Silver - A Rare and Unique Investment Opportunity Roy Tonnessen INTRODUCTION: I am now introducing you to information that only a few people know about. Most of the investing public, brokers or investment analysts don't have a clue about the current fundamentals of silver. Just ask your friends and find out how many can give you the names of two silver mining companies. You get this information long before the crowd. That is a huge advantage, if you chose to take advantage of it. You may have heard multi-level-marketing people talking about getting in on the ground floor. This is definitely the case regarding investing in physical silver and silver mining companies. OPINIONS: Is investing in silver today a "once in a lifetime" opportunity? No, it may be more like a "once in human history" opportunity. Probably never before have a collection of positive, powerful conditions like today ever existed. You may very likely never again in your lifetime experience a better profit opportunity with so little risk. The long-term investor seeks to capture the best possible return with the smallest possible risk. Five years ago, I felt that silver was at the top of the list, and this has proven to be the case. Based upon all that is likely to occur in the next five years, silver is still at the top of the list. It's the single best asset you can own today. - Theodore Butler, leading silver analyst In the eyes of the world, only gold compares to silver as an investment. Maybe one in a thousand investors recognizes that silver is more rare than gold, above ground. This is not a secret that can be hidden forever. - Theodore Butler, leading silver analyst Gold will preserve your wealth. Silver will make you wealthy. - David Morgan, leading silver analyst Silver may very well become more valuable than gold, as it was in ancient Egypt. - Jerome Smith The current price does not reflect the scarcity of physical silver. There is no best- or worst-case scenario in which I can conceive of... silver being a loser. You can mortgage the kids and bet the farm! I beg you on bended knees to buy silver. -Howard Ruff The accumulated silver inventory is gone, at precisely the time when we experience the greatest demand in history. When investing in silver, the long-term possibilities for financial rewards, compared with the risks - are spectacular, in my opinion.   FACTS: 1. We have consumed probably 80-90% of all the silver that has ever been mined in the world. 2. As a comparison, we have probably kept 80-90% of all the gold that has ever been mined. 3. For hundreds, if not thousands of years, there was much more silver than gold above ground. 4. Today it is generally estimated that we have about 5 to 6 times more gold than silver, in above-ground inventories. Read that again. Very few people are aware of this fact. Usually the more rare something is, the higher the price is. 5. We continue to consume more silver than we take out of the ground. 6. We continue to pile up gold. 7. Silver is much more rare than gold - when we look at how much is available above ground. 8. Silver has the lowest estimated in-ground resource of any major metal, relative to the consumption. Almost no one is aware of this fact. 9. New industrial uses for silver are discovered and developed on a regular basis. Silver is an industrial metal as well as a precious metal. It is needed in the world economy, like copper and zinc. 10. Industrial products consume the silver that is used. It is generally not recovered. 11. Gold is mainly used for jewelry and collectors coins. It is kept by those who purchase it. 12. Central Banks used to have large holdings of silver that they could dump into the market. They don't any more. 13. Central Banks and the IMF still have large holdings of gold. These can be used to manipulate the price of gold. 14. New exchange traded silver funds (ETF) around the world have pulled huge volumes of physical silver out of circulation. Investment demand for silver is increasing. 15. On an inflation-adjusted basis, silver is much cheaper now than it was 25 years ago.This is one indication that the risk from purchasing silver today is very limited. 16. About 70% of all silver produced is a byproduct from the mining of other metals like copper, lead, zinc etc. - so a strong increase in the price of silver does not necessarily mean that a bunch of new silver mines will be opened. 17. Silver will have to move to around $130/oz., just to reach the same price level it already was at around 1980 - on an inflation-adjusted basis. At the time of this writing silver is priced at about $14/oz. 18. Gold is currently trading around $660/oz. and will have to move to around $2,200 to match the price it reached around 1980 - on an inflation-adjusted basis. 19. Circulating coins in the U.S. generally were made from 90% silver through 1964. 20. Gold has not been circulating money for a long, long time. 21. Gold is more abundant deeper down in the ground; so much more is likely available in the ground - that has not yet been discovered. 22. Silver is more abundant close to the surface, so a lot of the easily accessible silver has already been found and extracted. 