The Rich Will Continue To Get Richer

Does it matter which metal is purchased, silver or gold? The interesting reality is that it does matter. Celebrated investors such as Warren Buffett, Bill Gates and George Soros have been demonstrating with their wallets, a firm belief in the shimmering metal, silver. In fact, Warren Buffet has invested over $500 million in silver with his purchase of 129 million ounces. Bill Gates, invested $10 million of his personal estate into the Pan American Silver company (PAAS). Lastly, George Soros and his brother own 26% of the Apex Silver Mines.  Why do these distinguished financiers desire to own solid positions in silver interests, as opposed to gold? Because, silver is remarkably undervalued and is rebounding after 100 years of lower prices.

Collectors angered as U.S. rations 'silver eagles'
 

"U.S. Begins Rationing Popular 'Silver Eagles"

By Ianthe Jeanne Dugan
The Wall Street Journal
Friday, May 23, 2008

The government rationed food during World War II and gasoline in the 1970s. Now it's imposing quotas on another precious commodity: 2008 dollar coins known as silver eagles.  The coins, each containing about an ounce of silver, have become so popular among investors seeking alternatives to stocks and real estate that the U.S. Mint can't make them fast enough. In March the mint stopped taking orders for the bullion coins. Late last month it began limiting how many coins its 13 authorized buyers worldwide are allowed to purchase.

"This came out of nowhere," says Mark Oliari, owner of Coins 'N Things Inc. in Bridgewater, Mass., one of the biggest buyers of silver eagles. With customers demanding twice as many as they did last year, Mr. Oliari would like to buy 500,000 a week. But the mint will sell him only around 100,000.

The coins have a face value of $1. But the mint sells them for the going price of silver, plus a small premium, to a handful of wholesalers, brokerage companies, precious-metals firms, coin dealers, and banks. The dealers mark the coins up a bit more and sell them to the public.

For Coins 'N Things alone, the shortage is costing hundreds of thousands of dollars in lost sales of silver eagles. The firm sells about $1 billion worth of precious metal every year, including silver, gold, and platinum coins. Mr. Oliari, a 50-year-old numismatist who has been in the business since 1973, sniffs: "You can't print what I want to say about the mint." The mint, a bureau of the U.S. Treasury, has offered little explanation beyond a memo last month to its dealers. "The unprecedented demand for American Eagle Silver Bullion Coins necessitates our allocating these coins on a weekly basis until we
are able to meet demand," the mint wrote. A spokesman declined to elaborate.
 

“Inflation Proof Your Money…

Collect Silver for Pennies on the Dollar.”

CLICK HERE TO BUY SILVER

... 'Poor Man's Gold'

The rare shortage offers a glimpse into the growing love of a commodity known as "poor man's gold." With more silver mined than gold traditionally, silver has always been far cheaper than gold and today has less than 2% of gold's value.

But silver is growing in popularity, and some investors are betting that its value will surge as inventory shrinks. Big investors are loading up on silver eagles, which are the only American silver coins allowed in individual retirement plans. For small investors, they are an accessible way to get into the metal boom.

"Unlike gold, these coins can be bought by regular citizens," says J.R. Roland, a Brownsville, Tenn., judge who recently began buying the coins -- and trading them on eBay. "In these economic hard times, silver coins are a great way to invest."

In March, sales of silver eagles surged more than ninefold from the previous month, to 1.85 million. This year, the mint has sold 6.8 million, representing more than twice last year's pace. Still, numismatists are clamoring for millions more as the price of silver soars. It has more than doubled in the past three years.

