Straightsilver.com, Miami Beach, FL – January 16, 2014
Many analysts see Silver selling at a minimum of $21 per ounce in 2014. However, there are some silver bugs that have a more aggressive outlook for Silver and think that this year 2014 may bring increased strength in the silver market that will result in a strong price increase. Let’s take a look at four major factors that could influence silver and support the price move in 2014.
1. Production Costs
During the time period of July through September 2013, the costs to extract silver from the ground had a average cost basis of $21.39 per ounce, The mining costs at those levels are above the price that silver is trading for right now. Silver settled in around $20.26 per ounce at yesterday’s close.
2. The United States Economy
The US Federal Reserve decided to reduce its bond-buying program at the end of 2013. The central bank plans is to lower it by $10 billion, to $75 billion a month starting this month. Historically, this tactic can result in a weakening of the US dollar. This result is positive for precious metals such as Silver and Gold. The reduction is based on a improving economy which could result in a increase industrial demand for the Silver.
3. Potential Stock Market Pullback and re-allocation into Precious Metals as a Safe Haven trade
From a technical standpoint, many traders believe that Silver is in an oversold position similar to 2001 and 2008. These types of set ups can be followed by strong movements to the up-side.and that’s bullish to buy Silver now before the prices move higher again. This coupled with the fact that in 2013, the stock market saw substantial gains in the stock market and many are analysts are looking for a correction in 2014. If this happens, this is just another reason to use Precious Metals as a “safe haven” trade.
4. Asian silver demand
China and India are increasing their imports amounts of silver and gold. If demand from those locations continues at the same pace, silver prices could see a big spike to the upside.
By now, most Americans realize what they have earned, built and own, no longer belongs to them. It will be taken unlawfully in the blink of any eye. Much like Washington, powers now want more of your income and wealth.
On October 9, 2013, from its perch in Washington D.C., the International Monetary Fund (IMF) released a report outlining its recommendations for immediate global wealth confiscation—specifically American wealth—and new capital controls and exit regulations.
The report titled “Taxing Times,” calls for the confiscation of household assets by a “capital levy” on citizens with a “positive net wealth” to reduce advanced economies debt to GDP ratios and stabilize global bond markets.
In other words, the IMF, recommend increasing taxes and instituting new capital controls and exit regulations for seizing Americans investment equity, IRA’s and 401K’s to pay down outstanding debt to pre-crisis 2007 levels. According to the IMF, this move will restore global debt sustainability.
The International Monetary Fund report reveals global concerns for the potential destruction of world financial markets. They also recommend “enhanced international cooperation to make it harder for the very well-off to evade taxation [capital levies] by placing funds elsewhere.”
The IMF is selling their plan as a tax on the well-off, not the middle class. Sound familiar?
Global forces are moving to destroy fundamental rights in the United States. Our government is entertaining these proposals. After all, they ran out of money 17 trillion dollars ago and printing more will only make it worth less.
As the crisis in Syria continues to unfold in the background, the U.S. economy is on the edge of once again collapsing into a severe recession. It’s hard to say exactly when this will happen, but since Federal Reserve Chairman Ben Bernanke has recently announced that quantitative easing, or QE as it is commonly referred, will continue to be the monetary policy of choice, economic calamity may be just around the corner.
In a recent press statement, Bernanke postulated that the diminishing risk to growth initially caused by QE that we have seen over the past year has led to improved European financial and economic conditions as well as an increased confidence in the continuing U.S. recovery. Therefore, the Bernanke-led Federal Reserve Bank will continue its fairly recent and controversial policy of purchasing $85 billion in assets, especially since economic forecasts suggest that the economy may be heading toward a downturn.
As a result, the Federal Reserve Bank has yet to decide when they will taper quantitative easing, but the decision will likely be based upon the close monitoring of future US economic reports. The decision, whenever it is made, will have a significant impact on the entire global economy. According to the projected forecast of the Federal Reserve, the economy will actually contract and decline throughout 2014 and the rest of 2013. As is usually the case, the Federal Reserve’s fiscal policy only benefits those at the top, and the greatest victims of impending economic doom are average people who regularly depend upon inflated commodities, such as food and gas.
Mark Faber, a financial commentator and notable Swiss investor, believes that Bernanke and the rest of the Federal Reserve Board would have tapered off QE by up to $15 billion, but since they are in a state of “QE unlimited,” he is not surprised the taper did not occur. According to Faber and countless others, the Federal Reserve does not understand that only a handful of people benefit from money printing.