23. I am not hitting on gold. Gold will probably be a very good investment. I believe silver will be a spectacular investment. 24. There are probably well over 1,000 companies considered gold companies. 25. There are very, very few companies considered pure silver companies 26. It takes 5 to 10 years after finding silver or gold, to bring a suitable property into production. 27. Out of several thousand properties where companies look for silver or gold, probably only a single one will become a mine. The current price does not reflect the scarcity of physical silver. We have record low inventories. We have strong, and growing industrial demand. We have growing investment demand. We have low prices. This situation can't continue very long. FUNDAMENTALS: What we do know is that every day the world collectively takes around 1.75 million ounces of silver from the earth. We also know that the world consumes well over 2 million ounces (the balance comes from recycling and inventory depletion.) We know that this basic production/consumption structure has existed in the world every day for around 60 years. This deficit has existed so long that the investment world seemingly has become numb to it. At the end of World War II, total known stocks of silver amounted to around 10 billion ounces, with the US government holding 4 billion ounces of that. We are now down to probably considerably less than 1 billion ounces, down almost 95 percent. The silver has been used up, to fill the growing industrial appetite for silver. The U.S. government considers silver to be a strategic metal - and used to have an inventory set aside for this purpose. Now even this strategic stockpile is gone. Many modern weapons systems, satellites, missiles, rockets and torpedoes can not function without silver. Almost all the silver that has been mined in the past 5,000 years has been used up for industrial production - and is gone forever. *** Today, world silver inventories are at the lowest point in 200 years *** We have a vital material, known to all men for all time, literally disappearing before our eyes. No other commodity in the history of the world has ever seen such a prolonged severe depletion of both the above and below ground supply. We are truly running out of a vital commodity. Silver inventories are running out - with silver currently at give-away prices. Traditionally it has taken about 15 oz. of silver to pay for 1 oz. of gold. Recently it has taken 45-50 oz. of silver to pay for 1 oz. of gold. This is a strong indication that silver is very undervalued and can be expected to climb a long way in price just to get to where the historic value has been. As I am writing this gold trades around $660/oz., so silver should trade around $44/oz (15:1) - but it is actually trading around $14/oz. This shows how far the silver price has to go according to traditional valuations, even without speculating that there may actually be a serious shortage of physical silver developing. Adjusted for inflation, just to reach the same price level silver was at in 1980 silver would today need to trade around $130/oz. This indicates to me that the price of silver is very likely to increase substantially. In 2003 the Chinese government allowed their well over 1 billion citizens to for the first time in over 5 decades own silver and gold. The Chinese are said to traditionally save 40 % of their earnings. China recently announced that they estimate needing 3,000 tonnes of silver annually. As world economies grow, demand for goods increases. As people make more money, they want more stuff, including better homes, improved life styles, medical treatment etc. China just reported a 23% increase in May-07 auto sales compared to a year ago. Several stock exchanges around the world have recently started to offer the opportunity to buy and sell silver in an easy way, through Exchange Traded Funds (ETF). This opens up for silver investment demand from untold new millions of people. Shorting is when traders sell stocks/commodities that they don't own; expecting to buy them back after they hope prices will fall. As of Apr.-07 the Commitment of Traders (COT) Report shows that the 4 (or fewer) largest traders on the COMEX are net short the equivalent of 145 days of global silver mine production, or short over 253 million ounces of silver. This is in violation of the law, and outrageous - and stands out like a sore thumb. No other commodity comes within a country mile of having such a concentrated short position. In all likelihood these 4 largest traders would not be able to deliver the physical silver if they had to. It simply isn't readily available. There never was a legitimate economic reason for such large and concentrated short positions in silver. Who, in their right mind, would desire to be short more than all the known quantity of a vital commodity in a world tight on most, if not all, vital commodities? - Theodore Butler, leading silver analyst Today less than 1% of silver trading is in physical silver. It will take just a small change from paper to physical trading, for the price of silver to explode. In 2006 Peru was the world's largest silver producer, accounting for 17% of the total, Mexico (15%), China (12%), Australia (9%). These 4 countries thus accounted for 53% of