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The Silver Rush Is OnBy
Friday, January 7, 2011
A couple years ago, I shared two shocking silver charts with DailyWealth readers.
These charts showed how governments around the globe have abandoned silver as money. They've decided it's easier to expand a nation's credit with fiat paper money than to mine more silver. They've sold off their silver stockpiles to industry and investors.
This trend is decades in the making. At first, much of this silver was used up in industrial manufacturing and processes like photography. That silver is gone forever.
But starting around 1997, silver began flowing into private hands. Folks concerned with wars, investment bubbles, and mismanaged economies were buying it up. They turned to silver as a safe form of savings that can't be debased by a gang of spend-happy politicians.
It was a modern day "silver rush." And buying silver back then was a smart move. The metal is up sixfold over the last 14 years... while stocks and real estate have struggled to do anything... while paper currencies have depreciated in value.
The thing is, the silver rush is still on. I just recently updated those two charts. Take a look at where we are today...
.gif) The above chart shows how silver supplies are moving out of government reserves... and into the hands of private investors.
Below, you'll find another chart. It shows sales of the U.S. Mint's popular Silver Eagle coins. Note the huge volume spikes on the right-hand side:
 Demand for silver coins is taking off. It's up almost sevenfold from the mid-1990s. The public is catching on to the value of silver, and I expect this trend to continue for years.
Since my first essay, the price of silver has soared more than 100% – from $13.50 to about $29 today. But over the long term, there's much more to come.
Here's how I explained it in 2009:
Governments around the world are behaving absolutely stupidly right now. Our vice president just said with a straight face that the government has to spend more money in order to save the nation from bankruptcy. That's crazy... but it passes for conventional wisdom these days.
In my 30 years of investing, I've never seen so many risks in the financial system. That kind of "patriarchal thinking" is producing those risks.
The stupid thinking I saw in 2009 hasn't gone anywhere. Governments across the globe are spending with abandon and creating big risks for savers and investors.
That's why it's a good idea to keep a portion of your assets in "chaos hedges" like gold and silver. You should know, I'm not the kind of guy who lives in a concrete bunker. I don't think the world is about to end. I'm not anyone's idea of a "gold bug." I buy this stuff just like I buy car insurance.
You should think of gold and silver as insurance against calamity. You should think of it as a safe store of wealth.
As I've just showed you, many people are catching onto this line of thinking. I expect millions more will over the next few years...
Here's to our health, wealth, and a great retirement,
Doc Eifrig
Further Reading:
Steve Sjuggerud's readers are up more than 30% on a silver play he almost didn't recommend. "I had what I thought was a fantastic idea for my readers," he wrote. "But I had one problem: The darn stock had already soared 900% in the last two years." Silver's recent bull market has taught Steve an important lesson he'd like to share. Find it here.
Market NotesTAKE A DEEP BREATH... AND TAKE THE "LONG VIEW" ON GOLD The frantic question in the market right now: Gold is down three straight days... down 40 bucks an ounce... should I finally sell out?
The DailyWealth answer (as usual): Before you get too excited, consider the "long view" here...
Longtime readers know we take an unconventional view of gold. We don't see it as a commodity. We don't see it as an investment. We see it as money... as a "real wealth" insurance policy you hope to never use. And despite what some gurus claim they can do, you can't accurately value the stuff. You can't say "I'll pay 10 times earnings for gold."
That's why when we hear the hot shots on CNBC trying to pick apart every $40 move in gold, we turn the channel. As you can see from today's long-term chart of gold, the "rich man's money" could fall all the way down to $1,000 an ounce and remain in the cozy confines of its uptrend. Big gold correction coming? Great! Let's buy more...
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