Bernanke described his decision not to reduce the Fed’s bond purchases to $65 billion as a precautionary step. He continued to state that QE will only be tapered when they see a noticeable improvement in the US economy. This stance is largely due to the fact that an end to quantitative easing would result in a sharp rise in home mortgage rates, which would lead to yet another housing market crash. Bernanake admitted that he did not want to raise home interest rates, because it would lead to an increase in home foreclosures and put added stress on a fragile market.
The US dollar is declining as fast as the economy. According to Bloomberg, the dollar recently fell to nearly a seven-month low as the Federal Reserve decided to keep money flowing into the economy and refrain from reducing its bond purchases. Shortly after the Fed policy makers concluded that they should “await more evidence,” of improved economic conditions before they raise the rock-bottom interest rates, the U.S. dollar fell markedly against Turkey’s lira and Brazil’s real. The dollar also weakened against the pound after the Bank of England decided there was no need for added stimulus.
Thanks to continued QE and a devalued dollar, the price of gold, silver, and other precious metals will continue to climb along with their demand. Time has proven time and time again that incessant money printing only devalues a currency. This currency manipulation is the only way the Fed knows how to keep inflation in check and avoid rapid price increases across the board.
Precious metals, such as gold, silver, platinum, and palladium, are the only time-tested safe haven assets to hold and protect your money during a recession. Whenever the value of the dollar declines, the prices of precious metals skyrocket, and vice versa. In fact, precious metals act as a protection vehicle for an extremely fragile dollar.
Currently, many nations throughout the world, especially China and Russia, are decreasing their U.S. dollar investments and increasing their gold purchases. For individual investors throughout the land, precious metals are the only safe bet in a volatile market full of uncertainty.
Silver price history is a long story of manipulation. Yet, the irony is that it is cheap! One thing to keep in mind is that Silver is an important strategic commodity as well as a form of money.
Major Events in Silver Price History
The major events impacting silver price history have been:
1. The U.S. decision to remove silver from silver coins and sell the remaining stockpile into the industrial sector
2. The Hunt Brothers’ failed attempt to corner the market in the early 1980?s
3. The last thirty years of growing short concentration
4. The recent inflationary era (current)
The current trend is in the beginning stages.
After some time, you learn how to deal with the day to day volatility in silver prices. It is an emotional battle that long-term investors understand boils down to value – and no matter the price swings up or down, silver will never entirely lose value, go bankrupt, or be nationalized.
If you look at how history has dealt with fiat currencies it is easy to see that the dollar will continue to weaken.
In the mildest of scenarios, a gradual dollar decline will place additional and slow upward pressure on the price of silver. Extreme dollar debasement, which seems more and more likely given the macroeconomic conditions in the U.S., would flood the silver market with safe-haven buyers—more people like those of us who tend to hoard silver.
But again, what history has not seen is the gradual and potentially explosive surge that will happen as industrial supply and investment demand converge. When this will happen is very difficult to predict, but it is not unreasonable to assume that this convergence will take place soon.
There is irony in the fact that the continual bailing out (nationalization) of the economy through money creation—which puts downward pressure on the dollar, causing inflation—will continue to fuel an industrial depletion or shortage that may have been averted if “normal” cyclical patterns were allowed to play out.
Now this makes the case for any amount of silver as investment.
Peter Schiff discuss the fed’s flawed policy and it’s effect on the economy and gold.
Ever since the big take-down in the price of the precious metals in April of this year, an interesting trend has taken place in the Gold & Silver Eagle market. While demand for both coins remained strong in the first four months of the year, investors are now overwhelming purchasing more Silver Eagles — anticipating higher gains in silver than gold.
The ratio was 19.5/1 in April, 80/1 in July and so far in August it is a staggering 489/1! Over the last month, investors are overwhelming purchasing nearly 500 times as many Silver Eagles as Gold Eagles from the US Mint!
If we take a look at the chart below, we can see that sales for Gold Eagles declined from 209,500 oz in April down to only 50,500 in July.
Furthermore, sales really dropped off a cliff so far this month as the U.S. Mint only reported that 5,000 oz of Gold Eagles were sold. Possibly, the U.S. mint has not updated their gold eagle sales figures this past week, but as we can see the trend is much lower.
However, Silver Eagle sales are stronger than ever. Here we can see that after the second take down in the price of gold and silver in June, investors purchased 4,046,500 Silver Eagles in July almost surpassing April’s total of 4,087,000.
Silver Eagle sales are on track to surpass the total sales for 2012 within the next 2-3 weeks.
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The gold & silver rally continues as both metals are climbing again as Asia opens, with silver bursting above $22.50, and gold up over $30 off yesterday’s lows and closing in on $1370.
