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(Mr. Friedman is one of Ted
Butler’s mentors. His opinions are not necessarily endorsed by
Investment Rarities.)
It was not a bad year for silver
investors. A 30% increase in prices makes you feel good. In my opinion,
silver is as good an investment today as it was a year ago. We are speaking
of silver under $10 oz.
Silver must be looked at
as a long-term investment. It’s possible we can have some correction in
the future, but that isn’t a sure thing.
With each passing day,
silver is rarer. Less above the ground and less below ground.
People don’t
understand yet that silver is the modern gold. In the last 50 years, silver
world stocks have declined while gold stocks have increased. This is the
essential and critical difference between silver and gold.
I will not be surprised to
see silver outperform gold in a big way in the future. We are starting a long
period where tangibles will outperform any other type of investment. And my
opinion is that most raw materials are going to rise in price in future years
as long as China and India are expanding and no communist
revolution returns to China.
Two and a half billion
people in China and India are
knocking on the door for higher standards of living. The world doesn’t
have enough raw materials at anywhere near current prices to satisfy all the
newcomers for these higher standards of living. There will be a big
competition for raw materials and silver will be the item most competed for.
I am not a big believer in
gold and will not be surprised in years to come that silver prices will
exceed gold prices. The only question in my mind is if silver equals the gold
price or greatly exceeds it. I hope that gold investors will not be angry
with my opinion.
Mr. Ted Butler
doesn’t share my opinion on gold. I give him the highest grade for
being the pioneer for silver investing.
Today when other gurus are
starting to jump on the silver train, the new silver gurus are recommending
silver mining stocks. You must understand that physical silver is the real
wealth and stocks are paper. The miners depend upon many things that
aren’t under their control – 1. Depletion of their reserves 2.
Cost of production 3. Hedging mistakes 4. Future taxes by the countries where
the silver is mined. 5. Confiscation of silver reserves.
Mr. Butler in all his
writings has never publicly recommended any silver stocks. I know this is
because he is concerned that the unknown factors could cause people to lose
money in the long run in some of these stocks.
We have to thank Mr.
Butler for pinpointing to the public how good an investment silver will be.
Today, on my opinion, the small investor has accumulated 250 to 300 million
ounces of silver because of him and I would not be surprised to see those
investors become millionaires in 10 to 15 years from now.
A marker reporter in 2020
is going to write, " It is unbelievable that 15 years ago the price of
silver was under $10, and looking back if you bought one ounce under $10 you
would have made more than 50 times your investment." In the same time
gold, which traded at $550, today is trading at $850.
Don’t be surprised
by these numbers. Today gold and silver have a gross mine production valued
at $50 billion annually. From this gold has a 90% share of the pie ($45
billion) and silver has 10% ($5 billion). 15 years from now, with a
tremendous shortage in silver and potential sharp reductions in silver mine
production, the pie will change and silver’s share could be 75% and
gold have 25%. And the pie could grow from $50 billion to $300 billion
because of high prices of silver.
15 years from now, world
stocks of silver will be almost zero. At the same time, gold stocks will rise
from 5 billion to almost 6.5 billion ounces. At the same time, most of the
mines that operate today will be depleted, so both gold and silver will have
to rely on only new mines for production. It is rational to believe why
silver can equal or exceed the price of gold.
When these big changes
will happen the tune will change too. Instead of hearing the regular business
news when they quote the price of only gold, then silver will become the news
of the day. You are going to hear this – good morning, the price of silver
traded in Europe and Asia at x.
I want to comment on the
silver ETF. My question is why they are registering the ETF for the American
Stock Exchange, under US
securities regulation, by mostly US firms, and to be sold to mostly US
investors, and they are depositing the actual silver in London
and not in the US?
We have good transparency here and we should use it.
For the traders be aware
of the danger to short any commodity, let the commercials take the chances.
We are only by the start of the bull market in commodities.
These are all my personal
opinions and you must do your homework before investing.
I wish you and your
families a healthy and happy new year.
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
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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,
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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
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