Linda Wood, a 57-year-old Pittsburgh accountant, scours eBay, coin shops, and flea markets in search of silver eagles. One by one, she has accumulated about 300 in the past few months and stores them in a bank safe-deposit box. Traditional coin collectors may be impressed with the government's written description of silver eagles as "one of the most beautiful coins ever minted." But Ms. Wood isn't in it for aesthetics. She became a silver bug after she and her husband saw the value of their individual retirement accounts decline by $2,500 -- a "significant" chunk. "I just need bullion," she says. "I wouldn't care if the coins were ugly." Amid the mint caps, shady silver-eagle hawkers are thriving. Mr. Roland says that he had to wait a month after ordering some on eBay
recently, because the sellers didn't even have the goods. "I can't wait long, because you never know what's going to happen with the price," he says.

In Manitowoc, Wis., Dan Zirk, owner of Manitowoc Card & Coin, has sold twice as many silver eagles as he did last year. So he has stashed away his remaining handful of 2008 coins, betting the price will rise. He says customers, meanwhile, are asking for earlier years and other forms of silver.

... Lady Liberty

The government began producing silver eagles in 1986, basing its design on Adolph Weinman's 1916 "Walking Liberty" half dollar. The front features a flag-draped Lady Liberty striding toward the sunrise, carrying branches of laurel and oak symbolizing civil and military glory. On the reverse, a design by John Mercanti features an eagle with a shield, olive branch, and talon and arrows. The coins are made at an armored facility in West Point, N.Y., alongside the military academy. Dealers say they heard the mint had run out of planchets -- round metal disks ready to be struck into coins. The disks are used for various coins, and the companies producing the blanks also are busy, limiting the mint's ability to increase production. The mint won't comment on the planchets.

... Coins Divvied Up

Each Monday morning now, the mint divides its silver coins into two pools. It divvies up the first equally among authorized purchasers. The second is allocated proportionately, based on the buyer's past purchases. The mint limited purchases once before -- in the late 1990s, when investors loaded up on silver, wrongly anticipating that a failure by the world's computers to adjust to the new millennium would cripple the economy. Jim Hausman, head of the Gold Center in Springfield, Ill., one of eight companies in the U.S. authorized to buy silver eagles, estimates that the rationing will cut his expected annual sales of
four million silver eagles in half. And the result, he says, is almost un-American.  Increasingly, investors are taking a shine to alternatives. The Royal  Canadian Mint saw its sales of silver Canadian maple-leaf bullion coins rise 40% last year, to 3.5 million, according to a spokesman.  Some investors expect the craze to end badly. They draw comparisons to what happened to silver in the 1970s. A rich Texas family poured billions of dollars into silver, and prices surged above $50 an ounce in 1980, only to plunge again after government intervention. "It's akin to what happened when the Hunt brothers tried to corner the silver market," says Wendell Curry, who owns McAllen Gold & Silver Exchange in McAllen, Texas. "The silver hawks are now trying to corner silver American eagles. And it's making it harder for mom
and pop to buy these for their grandchildren."
 

Here's brief excerpt from the Silver Stock Report:

By Jason Hommel, May 23rd, 2008

"I sincerely believe that conditions like this come along once in a lifetime, and in silver's case, I've long said that today's opportunity is unique in all of human history. My gut tells me that silver prices might not stay below $20-25/oz. for more than about another month or two.  Never before has silver been so rare and scarce due to consumption by  industry.  Never before in all of human history have all nations in the world abandoned silver as money.

No history professor knows anything from history that is even close  to what we are seeing today.  No event in prior human history can be compared to what we are now witnessing, and will soon witness. I can only guess as to how high silver is set to go, and my experience is that you don't want to hear it, either.


Ted Butler who writes for Investment Rarities writes in his latest letter:

"A visitor from another planet would surely be scratching his head about the current price discrepancy between gold and silver. The one that is the more rare and needed is selling for less than 2% of the price of the other. It would quickly occur to the alien that if just 1% of the money in gold switched into silver, that would equal an amount more than 3 times all the silver in existence. The visitor would wonder how so few of the earth's 6.5 billion inhabitants could  not see this discrepancy between two items that dated from the birth of human history. I'd be willing to bet that such an alien, should he exist and have a desire to make some big human money, would buy silver."