but physical silver is already recovering. I've seen rolls of silver eagles and junk silver recently selling on eBay for as much as 20% above the current spot price. I like eBay because it illustrates what the "real market" price is for silver coins, bullion, etc. The banksters can manipulate the paper spot price with a variety of shady tactics, including raising margin requirements, but the thousands of small auctions happening everyday on eBay are beyond their powers (or even notice). In addition, huge internet sellers like APMEX are not only out of silver eagles until May 13th, but they're charging (and getting) a $5.29 premium on each eagle they sell. All indications are that any physical seller that actually tried to sell close to spot would probably be out of stock in a matter of hours.

Lastly, trust in your physical silver. Continue to buy on the pullbacks. Check out the latest "silver bears" video http://www.youtube.com/watch?v­=u9LcKcXpCDE for some interesting insight into the insider manipulations behind the present price drop. WARNING: The bears work blue. If strong language bothers you, beware.

My opinion? The Silver Sky is NOT Falling!

Rick

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.
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Is Silver Getting Bubbly?

Silver's rising prices as measured in US government fiat dollars (alias paper funny money) spawns new articles on a daily basis predicting that surely now silver is in a bubble (a price that is irrationally higher than the intrinsic value of the product or investment). I suspect that as the "tears of the moon" metal approaches the 1980 high of $50 per ounce, the uninformed scare-mongering will only increase in volume. But is silver really in a bubble just because its worth as measured in rapidly devaluing 2011 US dollars is nearing the former 1980 peak?

Firstly, let's make sure we're comparing apples to apples, or at least dollars to dollars. Based on the CPI, you'd need $134.29 today in 2011 to purchase the same products you bought in 1980 for $50. So, while we can talk about the NOMINAL high of $50 for silver per ounce, the real figure we should be eyeing for bubbly signs is a lot closer to the $134 mark in inflation adjusted dollars.

Secondly, exact information as to what price point constitutes pricing above an item's "intrinsic value" is always a little sketchy, to say the very least. However, I'd like to tentatively submit the inflation-adjusted high for silver of $134 as that point, since the 1979-1980 bull market is the best and only historical comparison to today's market.

Next, I think a "real world" comparison of actual buying power of one ounce of silver for the years 1980 and 2011, may aid us in our search for buying power equivalency, and perhaps the actual 2011 point at which we may be entering bubbly territory. Therefore, I've collected the economic information below:

1980 $ Price - Price in Silver Oz. @ $50 per ounce

Avg. New Home $76,400 - 1528 oz.

Median Household Income $17,710 - 354 oz.

First Class Stamp $0.15 - 0.003 oz.

Gallon Regular Gas $1.25 - 0.025 oz.

Dozen Eggs $0.91 - 0.018 oz.

Loaf White Bread $0.50 - 0.01 oz.

Next, we'll look at the 2011 - Silver @ $41 per ounce

Avg. New Home $202,100 - 4,929 oz.

Median Household Income $52,029 - 1,269 oz.

First Class Stamp $0.44 - 0.01 oz.

Gallon Regular Gas $3.75 - 0.09 oz.

Dozen Eggs $3.00 - 0.07 oz.

Loaf White Bread $2.78 - 0.07 oz.

It's easy to see from these two pricing tables that you need a lot more silver to buy everyday items in 2011 than was required to purchase the same products at the peak of the 1980 silver bubble. For example, you could purchase an average new home in 1980 for only 1528 ounces of silver, but you'll need 4929 ounces to close on that same house today!

Finally, I'd like to see how high silver would have to rise in price before it could buy the same amount of products it did in 1980. To determine the 2011 dollar adjusted figures I'll divide the current 2011 dollar product costs by the number of silver ounces required in the 1980 peak. See below:

Avg. New Home - $132 per ounce silver

Median Household Income - $147 oz.

First Class Stamp - $147 oz.

Gallon Regular Gas - $150 oz.

Dozen Eggs - $167 oz.

Loaf White Bread - $278 oz!

The incredible numbers above show that silver will have to rise to between $132 to $167 per ounce to arrive at pricing levels in 2011 dollars that proved to be overheated or bubble-ridden in 1980! In addition, if you want to eat bread again like we did in 1980, you're going to need silver at $278 per ounce! So, our tentative figure of $134 per ounce for a silver top is pretty right on the money.

Given all the information above, I'd say we have quite aways to go with silver at about $41 an ounce before we reach any frothy action! For my part, don't even wake me until silver has exceeded $100 per ounce!

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick
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Chicken Little Hates Gold & Silver!

A recent article in Fortune entitled Don't Believe the Rosy Forecasts confidently predicts the popping of the "alleged" gold and silver bubble. See the following excerpt:

"From 1983 to 2004, gold prices averaged around $400 an ounce. Today, the price for an ounce stands at $1390, or 3.5 times its historic average. The rub is that the production cost of gold is still in the $400 range. It's a combination of speculative demand and a temporary shortage of supply because of the long lags in mining the yellow metal that accounts for the surge. The spread of gold ATMs and ads luring people to sell their jewelry are sure signs of a bubble. Look for gold prices to drop sharply, and silver, copper and other metals to follow."

I've been reading articles like this daily for the last two years that have conveyed much the same Chicken Little "the sky is falling" advice. Luckily, I've paid the advice no mind and my portfolio is up 79% this year! If silver and gold are truly in a peaking bubble then all of our investor friends and family should have precious metal stakes, right? Do me a favor, go ahead and conduct your own informal survey. You'll find that 98%-99% of your investment buddies own zero gold and silver, especially the real physical bullion.

What many writers and talking heads fail to realize is that we are in a totally different investment paradigm now. The old tried and true methodologies that were based on a strong dollar and sound economic policies have been scrapped in favor of the money printing press and multi-trillion dollar deficits. The US dollar is headed for the trash heap of history and the very real possibility of hyperinflation is now no more than two years in our future.

I'll take precious metals like gold and silver that have been valued by all human societies for over 5000 years over your green paper funny money any day of the week!

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

CLICK ADS BELOW FOR FREE DISCOUNT!