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WHY PRECIOUS METAL HAS ME WORRIED

BUYING GOLD/SILVER, GOLD & SILVER, SECURING GOLD & SILVER   No comments yet

Our physical silver and gold market is in a precarious position…… and this worries me. The great paper PM (precious metal) sell-off of 2013 started in April and showing little signs of reprieve as June fades into July. The hard asset faithful patiently wait for a bottom all while questioning the wisdom of owning physical silver or gold. All this while today’s media wastes little time casting disparaging remarks for those practicing sound money practices and prudence. Even with all the aforementioned, this is not why precious metal has me worried.

Thank you so much for joining TPS (The Prospector Site). This post, like the hundreds before, is all about translating monetary fact from fiction, sound money from paper promises. I have no doubt our world of financial rhetoric confuses many, maybe most. Hopefully we can clear the air of confusion that clouds the judgments of so many.

Even though the US Mint will sell more Silver Eagles in 2013 than any year prior, our physical silver market is on the ropes. Demand for silver is great but nowhere near equal to today’s level of economic turbulence and fiat uncertainty.  The great alternative currency experiment is nearing an end.

The PM volatility we’re experiencing as you read this is beyond the expectation of this writer. Honestly, I expected to see paper silver, and gold, dip but did not expect physical PMs would follow in such waterfall fashion. It’s easy for me to say prices will stabilize, then rise, because I understand the equilibrium between inflation (consumer prices) and physical PM.

After all, it was only after abandoning the gold standard we realized a rapid rise in consumer prices. The many decades before realized little, or only slight, inflation because the ability to print fiat did not exist. From Egypt to Brazil, the conflicts we see today are all a derivative of fiat currencies out of control.

Why I’m concerned:

Let’s take a closer look at this from a businessman’s viewpoint. A business expands as demand generates profit. This includes leasing or buying more equipment and space, growing a workforce, and so on. The goal is to generate enough product or service to match the market’s pace and trend. Simple enough I’m sure you will agree?

Today’s companies in the PM exploration and mining industry are in great trouble. Mining stock is in far greater decline than paper or physical PMs, even with rising worldwide demand. Why you ask? Because an ounce of real metal sells for less than the tangible cost to extract PM from the ground.

A company in the mining business doesn’t view silver or gold as a safe haven. They view PM as an avenue of business growth and profitability. The problem is we have reached a price point to where the return is not worth the investment, not to mention risk.

Each person considering owning physical silver or gold should expect to see an interruption in precious metal availability sometime in the near future.

The mining industry has yet another problem, as well. Today’s environmental challenges are complex and litigation is extremely expensive. Each passing day brings the threat of yet another environmental related regulation that requires new or updated compliance. It is only worth fighting through such regulation if the trouble equals profitability.

This tandem threat, environmentally motivated regulation and lack of profitability, is far more concerning than a temporary waterfall drop in PM prices. A mining bust will not return to a boom overnight, regardless if PM prices rise in the meantime.

TORONTO, June 24 (Reuters) – Barrick Gold Corp will lay off about 30 percent of corporate staff at its headquarters in Toronto and in other offices in a downsizing plan triggered by problems at major mines and a drop in the price of gold. Read it here.

So what does this mean for those of us living outside the complex world of PM mining? It means a growing market of PM buyers will soon compete for smaller piece of the pie. If current PM physical demand weren’t as great I would say declining output is in nature order, but this is not the case.

The collapse within the paper silver and gold market has caused adverse effects far beyond what most comprehend. Please take a moment to read the Q & A segment if you’re contemplating adding more metal to your PM stack.

QUESTION: DC, are you buying now?

TPS Reply: Thanks for the tiny question. My answer is “no”. I’ve suspended my purchasing plan until prices stabilize because I refuse to buy new metal only to watch prices free-fall soon after. Remember, this is all about ounces….. not price. If I can buy more ounces tomorrow with the same amount of money then why buy now?

I’m not a financial adviser, this means I’m speaking for myself and each reader can take it for what’s worth. I do offer consultation for those who’ve made their mind up to buy metal but want to make sure they’re buying the best metal possible, at the lowest price, but from a reputable source.

It’s easy for me to suspend my purchasing plan because I’m already PM protected. I own both physical gold and silver; my PM plan is on cruise control. Please don’t confuse my temporary action as a loss of PM faith, far from it.

If I were yet to own physical silver or gold I would buy immediately, regardless of today’s PM market volatility. Who knows when the economic shoe could drop leading to an overnight depletion of an already thin inventory of PM?

