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WHAT WILL HAPPEN TO THE SILVER MARKET?

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

When I was around four years old my father and grandfather invested a full day in me and fishing. I can’t recall how many fish we coached to shore but I vividly recall asking far more questions than any father with a much-needed day off should endure.  Finally my father resorted to a generic reply of, “because that is simply the way it works” to each unanswerable question that only a four-year old mind can create.  Unfortunately, explaining the purpose of PM is far too important for a generic reply. Many of you are sending questions to The Prospector Site and we appreciate each question and comment, thank you. The value within each question goes beyond an answer so let me explain.  Gold and silver dialogue, or questions, create further discussion and interest in the one nontraditional asset each person should now own.  Not every question is answerable but each question is worthy of a reply. Today I want to share a couple of what I call common questions from a reader willing to invest time and money to preserve financial wealth via silver and gold, congrats.

By the way, don’t forget to sign up for The Prospector Site online newsletter emailed straight to you once a week. It’s free and available by registering here.



QUESTION:

Hello, I am an European reader and I am very fond of your site ( found about it while reading dailyreckoning.com ). I have read your website from the beginning, started last month and only now got to March. It has been very enlightening but I never said anything up until now. I wanted to read the whole site so that I could have a grasp on what the global scene was month after month, since March last year, basically reading the gold/silver economy trend, trough your posts. I have now stepped up and registered at Bullionvault.com buying small amounts of silver.

I would like to ask you 2 questions:

1. What will happen to the silver market if the copper is “the” next silver, will silver drop in prices?

2. Why if there is a gold dip, there is a silver dip at approximately the same proportion?

Thank you very much
Regards from Europe

PROSPECTOR REPLY:  Always great to hear from our European readers so thanks for the comment and questions.  I’m not sure if you know or not but you guys are in the news a bit lately?  You mentioned something that really grabbed my attention with an interest in the global scene as part of your decision-making process to buy silver.  I’m flattered our site is part of this decision so thank you for using us as a PM resource.  Starting with small amounts of silver is exactly how I advise clients to begin a soft entry into PM (precious metals). Silver is relatively cheap to own and easier to buy allowing newbies time to develop confidence in PM without spending boatloads of money in the process.  I do recommend owning both metals ONLY AS YOU FEEL COMFORTABLE in doing so.

Now, to question #1. I see no long-term drop for silver considering all worldwide currencies committing to printing themselves out of economic trouble.  Injecting fiat currency into world markets will drive up value and demand for real money, like silver, and copper rising is no more a factor than two ships rising from the tide, simultaneously.  My opinion is most metals in limited supply will find monetary attraction but nothing like silver or gold. Copper and nickel could easily be included in future monetary attraction but they will not suppress or replace silver, not in my opinion.

I see slim odds of silver doing anything but putting smiles on silver holding faces; this comes from a guy not selling silver or gold. Please stay in contact by letting other readers know how Bullionvault.com is working out (I’m assuming you’re using their vault in Zürich?).  Some PM advisers are hesitant to recommend passive storage but each person must judge risk accordingly depending on local volatility and government overreach. Diversifying storage is as important as diversifying wealth in general (hope this makes sense).

Now, to question #2. You are correct by noticing both silver and gold follow lockstep to monetary demand, kind of. Silver has one over gold and this one thing is a very big thing.  Silver is now the second most used commodity, we can thank modern-age technology for this.  Silver is a great conductor and technology now contributes to silver’s demand.  This means silver has monetary value (money) and industrial value simultaneously.  This is why PM experts feel silver undervalued and will close the silver to gold ratio very soon.  Paper silver suppression obviously is a major factor in today’s cheap silver prices (I hope all are taking advantage of discounted physical silver).

Regardless if (when) silver closes the gold gap; both historically parallel each other in true relevance and value.  This is because both metals are real money and no amount of fiat printing will change monetary balance.  Both metals float along inflationary rivers willing to rise to whatever point necessary to equal true value and worth.  This is why I started trading currency for metal ten years ago to the month.  I’m guessing this is why you are too.  Thanks for the great questions and welcome to The Prospector Site.

IF OTHER READERS  HAVE A QUESTION OR COMMENT WE WOULD LOVE TO HEAR THEM.  REACH ME HERE.


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FICO FICTION

BUYING GOLD/SILVER, GOLD & REAL ESTATE, GOLD & SILVER, GOLD/SILVER CONFISCATION   No comments yet

Is it possible you’re still trying to protect something soon to be useless over this decade and beyond?  A big part of understanding relevance of PM is by developing a nontraditional mindset, at least nontraditional to those still buying recovery. The monetary establishment still drums importance of a high FICO score as necessary because their very livelihood depends on you and your buddies returning to debt infested waters.  Since old habits die hard many still protect FICO scores like a burned out fort not realizing the new normal includes far less credit than most are comfortable with.  My question for you, do you still believe in good FICO fiction?

