Stand Firm

We are value investors and as such we refer to the Fool Mantra “Down Baby! Down!”

A Friend of mine who I bought silver with at 11.75 (interestingly enough during the downturn of August 2007) asked me what I think of silver’s dive to 12.80. Here’s my response:

I think it’s hilarious! Think about all those people who are down 40%, or lost 400% if they were leveraged something like 10x! This is why we a) bought low – we’re not even underwater yet, and b) buy physical silver that is worth more than paper silver (contracts, futures, etc.).

Nevertheless you’re probably going to ask me for some fundamental advice and here it is. Hold and BUY (buying will be slightly more complicated because you most won’t find physical silver at such a stupid price – if you do email me immediately!)

Top 10 Reasons I’m Excited About Silver

10. The Dow/Gold Ratio is currently at 14.6! We are targeting a single digit (something like 5). We have plenty of time before we sell!

9. The Gold/Silver ratio which bottoms at around 16 every 30 years or so has jumped from 47 to 62! If gold were to stay at 800 silver can still rally to $50!

8. Tech Funds who were long silver had no clue what they were getting themselves into. Now they are being forced to sell. This will a) throw many out proclaiming that silver is the worst investment ever (good for us), or b) will be compelled to buy physical metal (even better for us).

7. The commercial position on the COMEX is net short over 300 million ounces. This means 300 million physical ounces were already sold that MUST be bought back. They are getting desperate to cover. This may be the last buying opportunity in a very long time and the last time we’ll ever see silver below $20!

6. August is known to be the weakest month of the season. Meanwhile September and October are known to be the strongest dating back over 40 years.

5. Silver is now oversold and will be forced to rally. It has not been oversold as much since the 17 month consolidation in 2007. This is a very positive development.

4. Inflation is roaring and it will get worse, much worse. Consumers are just beginning to feel the brunt. Amex is now canceling credit cards!*

3. Sentiment: Could it get any worse? I doubt it. Anyone who ever wanted to buy silver is now pissed scared to do something like that.

2. Recession is looming. And gold usually rises when the economy gets worse. Yet we have not yet official fallen into recession. When we do watch as gold and silver take off.

1. Interest Rates remain negative, meaning that cash and bonds are losing investment. The stock market is the only alternative to commodities. If, and when, it falters (due to plummeting earnings) commodities will have a heyday. Get on board now!

Needless to say. If you see ANY physical metal, selling at ANY price below $15 (including shipping and handling) buy as much as you can!

Have a Great Weekend!


* I will relay the situation as I heard it first hand. I was speaking to a friend of mine of sad to say has a lot of credit cards debt. American Express simply called him a few days ago and said that they were canceling his credit card and that he had a week to come up with $150,000. Then I found out two others had the same thing happen. This is what they mean when they say “Credit Crunch”.


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