I will resume buying physical PM when prices stabilize, not before. Thanks for the question.

QUESTION: After reading Storing Silver & Gold I would like to add my two cents. I’m looking to purchase a standup style safe but a little conflicted over investing money for a block of iron when I could invest the same money into PMs. Right now a $1000 will buy a couple rolls of silver bullion!!! What about a compact safe instead? What is your opinion on PVC storage?(edited)

TPS Reply:  Thanks for the comment and question, as well as making the effort to properly store your PM. You’re correct, a thousand bucks will buy a substantial amount of bullion these days, but. Someday soon this silver will rise in value and your ability to safely store this stash is imperative in order to protect your family’s financial future (this is the goal, right?).

I’m not against using a compact style safe, depending on the situation, but prefer something weightier and less mobile. The important issue here is how it’s mounted more than size itself. Regardless, insure the safe’s contents just in case the unlikely worst-case scenario happens to you (the book’s last chapter provides private PM insurance information).

Also, you must consider that money spent on a good safe is also an investment; investing a $1000 bucks for peace of mind sounds very reasonable to me when we view such an expenditure as an asset, too. Since you read my book then you also realize safe manufactures, like Liberty Safe, can’t keep pace with consumer demand. I doubt this trend will do anything but compound – especially when we have an administration taunting gun control.

Now let’s discuss PVC storage. For those who are unfamiliar, storing PM inside a buried section of large diameter PVC pipe is extremely effective. This process includes capping each end to ensure all contents stay dry and airtight. The PVC section is usually buried vertically just long and deep enough to allow access as needed. My only concern with storing metal buried in the ground is who will know where to look if something were to happen to you? Be sure to let someone trusted know of your PVC storage plan.

Thanks for the comment and questions.

 

DC Carlton is founder of The Prospector Site and author of the Amazon Kindle #1 Bestsellers Why Silver and Gold Will Go Higher and Storing Silver & Gold. If you’re looking for trustworthy PM assistance feel free to contact DC regarding his personalized consulting service. TPS doesn’t sell silver or gold; we represent you, the buyer, looking for affordable precious metal from honest trustworthy sources. Feel free to register here for his free online newsletter that provides precious metal insight rarely mentioned from mainstream media sources.

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TRUE SILVER CONCERNS

BUYING GOLD/SILVER, GOLD/SILVER COINS, SECURING GOLD & SILVER, SELLING GOLD/SILVER   No comments yet

Are you one of the many concerned about silver’s future?  Just this week I heard a talking head mention the volatility in precious metal as 2012 closes its final chapter. She confidently mentioned why investors sell silver and gold to wisely buy equities now that politicians are on the verge of solving our fiscal cliff issue. Wall Street celebrates this great news with a year-end rally almost like they realize Washington has no other choice but to feed the giant that holds the wealth of Middle America. My concern, my truest concern, goes far beyond the fiscal cliff or the triviality of our mainstream media, I’ll explain.

I would like to take a moment and do something I rarely do. I want to make a prediction, a silver prediction that is, and I’m asking each reader to, well, read closely. By the way, this prediction has everything to do with my concern of the day.

While paper silver sells down…. physical silver disappears at near record pace. Because of this I’m concerned something “big” will cause a sleeping society to awaken to our fiscal reality. This reality has the potential to dry silver inventories nearly overnight.

For those new to physical silver I want to share a fact or three.  The majority of silver on the market today is newly minted silver in the form of bullion, rounds and bars. The number of mints making silver bullion, rounds and bars are few. Most of you that own silver bought it through a third party (online bullion broker) and not from the mint itself.

Your source, the bullion broker, in all probability isn’t sitting on a huge inventory of silver in hopes you call for more. The price of silver fluctuates too much for silver sellers (brokers) to risk anything other than placing a “buy” order only after you ask for more. This means those brokering silver sales are limited to what’s produced or allocated from the few minting silver.

We will soon see days of silver rationing meaning those wanting to buy silver will be limited to a few ounces, at best, or only the highest premium and less desirable forms of physical silver.

Now here is where my concern takes over. People prudent enough to own physical silver have no intention of selling anytime soon, why should they? This December’s drop in silver means nothing to those sitting on physical silver. There is no way a person wise enough to protect with physical silver will sell it, one call to any silver broker will prove this as true.

The new-age bubble investor will run to silver not driven by wisdom but emotion. This is why so many scurried to buy silver not long ago when it hit nearly $50 per physical ounce.  The combination of short inventories and the unwillingness of those holding silver to sell will create a shadow market in PM making the true value of physical silver hard to pinpoint. This value will be far beyond silver’s daily paper fluctuations we watch today.