As it becomes increasingly obvious that the metals have bottomed at $1179 and $18, big money that has been sitting on the sidelines throughout the summer entering the market en-mass could easily ignite a short covering rally of epic proportions.
Silver explodes to the upside reaching a high of $23.32. We expect $23.44 to be tested before the end of the week. Look for the cartel to put up a major fight at $23.44 as a move through could quickly result in a gap-up towards more significant resistance near $24.50-$25.
Excellent interview with Max Keiser | Stacy Herbert on : The Great GOLD Migration
The FIAT Flash Point There is a serious rumbling underfoot of an impending financial disaster, yet no one really seems to be taking notice. No matter how many times and ways elected officials try to claim the economy is healthy, anyone can tell by quick observation that it’s all lies. Official unemployment figures always seem to hover around 9 or 10%, but this fails to account for the individuals that have run out of unemployment benefit without getting hired. They live a life in limbo. It also fails to account for those that have jobs, but are working far less than full-time. The economy built on borrow-now and pay-later philosophy is due for a hard fall soon. We are quickly reaching flash point with the FIAT currency.
What is FIAT Currency?
FIAT currency is money that is issued by order of public officials with a paper guarantee of worth rather than the traditional method of backing by precious metals. Wouldn’t it be nice if we could just print up money whenever we run out and want some? Well, that’s exactly what the government does. It doesn’t really matter to the powers-that-be whether the paper money is actually worth anything. The debt ceiling gets raised whenever it gets reached and has lead to unprecedented economic debt and overspending. Once this earthquake gets set in motion, you’ll have to depend on yourself to survive. The government isn’t going to care whether you sink or swim. It’s time to wake up and see the reality of the grim situation.
Fall of the New Roman Empire
One of the most powerful economic forces on Earth was the Roman Empire. There is some debate on exact dates, but the standard acceptable date for the fall of the Romans was in the year 486 A.D. They maintained a strong economy and fierce military. They used their money and might to conquer more and more land. Thievery, enslavement and pillaging was the order of the day. Their big mistake was taking the currency off the precious metal grid. It made the money valueless and down the Empire came. It happened over a few years time, but was unstoppable.
You can easily view the current economy and government activities the same way. Phone conversations being logged, internet activities monitored, pilfering of programs like Social Security to pay for other projects and endeavors. Nothing is sacred when it comes to the greed and power hunger of elected officials. Our senses have become deadened to the point that many people don’t even bother to vote anymore.
The New Deal Gone Wrong
How did the stage get set for such an impending crisis? Our 32nd president, Franklin Roosevelt, took office during the height of the Great Depression. He was facing the daunting task of employing over 13 million unemployed Americans. He created a system of measures that was tagged and nicknamed the New Deal. It ultimately increased taxes and began our system of the government operating in the red. He did many great things, but elected officials have since taken this method and ran with it. Debt became the rule, rather than the exception. This wave of debt is much like a tsunami threatening to crash into our society and drown us all.
There have been economic rumbles felt in the country for decades. The earthquakes began when the housing bubble burst, the banks failed and bail-outs galore happened. Now what happened with you and me when we couldn’t pay our bills? We lost stuff and services. The government provided no bail-outs for you and me.
Heed the ongoing warnings and seek higher ground. Once the economic tsunami hits it will drown all in the path. The elected officials have enough lifeboats for themselves, but the average tax paying citizen is expendable. It’s time to take action and protect yourself now.
If you pay any attention to the Federal Reserve and Ben Bernanke, you probably have noticed his constant statements that claim inflation is under control. He cites statistics that claim inflation is only up one or two percent per year, thanks to his miraculous ability to handle the money supply. While his version of events is definitely calling for the Wall Street crowd, it’s not good enough for the average consumer. Is inflation basically non-existent, like Mr. Bernanke claims it is? In a word, no. In fact, it is much worse than he would claim, although the statistics that they use to measure inflation may not be showing it. Some might say, this is done deliberately so that they can keep doing what they’re doing.
So where is this inflation coming into play? The Federal Reserve has essentially been printing trillions of dollars and giving it to banks ever since the financial crisis of 2008. Banks have been taking the free money and using that to buy bonds like United States Treasury bills and other securities. This has lead to a massive decrease in market interest rates, because there are plenty of buyers with plenty of money to buy. The Fed has created more than $2.5 trillion for these purposes. This has lead to inflation in the bond market and a re-inflation in the real estate market. Real estate prices have gone up nearly 10 percent in the last year. Stock prices have gone up drastically since this all began.