global silver production. Total supply of silver fell by 1.5 per cent in 2006, to just under 912 million ounces. IT'S NOW OR NEVER! was one of the hit songs by Elvis Presley. Take it to heart regarding investing in silver. The most respected name in precious metals fabrication, Johnson Matthey, recently started producing 100 oz. silver bars - for the first time in 15 years, to meet the renewed investor demand for silver. No one in the world can buy huge quantities of physical silver. It simply doesn't exist any more. It doesn't matter how much money you have - the silver isn't there. Jim Rogers is fond of noting that no one can repeal the law of supply and demand. It's on this front that silver really shines. On the supply side, silver seems like it's a one-way bet. According to research consultancy CPM, in 1900 there were 12 billion ounces of silver on the planet. Today this number has fallen to 300 million ounces - a drop of 97.5%. Two years ago, the Chinese government announced that it had depleted its stocks of silver. The above-ground silver supply is projected to shrink to a critically low level by 2010. - Nicholas Vardy PRICE EXAMPLES FOR METALS AND MINING STOCKS: As an illustration of what has happened so far, take a look at the following: During 2006 the shares of Aurelian Resources (ARU/AUREF) moved from $0.39 to $35.73 Palladium traded around $150/oz. during most of the -90's. In -98 it traded around $200 and then rose to around $1,100/oz. during Jan.-01 because industrial users panicked and built up inventories. Silver is used in many more applications than palladium. The price of one tonne of copper jumped from $2,000 in the late 1990s to $8,700 in 2006. During the same period, the price of one tonne of zinc went from $1,000 to around $4,000. The price of indium has increased tenfold within just a few years. Rhodium in early 2007 fetches the pretty sum of $5,450 an ounce. No, that's not a typo. Rhodium was trading near $440 in April of 2003. From 1970 to 1980 the gold price rose 2,300 percent - so it shows what can happen. - Anthony S. Fell, former president of the Royal Bank of Canada Between 1975 and 1980, while gold bullion rose from $150 to $850/oz., a few penny mining stocks made millionaires out of investors who got in early, held on, then sold at the right point. Azure Resources from $0.05 to $109, Bankeno rose from $0.40 to $560/share, Lion Mines from $0.05 to $380, Mineral Resources from $0.60 to $415, Steep Rock from $0.93 to $440, Warf Resources from $0.40 to $4350. You could have bought 10,000 shares of Lion Mines in 1975 for around $700 dollars and if you held on for the whole 5 years until January 1980, you could have netted a total profit of around $3,799,300. WARNING: The juniors, although offering great potential, also contain much greater risk as most of them ended up falling back to zero. So be careful. - Aubie Baltin CFP, CTA, CFA, PhD. In the early 1970s, silver began to rise in price from around $2/oz. - ultimately increasing 2500% by 1980 to $52/ounze. Wall Street Journal, October 26, 1979, page 48, noted that silver prices had tripled during the last year. By mid January 1980, silver jumped some 450% over the August 1979 price. In the case of the Hemlo discovery during 1981-1983, the three primary companies involved were Corona Resources, up 5,445%....Golden Sceptre, up 7,650% and Goliath Gold, up 7,011%. In the Eskay Creek discovery, Consolidated Stikine Resources went from 10 cents per share in 1988 up to a high of $73 in 1990, a stunning 70,000% gain! In the last five years, copper has been up 330%, nickel 560%, uranium 1,150%, zinc up 460%, molybdenum up 450%, and even lowly lead, the most basic of base metals, is up 425%. - Doug Casey, June -07 Among a long list of recent wins in January 2007 are....Almaden Minerals (up as much as 374% since March of 2003); Altius Minerals (up 1513% since September 2001); Anatolia Minerals (up 825% since November 2001); Bear Creek Mining (up 233% since September 2004); Bravo Venture Group (up 407% since August 2005); Esperanza Silver (up 100% since June 2006); First Majestic (up 281% since February 2005); Greystar Resources (up 134% since July 2005);Virginia Gold (1065% gain since March 2003. In April of 2007 we have the following gains for mining companies: ECU Silver Mining Inc. - a gain of 5,983% in less than three years; Energy Metals Corp. - a gain of 5,858% since September 2003; Laramide Resources Ltd. - a gain of 7,403% since May 2004; Mega Uranium Ltd. - a whopping gain of 14,880% since June 2003. Nuinisco Resources delivered an 82% gain in just six trading days....Seabridge Gold Inc. - a gain of 2,764% since April 2002; And, of course, there's the remarkable story of Aurelian Resources - that produced 240% returns in less than 24 hours....and turned $10,000 into $700,000 in under a year! During 2006 and the first quarter of 2007 Minera Andes' share price has increased over 500%. Can you expect this kind of gains from every silver or metals stocks. No, of course not. I could clearly have looked for and found many companies that lost value. You will in all likelihood have some losses if you purchase shares of mining companies. What you aim for is to have more, and bigger gains than