This writer believes we have reached such a point but the monetary spread between physical and paper hides behind a splinter of availability (silver inventory), an inventory on the verge of disappearing.

 

 WHAT ABOUT YOU?

My intention is to shout silver’s praises from the highest mountaintop so that as many folks as possible replace at least 10% of their net worth with precious metal. For those asking, 10% is a minimum and something closer to 20 – 25% is best (my opinion based on what I feel silver and gold’s actual physical values are today).  Remember, I gain nothing financially if you buy a boatload of silver since I sell neither metal.

But the problem, or concern, is that the physical silver window is closing just as those who trust a fiat currency need PM (precious metal) most. To put it simply, there is not enough AFFORDABLE silver or gold to go around. This is why both metals will go higher as more individuals realize we bought into a temporary currency system that still stands only because of the ability to print more.

Today’s silver buyers are a crafty bunch. They silently buy boxes of silver with little mention to anyone outside the few trusted, very wise. Is this why the silver cookie jar suddenly nears empty? Not exactly, physical silver has a bigger problem than its sneaky buyers.

Mining silver is challenging in today’s world. A global market may thirst for silver but politics and environmental issues dictate how fast silver leaves the ground. This conflict worsens as demand and prices grow, how could it not?

While preparing this post I typed “conflict in silver mining” and then watched nearly 3,000,000 results pop up on my screen. South America’s mining industry rages with conflict as inventories cry for more.

This only proves the option to own silver is not infinite.

I urge you to keep the above facts in mind each time a drop in paper silver prices rattle your PM faith. The fiscal issues our Congress address today are long-term problems that will take many attempts to fix. This makes protective assets, like silver, a long-term protective measure that each person who wishes to sustain wealth must own. Why not add a few hundred ounces to your stash while the opportunity to buy cheap silver still exists?

COMMENTS & QUESTIONS:

QUESTION:  You mentioned storing PMs in two or three locations as part of a proactive storage plan. One you recommended to another reader involves international storage which requires funds wired from a banking account. To my knowledge, the only way to someday retrieve this wealth is to have the funds (from PM sold) sent back to the same bank account. Here is the problem as I see it. What if the bank is no longer in business? What if the IRS decides my bank account is in their control regardless if I’m delinquent or not? Not sure I like the method for retrieval with international metal storage. Your thoughts?

TPS Reply:  Awesome question so thanks for sending it over. “Yes”, I recommend that each person who owns physical PM to use an aggressive proactive plan for storage. This could include international storage but two words popped into my head as I read your email, DUE DILIGENCE. I commend your efforts to look at international storage through realistic eyes because the risks you describe are very real, but.

I won’t speak for companies like BullionVault or GoldMoney, but my understanding is most depositors can retrieve real metal as well as cash back into a registered bank account. This means they will send real PM back to those who request it (for a fee). Does this take 100% of the risk out of international PM storage, of course not? I know of no way to store PM that is completely risk free.

My advice is for each person considering international storage to take the time to ask “what ifs” before taking the plunge. I personally feel it is well worth the risk depending on where you live. Thanks for the questions.

QUESTION:  You mentioned something about insurance for those who store PM at home?

TPS Reply:  Yep, insuring PM stored in your home is a great option…. and one recommended. The last I checked the fee for storing $100,000 in bullion was around $500 per year, well worth the effort and cost in my opinion. I’ll send the info over.

QUESTION:  Found your site on the internet looking for silver and gold information. I have so many questions I don’t know where to start and can’t afford the one-on-one consulting service you offer. In a nutshell, can you explain the steps to protect with physical silver?

TPS Reply: Would love to….. and thanks for spending time with TPS.  You have taken the first step to financial freedom, so congrats. Research is the key to understanding the power of silver/gold and how they protect in times of huge currency creation. First, continue to educate yourself why silver and gold are so relevant today.  Next, buy PMs as close to spot (paper) price as possible. I own bullion, rounds and bars…for what’s worth. Next, formulate a comfortable plan for storage that includes several options just in case one option fails. Next, forget the metal exists and live your life in the confidence that only comes from an independent nature that leads you to own a real asset like silver or gold.

 

DC Carlton is the founder of The Prospector Site and author of Why Silver and Gold Will Go Higher. Feel free to register here for his free online newsletter that provides precious metal insight rarely mentioned from mainstream media sources

 

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