Is this rise in stock prices due to the recovery of the economy? Are people actually going out and spending money and helping these companies on the stock market performebetter than they did a year ago? Or is it due to the manipulation of the markets with the help of the Federal Reserve and the banks?
The so-called recovery that people point in the stock market as verification, isn’t really that much of a recovery at all. It is a form of market manipulation by the powers that be to make it seem as though everything is alright. The big problem with this scenario is that it’s going to hurt the middle class more than anyone.
Have you noticed the prices of things like food, gas, and consumer goods rising in the last few years? The two biggest things that most people spend their money on are food and gas. Unfortunately, these items are left out of the core consumer price index number that the Fed uses to cite inflation numbers. They say that those prices are too “volatile” to include in a true measure of inflation. The problem with this is much of their volatility is due to the practices of the Federal Reserve and the major banks. As the Federal Reserve continues to increase the money supply, the purchasing power of the dollar relative to other currencies and gold declines. As the purchasing power of the dollar is eroded, it buys fewer barrels of oil than it use to. As the price of oil goes up relative to the dollar, this makes the price of gas go up for the average consumer.
The price of food is also largely affected by these policies. Although there is some natural volatility in the food market because of weather and harvest, that isn’t the only thing at play here. Food has to be transported to stores with the help of trucks. When the prices of gas are high, this adds to the cost to get the food to the stores for people to buy. This means that a good chunk of the cost of food is from the rising costs of gas, which are impacted directly by the Federal Reserve.
If you think things are expensive and times are tough now, it’s probably only going to get worse. If you are having a hard time making ends meet, you may want to buckle up for even harder times. Unless these policies of the Federal Reserve are somehow changed or stopped, then inflation is going to continue on until it’s out of control. As a consumer, stocking up on hard assets is one of the best ways to combat these policies.
Excellent interview that you won’t want to miss – The Two Greats: Doug Casey Interviews Peter Schiff. They discuss the economy, gold, the federal reserve and much more!
Even though gold recently sank to two-year lows in April, astute investors know there is only so long America’s massive debt, high deficits, systemic unemployment, and printing of money can continue to be ignored. Gold has outperformed most traditional investments since 2001, as the world’s appetite for the safe haven of precious metals continues to grow in these tumultuous global times. However, gold’s little brother silver, continues to be a vital precious metal and is thought by many analysts to have a far greater upside. Legendary investors such as Jim Rogers continue to push silver over gold. Prominent investor Eric Sprott has even gone so far as to build a mutual fund around silver exclusively.
There are three main reasons most in the precious metals community feel that silver will one day correct its lower valuation and spring to new highs. First, one must take a close look at the 16:1 rule. Silver’s ratio to gold is currently 60:1, far off the average of 16:1 it has exhibited throughout history. If gold were to settle at $1365 per ounce, silver should logically trade around $85 per ounce. For this to occur, one would expect gold to experience a dramatic correction, silver to rise while gold suffers a more moderate setback, or silver to finally get its respect and catapult to all time highs.
Silver also serves as a much more functional metal than gold, as it is widely used in photography, jewelry, electronics, batteries, and a host of other practical and consumer applications. The worldwide demand for silver stems from these needs, as approximately 10% of silver demand only comes from coins. During economic downturns, silver traditionally suffers far less than other precious metals, as the need for these basic uses continues whether or not economies are expanding or contracting.
Finally, when looking at silver demand over the last few decades, we see that while only 30 million ounces per year of silver coins were in demand in 1990, that number skyrocketed to 88 million in 2011. As countries such as China and India continue their aggressive growth, it is reasonable to assume the demand on silver will certainly grow along with it. Additionally, because the markets have ignored the historical 16:1 ratio mentioned earlier, investors flock to silver as a cheaper way to own precious metals and protect themselves in the event of another global economic meltdown. In early 2013, the U.S. Mint ceased selling 2013 Silver Eagles, leading many to speculate there was a shortage of silver as the 2012 Silver Eagles recently sold out. Could it be that the world’s demand on silver is outpacing supply? Precious metals experts have discussed the potential for silver to end up in manufacturing settings (not in coins), creating a scenario where silver might potentially rocket in price, as industrial needs supersede investor needs.
Either way it goes, good economy or bad, the demand on silver will continue to be strong. If the global economy goes into a tailspin, investors will look to silver and gold for safety. If it continues to pull out of its multi-year downturn, then manufacturing and industrial needs will be the catalyst. Whichever scenario takes place, investors can be assured that silver will most certainly climb higher.
This is the time that you add to your physical holdings of gold and Silver. Watch this Powerful Interview with Ron Paul on Gold: “I’m Buying”