Segment 1: Trading with the Greats SEGMENT BEGINS AT 00:41 A rules-based approach to trading has been economist/trading coach Jerry Robinson’s clarion call for many years. Listen as he shares seven important trading rules he has learned and adopted from three...
(Editor’s Note: Jerry Robinson will be traveling to speak on the economic crisis until early next week. He will return with his daily column on Tuesday, May 3. In Jerry’s absence, FTMDaily.com friend, Marcus Curtis, will fill in with his personal financial insights. Marcus has been a student of our Five Levels of Financial Freedom for the last two years.)
by Marcus Curtis | FTMDaily Contributing Writer
TULSA, OK , Apr 28 – Having an emergency savings account will protect you from accumulating debt in times of crises. This is common sense. Diversifying that savings account, so you will not lose the value of that account, is pure genius! A falling dollar leads to debasing the currency which, in turn, destroys savings. This is what makes Jerry’s advice so important. I have worked way too hard to watch my savings diminish because of a falling dollar. So I take a third of my savings and purchase precious metals.
My metal of choice is silver. Don’t get me wrong; I believe that investments in gold and other metals are good choices too. However, I have a whole host of reasons for purchasing silver.
First, and I think most important, is the advantage of the entry point for this investment. It does not take a lot of money to obtain silver. I checked the spot price yesterday and silver was $46.00 for a one-ounce coin. Silver in this form is readily available from the many gold and silver dealers in my area. I typically buy 1 to 2 silver coins per paycheck, by working a few extra hours each pay period to cover the cost.
Second, I get a great return on this metal. In January of this year, silver was around $18.00 an ounce. Spot price is now $46.00 an ounce. That is a $28.00 increase for each coin I purchased in January. That is a far better return than any savings account is offering! This does not mean you should take all of your money and buy silver, because it is very important that you remain diversified. All I am saying is that silver is one of the many wise investments I have made, and that I believe it is worthy of your consideration for your portfolio as well.
Third, there is more gold above ground then there is silver. This little known fact offers great insight, especially when you factor in the law of supply and demand. You can bet that, as the dollar continues to fall, people will buy more silver and gold. I believe that silver will be a great beneficiary of this and is getting ready to take off like a rocket.
Fourth, silver is an industrial metal that is used in electronics. It is found in circuit boards and silver solder, which can contain up to 40 percent silver. Gold does not have this same industrial demand.
Fifth, my return may turn out to be greater with silver, in the long run, compared to other metals. While there are no guarantees, if silver takes off the way I think it will, the return could be remarkable. Let me give you just one example: Let’ say that you had purchased one ounce of gold in January of this year for $1,350.00. Today the spot price on gold is over $1500.00. That is a $150.00 profit for one ounce of gold in just four months. On the other hand, if you had purchased silver with that same $1350.00, you would have paid a little over $18.00 an ounce, giving you around 75 ounces. Today the spot price on silver is $46.00 an ounce. That is a profit of $28.00 per ounce. When you multiply $28.00 times 75 ounces, your profit would be $2,100.00 in the same four months.
You should not put all your eggs in one basket, because it is important to be diversified. You never know which investment will give you the greatest return. But I do believe that silver should be on your precious metals list. This is an excellent way to protect you from a falling dollar. The biggest benefit, at least for me, is the affordable price of this investment. If you have not yet invested in any precious metals and you are on a tight budget, silver is a great place to begin.
The Truth About “Naked Short Selling”
Before we can really understand silver’s potential (and why I believe it is about to take off), we need to look at an illegal practice in the stock market called “naked short selling”. Sometimes when you buy stock, the broker you are using may not have the shares you have purchased. This is really no big deal. The broker issues an IOU and he has a few days to supply those shares. If you purchased your stock via electronic means, you don’t see the IOU. You just see the shares of stock you purchased. This is called short selling. It is a legal practice. It allows high volumes of shares to be moved.
Although you may never receive the shares you purchased, they are still counted as actual stock, causing the stock shares in the marketplace to become diluted. When you sell your shares (which really are nothing more than an IOU), you have moved your (IOU) shares into the marketplace. This is called naked short selling. In extreme cases, phantom shares are sold. Naked short selling can be detected when more shares of stock for a company are in circulation than have been issued by that company. This practice is criminal in nature and has ruined companies. Overstock.com is one of the many victims of naked short selling. Check out this Bloomberg report regarding this issue.
(If video above does not appear, you can view it here.)
Naked short selling also contributed to the melt down of 2008 by diluting the shares of a company and driving the stock prices lower. Moreover, it appears that JP Morgan holds a giant short position in silver in the form of futures. Check out this article from December of 2010.
To quote this article:
“In the overnight futures session on Sunday night, silver is currently trading 2.27% higher at $29.935. SOMETHING IS GOING ON. Making matters worse for JPM is the fact that a viral campaign (Crash JP Morgue Video) to buy physical silver and “crash” the bank is now spreading like wildfire on the internet. Just Google Crash J.P. Morgan Buy Silver.
Furthermore, it appears that significant physical silver shortages are developing in the marketplace and the metal is being sold well over spot where it is available. Shortly after popular financial blog ZeroHedge posted the “Crash The JP Morgue” video (see above), the website which created the video, goldsilvergold.com, reported that it was sold out of inventory and will not be taking new orders until December 6.“
After doing a little research on Google, it appears that JP Morgan is not the only culprit. As people abandon the futures market and take possession of the real metal, I believe you will see a giant spike in the price of silver. If this commodity has been subject to naked short selling, this means that there is actually less silver available than portrayed. According to this article, the market is suppressed by 3.3 billion phantom ounces of silver that do not exist. Here is an article that goes into detail about a silver price suppression scheme that the big banks have been involved with for years. Special thanks to the Gold Anti-Trust Action Committee for revealing this and fighting against the big banks in their efforts to suppress the value of this metal. Consider these links:
and this video…
If you have followed the links, you know why I believe silver is getting ready to take off. You can find out more about naked short selling and how it contributed to the 2008 melt down by reading my article, “The Rabbit Hole”.
About Marcus Curtis
Marcus Curtis is a FTMDaily guest writer. He is the founder of IraqCurrencyWatch, a blog dedicated to following the developments in the political and economic developments in Iraq.
FTMDaily.com is a financial education and media company that seeks to help individuals understand how the global economy and geopolitical events affect them and their families. Learn more at FTMDaily.com