Saturday, April 23, 2011

Silver Projected To Hit $90 Before The End of 2011 - GoldCoinBlogger

Elizabeth Kraus

While Paul Ryan’s proposal will do nothing to reduce health care cost but do the opposite, where individuals will have to carry a heavier burden, is not a “path to prosperity”, as the Ryan plan was titled. To summon up the words of the dean of progressive social policy, FDR who was asked his opinion of the platform of the American liberty League in 1935, which like the Ryan’s cabal, aimed to dismantle the New Deal under the guise of preserving individual rights and free enterprise, he told reporters, “say you shall love God and then forget your neighbor. For people who want to keep themselves free from starvation, keep a roof over their heads, lead decent lives, have proper educational standards, those are the concerns of the government.” Those are still the concerns of the government today, and to say we can’t afford them is an affront to the working people who built America today.But where ideals today lead us? Already a substantial percentage of the American people are feeling quite stressed, and they know, we are heading for some really difficult economic times– all the while looking to the government for personal bail outs. However, while this economy has millions of Americans feeling depressed, it is not the appropriate response, nor will it solve anything. Rather, once we understand just how bad our economic problems are, we should feel empowered, because then, we can start focusing on real solutions. And somebody really needs to start focusing on solutions because panic is starting to abound as already many top corporate insiders are selling off stock like there is no tomorrow. The biggest bond fund in the world, PIMCO, has been getting rid of all of their U.S. Treasuries. When Wall Street big shots starts freaking out you know that the hour is late. And, it certainly doesn’t help that the Middle East is in a state of chaos and that the Japanese economy is falling apart as a result of the recent disasters. So, in these uncertain times is where critics of investing in gold and silver really drive home … to own gold or silver to really save you, you might ask, is it really worth it? According to the Regal Assets analyst PIMCO is just another addition to the many who have been ditching U.S. Treasuries. “China has been unloading billions of dollars in U.S. Treasuries and will continue to unload as the dollar depletes in value” Regal Assets stated this morning in an interview.

In this economy, a lot of people have questions about silver and gold. As investors are turning to real “global currencies” such as gold, silver and oil, the answer suggests that paper currencies are not only becoming worthless, but rampant inflation is on the horizon, that says to analysts, gold and silver is the only safe haven…predicting that silver prices will reach as high as $100 in 2011 and $250 by 2015.

So, if one asks, is it worth it? Why is China buying like crazy! China’s silver consumption already accounts for 70% of the global total of industrial use, and its middle class isn’t even close to reaching its spending potential. But, China’s impact on the market isn’t the only thing catching the attention of silver analysts. As the global economy expands its size and reach… as technology advances… and as more ways to buy silver become available… as silver supplies have dwindled… more factors began affecting the price of silver more exclusively – for better or worse, which makes silver quickly gaining serious value in many highly profitable industries. Although it’s a less active and lower-volume market than gold, which means that purchases, even by individual investors, can make an impact on prices, 100 silvers buyers purchasing the same amount of metal as 100 gold buyers will have a bigger impact on the market. Think how much prices can spike when millions of Chinese investors flood the market with bids to purchase silver. Now, combine that with the global return of industrial silver demand.

Martin Hutchinson of Money Morning believes both silver and gold will continue climbing into 2011 and beyond. If enough investor momentum gains – and if China’s push for individual silver investment intensifies – he believes silver could peak past $100 in 2011. But that’s just the beginning. Silver could top out at $250 oz. in the next five years, as global mine production crawls in the face of increasing consumer and industrial demand. That’s an increase of more than 1,150% over current prices. Bear in mind that silver prices have been moving as fast if not faster than gold. So those who want to invest in silver better pull the trigger soon, or be prepared to watch from the sidelines as silver’s price explodes upward.

Matt Turner at Mitsubishi said this week, “one ounce of silver briefly rose above 40 of today’s US dollars per ounce in 1864, when the American Civil War neared its climax. In nominal dollars, the Hunt brothers’ multi-billion-dollar corner only saw it more highly priced on 5 trading days in January 1980. And while US investors waiting to buy silver are also still waiting for it to record a new intra-day high, it’s already broken new ground against the British pound and for most of the Eurozone, too.”

The cause? Gold investors have long tried to explain how metals are “telling us” something. “First warning” of the looming financial crisis, said Marc Faber in his Gloom, Boom & Doom Report of September ’07, was when “the price of gold more than doubled in nominal terms and against the Dow Jones Industrial Average [because of] ultra-expansionary US monetary policies with artificially low interest rates.” In which case, and with global interest rates further below zero today after inflation than at any time since 1980, what in the hell is silver telling us now?
“TIPS pay a lower rate of interest than regular Treasuries,” explained Bloomberg News when the yield offered by 5-year Treasury Inflation Protected Securities briefly dipped below zero (and $20 silver broke a 28-year high) back in March 2008. [That’s] because their principal rises in tandem with a version of the consumer price index which includes food and energy prices. Rising demand for TIPS [which pushes up prices and so pushes down the nominal yield] indicates investors expect the inflation adjustment to make up the difference.”

What great expectations TIPS buyers must have of Uncle Sam’s “inflation adjustment” today! They’re buying 5-year index-linked bonds with a nominal yield of minus 0.6%, anticipating a full 2.8% per year fillip from Washington when compared with the annual yield now offered by conventional 5-year bonds. And what greater hopes still must the new rush of silver investment hold…rejecting TIPS in favor of metal, and breaking silver’s tight connection with both gold prices and TIPS yields. The point that broke silver higher – was right when Fed chairman Bernanke vowed to begin QE2 in summer last year. That a fast-growing nugget of the world’s private wealth is fearful of the result is clear. That silver looks a turbo-charged play is clearer still.

There’s no bull market like a silver bull market, in short – just ask the Hunt brothers ahead of their bankruptcy, eight years after their corner blew up with the big inflation-fueled 1970s’ bull market. Double-digit Fed interest rates popped the bubble back then (plus a good dose of anti-speculative action by regulators and the exchanges, otherwise known as “saving the system” of course. It was sparked in turn by the Hunt brothers’ own naked greed, otherwise known to them as “inflation protection”). The most recent time silver got hot, however, it took oil at $150 and then the Lehman Brothers’ collapse to do to GDP growth and commodity prices what central bankers wouldn’t dare. Because raising interest rates to double digits to kill a “speculative frenzy” wasn’t politically possible. Silver’s and gold’s Bull Run on inflation. Which is worth bearing in mind whether you’re quitting, holding, ignoring or looking to buy gold or silver today. Did anyone imagine gold at $1492.40 or silver at $42.40? Well there you are!



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