the losses. HISTORY: Around 1980 the price of silver for a short spike reached $52.50/oz. - and then the price plummeted. For 23 years there was a bear market for silver. In 1991 the price bottomed around $3.50/oz. For all those years the price of physical silver was stuck around $4-$5/oz. An investment in silver during this time would for most people have resulted in discouraging returns. According to the U.S. governments own numbers the price of $52.50/oz. in 1980 equates to about $130/oz. in 2006 dollars. Silver today is selling around $14/oz., so silver will have to multiply around 10 times in price just to catch up with inflation. This means that each 1 dollar invested in silver today could increase to over $10 just for silver to reach the same price level it was at in 1980. In constant dollars, silver's purchasing power averaged $150 per ounce (in 1998 dollars) for 600 years. This was the average purchasing power for 600 years. Obviously silver is nowhere close to that 'value' today. This provides one unbelievable investment opportunity. - David Morgan, leading silver analyst For almost 65 years the world has consumed more silver than what has been produced. This could only happen because we had huge silver inventories, but we have now in all likelihood decimated the world's silver inventories. These inventories took thousands of years to accumulate. For the most part, they are gone forever. The current price of silver does not reflect this situation. No other commodity has ever experienced this phenomenon to this extent. Silver stands alone as the only practical investment vehicle that is both an industrial commodity and a precious metal. This places silver on a very unique pedestal. Few potential silver buyers recognize just how powerful this will be to the price. No other industrial commodity can experience broad-based retail and institutional investment buying. Silver already has, and will continue to see, such buying. The fundamentals of silver are so bullish and so compelling that I couldn't make them up if I tried. - Theodore Butler, leading silver analyst Keep an eye on silver. It not only rises with gold in a big bull market, but usually outperforms it. - Jon Nadler, analyst at Kitco Bullion Dealers On Jan. 18, 1980 silver traded up to $50.35/oz. In June-07 silver would need to rise 280% just to reach the same level. On Jan. 21, 1980 gold traded up to $656.10/oz. Gold will need to increase 30% in price to reach the same level. On Mar. 6, 1980 platinum reached it's peak. Just recently it traded at $1353.83 and bypassed the previous record. From this you see that silver is lagging behind the other metals and has lots of upside potential. Once the freight train of big money gets rolling into an investment theme, it is hard to stop. Ironically when we get high and rising prices of silver - we can expect great numbers of people to want to purchase silver in unison. In 1929, when the stock market crashed, so did the stocks of precious metals mining companies - for a time. And they likely will again. At the crash low, Homestake Mining went down to about $7/share before climbing 871% to a peak in January of 1936 to just above $68. Get the word out. A candle loses nothing by lighting another candle. Buy silver and gold. SIZE OF MARKETS: It is estimated that there are more than 5 billion ounces of gold in above-ground inventories in the world. At $600 an ounce, the value is $3 trillion. It is estimated that there is less than 1 billion ounces of silver in above-ground inventories. At $12 an ounce, the value is around $12 billion. The current gold market value is thus 250 times the market value of silver. We have 250 times more gold than silver in the world, in dollar value. Let's say that 200 to 1 is the real gold/silver ratio. This means that all the silver in the world is worth 0.5% of what all the gold in the world is worth. Please think about this for a moment. Even if all the owners of silver decided simultaneously to sell all their silver and buy gold, it would only amount to 0.5% of the market value of gold. But if only 0.5% of gold owners decided to switch into silver, that would represent 100% of the silver available in the world. So, the moment the world discovers silver as an investment opportunity - and serious money starts to chase it, they will discover that the silver basically isn't there to be purchased, and prices will go to the moon. There is more gold being piled up in inventory every day, while the amount of silver in existence is shrinking daily. - Theodore Butler, leading silver analyst IS IT TOO LATE TO INVEST: The time to get a great investment deal, or when you can buy something at a low price is when a particular company or sector is: 1) Unpopular 2) Unloved 3) Ignored by the markets In my opinion silver is still in this category. Investor demand for silver and gold will rise as the price increases. This may seem counter-intuitive, but that is how these markets behave. This is partially because increasing prices will cause silver and gold to be in the news. Also, as more people understand this story - they will realize that this is a very unique opportunity. Warren Buffett wants to buy stocks that are operating in the absence of any