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Eventually all will realize only loads of credit allowed Americans to live a lifestyle unworthy. I often refer to today’s period in time as the great correction because not only will worldwide economies correct but so will individual belief systems. The necessity of a great FICO score has to be on the list of a correcting belief system and we have to look no further than credit shrinkage as proof. If you can grasp this as fact then you’re inches away from understanding why our economy continues to suffer from job losses, housing devaluation and foreclosures, budget woes, and soaring precious metal values.  The last forty years created a credit necessity to maintain an unsustainable lifestyle and this is why governments worldwide are frantically printing currency in hopes of reviving a stone cold economy.

If you’ve owned gold or silver for any length of time then you already know traditional credit doesn’t have to be part of a wealth preservation strategy, but most aren’t so observant. From buying a new home to selling municipal bonds, strong credit is the linchpin holding together a tradition of borrowing, leveraging, or anything but saving.  Today’s mortgage lenders have beefed up borrowing requirements, especially over five short years ago, by now requiring borrowers a FICO score in the high 700s along with a near spotless credit history, not to mention a higher down payment.   Little do the few still willing realize but this false belief supports artificial housing values by postponing a real estate bottom.  This may sound odd but a poor credit score will save millions of households from prematurely purchasing properties still in declining markets.

Our clients often ask what a future with limited or less credit could look like and we understand the curiosity.  No one knows for sure but we are sure that strong FICO scores will be less relevant especially as gold & silver continue to climb the worldwide currency ladder.  Most assets we commonly leverage (homes, cars, trucks, boats, RVs, vacations, and soon to be education) are in decline especially when compared to gold over US dollars.  This is why it’s becoming cheaper to buy most assets in real terms of true money (PM).  This is hard for many to grasp, maybe this is why so many continue to wear high FICO scores like a badge of honor.  PM holders realize the time is soon at hand when leverage, by way of credit, is no longer necessary to buy other declining assets.

SmartMoney recently ran an article called Foreclosure Sales Flood Market offering alarming news for those still advocates of a housing bottom.  Their research shows foreclosures and short sales now account for 35% of total existing home sales in January 2012, this is up a disturbing 16% from last summer.  I guess it is no wonder housing values dropped 8.5% nationally over the same time period.  Folks, you don’t need me to tell you housing has not bottomed and is now below intrinsic value in many cases.  This should tell us housing will not only correct but over correct allowing those sidelined holding gold, silver, or cash, buying opportunities of a lifetime, maybe five lifetimes. If true, and I certainly believe it to be, fussing to preserve FICO scores could be unnecessary as anytime in modern history.

Those looking hardest for economic recovery fail to understand how integrated credit has been to markets in the not so distant past.  Easy credit days will not come back anytime soon and this fact will complicate recovery before correction.  My guess is we will soon see organic credit, especially in home sales, commonly seen during an era of high mortgage interest.  Owner carryback financing relies less on credit scores and more on buyer trust, integrity, and down payment.   Can you imagine the opportunity for PM holders in a time we’re describing?

COMMENTS & QUESTIONS:

QUESTION: You talked about getting the copper rounds for as low as 59 cents; who is the manufacture of these rounds and how are you getting them for that price?

PROSPECTOR REPLY: Thanks for the question.  Not sure how long ago I posted copper prices since I don’t recall talking copper prices recently, but it’s possible.  Copper bullion bars and rounds are readily available from several mints and below I’ve linked to an American copper bullion source for those interested.  We have to wonder if copper and nickel will find the same appreciation as silver, my bet is they might but I’m not 100% sure of the level (upward).  Some copper coins are so professionally minted it’s hard to tell them from more expensive bullion.

Check out The Copper Exchange for more information, they ship free to the lower 48 states. This wholesaler offers bullion bars (5 lb. bars) as low as $.44 per ounce and copper bullion 1 ounce round as low as $1.05. I believe they have a 1000 ounce minimum but it is worth asking before buying.  Back to your question, I’m unaware of a bullion source selling one ounce copper coins @ $.59 per.

GOLD NEWS:

The gap between new gold bullion and Pre 1933 rare coins continues to shrink making rare coins worth considering, regardless if a collector or after wealth preservation.  Gainesville Coins now advertises $20 Saint Gaudens Double Eagles at $1815 while American Eagles bullion at $1800 per ounce (obviously prices are constantly changing). Many collectors believe Pre 1933 coins could be exempt from possible confiscation under collector coin exemption.  This is only speculation but with new gold and rare gold nearly one and the same it’s worth buying rare, at least if you’re in the market for more gold.

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