precious metal: silver

• Editor of Taipan’s New Growth Investor

• Editor of Death Cross Trader

• Retired Hedge Fund Manager

• Specialty is new growth situations

Zachary D. Scheidt, CFA

Not a Complicated Investment

1. Own stock shares of a silver company

2. Buy silver coins; hold value as collectibles

3. Own silver ETFs; easy to buy in a standard IRA retirement account

4. Buy option contracts

Source: www.thelensflare.com/images/silver-bars.jpg

Two Reasons to Own Silver

1. Inflation – As the value of paper money declines, the value of REAL “stuff” (and precious metals particularly) trades higher

2. Consumption – Silver is used for various “real” purposes which means the amount of silver available is continually dropping

Reason One: Inflation

• Money being pumped into global firms

• World is loading up on debt

• U.S. must PAY for this debt

• Excessive printing of money has nasty consequences

Laws of Supply and Demand

Purchasing power of $1,000 from 1950 to 1999

Source:  U.S. Bureau of Labor Statistics

Getting Ahead of Inflation

1. Beat inflation by owning “stuff”

2. Tangible items maintain their value and by definition increase in price

3. Precious metals offer ease of storage and universally recognized value

Reason Two: Consumption

• Extensive medicinal uses– anti-bacterial wound dressings

• Superior electric components– soldering solutions and specialty batteries

• Excellent reflective properties– mirrors for high-intensity functions

• Additional uses in photography, X-ray technology, and dentistry

Effects of Our Consumption

• Silver is being used up and taken out of circulation due to consumption

• U.S. Mint halts production of some coins due to shortage of metals

• U.S. Mint cites “extreme fluctuating market conditions”

Source: http://wikimedia.org/

Price of Silver on the Rise

• Price rising from low of $8.50/oz. in September

• Price hovers around $15/oz. (up 75% from recent low)

• Price of silver up due to volatile and historical nature of current economy

• Some economists say if gold moves X percent, the price of silver should move three or four TIMES X

Look at the Price of Silver

Source: http://www.allcountries.org

Chart of silver in real or inflation adjusted term

Investment Options for Silver

1. Own the physical metal – specifically in the form of coins or jewelry

Source: http://www.goldline.com

Investment Options for Silver

1. Own the physical metal

2. Buy stock in a silver mining company

Source: http://www.goldline.com

Investment Options for Silver

Source: http://www.goldline.com

1. Own the physical metal

2. Buy stock in a silver mining company

3. Buy the Silver ETF (SLV:ARCA)

Investment Options for Silver

Source: http://www.goldline.com

1. Own the physical metal

2. Buy stock in a silver mining company

3. Buy the Silver ETF (SLV:ARCA)

4. Futures contracts

Investment Options for Silver

Source: http://www.goldline.com

1. Own the physical metal

2. Buy stock in a silver mining company

3. Buy the Silver ETF (SLV:ARCA)

4. Futures contracts

5. Option contracts on silver

Silver Summary

• Reasons to own silver: Inflation and Consumption

• Many ways to take advantages of silver– Own the physical metal– Buy stock in a silver mining company– Buy the Silver ETF (SLV:ARCA) – Future contracts– Option contracts on silver

Zach’s Special Report

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