excess attention. Small-cap stocks tend to benefit from having less attention focused on them, and therefore a greater percentage of them are likely to be mis-priced. Investors should make a cornerstone of small cap stocks free of the attention of the investing public. - Bill Barker Silver stocks tend to be very thinly traded. So much so that when very few investors are paying attention to silver, the shares of these companies can sell for literally a few cents. But later, when the investment masses begin clamoring for silver stocks, it's akin to trying to squeeze Niagara Falls through a garden hose.... sending the shares to the moon and literally making fortunes for early investors. These stocks do well during periods of crisis for several reasons, but mainly because they are such a small sub-set of the financial landscape that even a fractional increase in interest sends them soaring. And this time around, I think we are going to see the high end of the range that these stocks are capable of. If all unfolds as it can, and likely will, for the first time ever we will benefit from a concurrence of a market with much higher precious metals prices. Toss in a lot of investors with a lot of cash, nervous about the outlook for global financial markets and looking for a trend to fall in love with, and you have all the elements necessary for you and me as early investors in the resource sector to pull down truly extraordinary gains. - Doug Casey You'd be correct in suspecting that the easy money in gold [silver] shares has already been made. It has. But it would be financial folly of the highest order to assume that it's too late to make the big money. The big money is still on the table. - David Galland HE WHO HESITATES IS LOST! I believe the silver train is about to leave the station to where silver prices will pierce the past record high of January 1980, not only in straight number terms, but also in inflation-adjusted terms, and then for silver prices to be sustained at high levels. USES OF SILVER: Michael DiRienzo, director of The Silver Institute in Washington, D.C., calls silver "the indispensable metal," because a bit is used in every computer and cell phone, and in many other industrial applications. Silver is a superior conductor of electricity and is very durable." SOME USES OF SILVER IN INDUSTRIAL FABRICATION Conductors, switches, contacts and fuses Electrical/electronics Electroplating for bearings Brazing and soldering Photo chromatic glasses Missiles, rockets Batteries for watches, cameras, and similar electronic devices Silver inks for silkscreen applications on printed circuits, smart cards Catalyst in formaldehyde production (plastics) Catalyst in ethylene oxide production (polyethylene and other petrochemicals) Dental alloys Medical devices, burn treatments Mirrors, glass coatings Thick-film pastes for ceramic capacitors, membrane switches, conductive adhesives, rear-window defrosters Electro-deposition in coatings for plate, bar, or rod anodes Solar panels Water purification systems, surface treatments and disinfectants Coatings for compact disks and digital video disks Silver is used in every wall switch in your house. Silver is in your washing machine, dryer, refrigerator, thermostats, electric tools, circuit breakers, pumps, car, computer, server, monitor, keyboard, cell phone, TV, and other appliance parts. Silver coated bearings provide superior performance and safety for jet engines and railroad diesels. Aside from petroleum, silver is used in more applications than any other commodity. Silver is known as the healthy metal and has many, and an increasing number of medical applications. While silver's importance as a bactericide has been documented since the late 1800s, its use in purification has been known throughout the ages.  Silver is today's metal. It's got more uses than any other metal known to man .... in areas of technology, medicine, electronic applications, clean water applications, and you can get silver on your Band-Aids now because it's an effective killer of bacteria. - Dennis Wheeler, CEO, Coeur d'Alene Mines Corp. Silver is considered to be price-inelastic, which means that an increase in silver prices is expected to have very little impact on reducing the industrial demand for silver. This is often because the quantity used in many applications is so small that even a large increase in the price of silver will likely not reduce the consumption very much. Silver is truly indispensable to a modern society. It could easily be viewed as the ultimate "technology stock". Silver is used in numerous industrial products. Silver possesses exceptional qualities: Silver reflects! The coating on mirror backings is silver. Mirrors are used in telescopes, microscopes, spacecraft and solar panels, as well as in bathrooms! Don't forget the silver transparent coating on double-pane thermal windows. Silver conducts heat! Those silver ceramic lines fired into your car's rear window keep the window clear of frost and ice. Silver conducts electricity! Silver is the metal of choice for switch contacts because it does not corrode. Every time you turn on a light switch, start your microwave, dishwasher, television set, car engine, etc., silver contacts