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(This
very bullish opinion was written by silver enthusiast Israel Friedman, age 73, a friend and mentor to
Theodore Butler. Mr. Friedman has owned and studied silver for 30 years.
Investment Rarities does not necessarily endorse these views, which may or
may not prove to be correct. Silver can go up and silver can go down.)
I hope that the sell-off in the metals made you
think about the way you perceive gold and silver as investments This
wasn’t just a correction, this was a slaughter by the paper short
sharks who call themselves commercials.
Mr. Butler wrote to the authorities in detail and
asked why these so-called commercials can break the law. But up to now, he
has not received any answers. I am in the camp that believes you can’t
change the paper market to be honest. But that doesn’t mean you
can’t do anything about it, because you can.
To those people who speculate in the paper market, I
say you’d be better off giving your money to charity than give it to
the paper sharks.
This sell-off brings two conclusions. One, that gold
and silver don’t have monetary value, because money value doesn’t
change so much in value in such a short period of time. Gold and silver
aren’t insurance for anything, not for inflation, not for a collapsing
dollar and they are simply controlled metals. Two, the naked short sellers
aren’t afraid of anybody. The users are also controlled by the
commercials and aren’t buying at dumping prices. They will regret not
buying at the low prices, as they need silver to live.
So, the conclusion is that paper trading is dictating
the prices, and if you think for one moment that they will not take your
money when you trade paper, forget it.
Not to lose your investment money and participate in
the future bull market in silver is the most important thing, and you have to
choose the right course to achieve that. What kind of decision do you have to
make to buy metals? You have to ask yourself some questions. One, will any of
the metals be in short supply? Two, if I invest money can I make a minimum of
5 times my investment? Three, can I hold for the long term? Lastly, do I have
extra cash to buy with?
If you can answer yes on all four questions, in my
opinion you can buy.
After you answer yes, the question then becomes
should you buy gold or silver? I am a silver sympathizer, and in my opinion,
only in silver can you have a shortage situation. Gold no. Only a shortage in
physicals can bring high prices and defeat the paper market and force the
naked short sellers into bankruptcy.
To define what I mean by shortage in silver, I say categorically
that I’m not interested in the level of world inventories of silver,
COMEX inventories and the guru’s stories. I am only interested to know
if the users are receiving their shipments of silver on time. When a delay of
silver shipments occurs, and affects most the users, I will consider this as
a shortage.
Let’s see the stages of a shortage. One,
pre-shortage – the users will have to wait 3 to 6 weeks extra for
shipments. Then the prices can rise to $20-30/oz. Two, shortage – the
users will wait an extra 6 weeks to 4 months for silver. Then the prices can
rise above the old all-time highs of $50/oz. Three, super shortage –
the users have to wait more than 4 months for their silver shipments. The
price will range from $100 to prices you won’t believe. If this last
scenario occurs, and gold has plenty of supply, the price of silver, at a
minimum, will equal the price of gold. And my crystal ball tells me that
silver can exceed the price of gold by a great deal.
You should be asking, how
did I calculate the prices for the different stages? My calculation is very
conservative. I only take into consideration the future deficits between the
producers and users, which is running currently at around 50 million ounces
annually. I also take into consideration that private investors have 400
million ounces in bullion and coins that they will sell in some stages. In
stage one, pre-shortage, I think investors will be willing to sell 50 million
ounces at a price between $20 to $30. Stage two,
shortage, investors will sell 200 million ounces between $30 and $100. And
the remaining 150 million ounces will be sold in stage three, super shortage
and the prices will be truly shocking.
These prices are very conservative, in my opinion,
because they don’t take into consideration the naked shorts, new
investments, or those banks worldwide that sold silver certificates without
real silver backing, only derivatives backing.
The users will be the key for the future price of
silver. No user wants to stop production, and will pay any price for silver
if that means staying in business. For you the investor, who wants to know
when stage one will start, my answer is simple – not me or anyone will know in
advance when it will start. No one will ring a bell.
In my opinion, all of these stages will happen in
silver, and super stage three will take years to develop. I ask you, do you
believe that, when stage three comes, you will benefit if you hold a
paper-leveraged contract. The Exchange will change the rules; including changing
margins, and maybe by canceling the delivery process, and you will be left with a paper only contract.
The conclusion is, if you
believe in a shortage situation, you will be secure only if you buy physical.
The only question is what to buy? Because I believe that at some point we
will arrive at stage three, super shortage, when prices will be over the old
all-time highs and will fluctuate by dollars per day, no investor will have
the money to buy 100 or 1000
ounce bars. For the small to medium investor, I say
buy U.S.
Silver Eagles. And for rich investors buy Eagles and bars. I like Eagles
because I think, at some point, the Mint will stop minting them and they will
develop a numismatic and scarcity premium. Plus, in my opinion, they are the
most beautiful coins in the world, and when I hold one they
make me feel good about America.
If my vision comes true, and we arrive at the super
shortage stage, the Congress will ask a lot people hard questions, and the questions
will be how we came to this situation. And Mr. Butler’s past complaints
will be checked.
Physical investment is the safest way to riches, in
my opinion. When the naked shorts go to bankruptcy courts, including the big
sharks, you will dance to the bank.
Remember, do your homework
before you invest. Cover all the angles, but don’t speculate, only
invest in physical silver with free cash money. And take in consideration you
can buy silver 30% cheaper than a month ago. And this is a fantastic, fantastic,
fantastic opportunity.
Good luck and remember the modern gold is silver.
.
Israel Friedman
(No one can safely predict the future and it’s possible that
Theodore Butler’s analysis will prove incorrect. Silver can go up, but
silver can go down. It is up to you to read, analyze, and arrive at your own
conclusions. Prudence requires we emphasize that precious metals may or may
not prove to be suitable for your consideration.)
All Rights Reserved © 2002 Investment
Rarities, Inc.
_________________________________________________________ Information contained herein is
obtained from sources believed to be reliable, but its accuracy cannot be
guaranteed. It is not intended to constitute individual investment advice and
is not designed to meet your personal financial situation. The opinions
expressed herein are those of the author and are subject to change without
notice. The information herein may become outdated and there is no obligation
to update any such information. The author, 24hpm,entities
in which they have an interest, family and associates may from time to time
have positions in the securities or commodities discussed. No part of this
publication can be reproduced without the written consent of the author.
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