complete the electrical circuit. The same thing happens when you tap the keys of your computer keyboard, adjust your car's power seats, or release the power trunk lock. Silver is there. Silver kills bacteria! Silver chemically affects the cell membranes of bacteria, causing them to break down. Bacteria do not develop resistance to silver, as they have done to many antibiotics. Silver solutions are used in burn treatments. Silver gauze packs the wounds of patients during transport to medical facilities. Hikers use portable silver-based water purification systems for drinking water. Silver rings! Silver has a pure acoustic resonance and is preferred by musicians for making high quality bells and musical instruments. Silver captures images! Silver salts are the basic image capture and forming materials in photography. Every picture of your sweet little darling contains silver, as does medical/dental x-rays and your favorite movie. Silver is pretty! Don't forget the silver in your jewelry or traditional tableware. Silver has been used in cherished heirlooms and gifts for centuries. A CHILDREN'S STORY by Ted Butler There are two metals in the world - one is white and one is yellow. They feel and weigh about the same. For thousands of years they were used for similar purposes, but during the last 100 years or so it was found that the white one had many properties - better than any other material - that made many of the modern devices and inventions possible. Because the white metal was now used in so many products, almost all of the white metal we had stacked up over 5,000 years is now almost completely gone. The yellow metal was basically used in the same way it had always been used - and almost everything that had ever been produced is still here. Even though we produce more of the white metal than the yellow metal every year - we use it up even faster than we produce it. That means there is now a lot more of the yellow metal than the white metal hanging around. If the yellow one disappeared completely from the face of the earth tonight, it would have little impact on the life of the average citizen. If the white metal disappeared, modern life as we know it would be disrupted beyond belief. Then we would tell the children that one of the metals costs 60 times more than the other. Which one do you think they would guess is the most expensive? So, buy physical silver. Put it away. Forget about it, until every other commentator on the evening news won't stop talking about silver. Put silver to work for you - and don't miss out on this incredible opportunity. Remember I am not trying to sell you anything. I just want to share this opportunity with you. A VERY SERIOUS AND SINCERE WARNING! After all I have said so far - now "The rest of the story". Investing in silver mining stocks is not for the faint of heart. There is a lot of price movement - both up AND down, in these stocks. One mining stock I followed went from $0.14/share, down to $0.01. Another mining stock I followed went from around $2.90/share to $5.60 in about 1 month. Can you expect this kind of movements in every stock? Probably not. But unless you are prepared to stomach these kinds of moves - stay away from this particular market. DAILY moves of 10-20% are not at all unusual, and even larger moves will probably become the norm. Trading volumes in many companies can at times be very small. Some don't even trade every day in the U.S. Most of the mining companies are headquartered in and trade on exchanges in Canada. Most of them trade Over-The-Counter (OTC) in the U.S., which sometimes brings with it a bunch of challenges. It is not a computerized system with close buy/sell prices. You do not have a guaranteed fill of your order even if better prices have been filled. If e.g. you have placed an order to pay up to $0.49/share of a particular company, it may close/trade at $0.48 - and you don't get your order filled. Too bad, try again tomorrow. At a time with very small volumes trading, if just one analyst gives a positive or negative recommendation about a company - prices can rise very fast and vaicee voica as Yogi Berra might have said. It is crucial to keep the big picture - and the extraordinarily bullish fundamentals in mind. It is difficult not to become emotional when dramatic one day drops catch even the most seasoned investors off guard. In the short term, strong dramatic price drops strike fear and doubt into our trading decisions. In these situations we could sell out of our well considered investments and bury our heads in the sand as we can not bear to watch. Remember, if trading the financial markets was easy, everyone would be home building wealth and nobody would be working. Half the value of your investments may disappear, for some time, during a bull market correction in the silver market. Unless you have a very solid understanding of the fundamentals, you will not feel very good - and you may even sell your shares at the bottom, unless you understand that this is just part of the ride. The good thing about the volatility of mining shares is that if you miss purchasing one stock at a certain price, by waiting a while you may experience a dip in the price that allows you to later buy some shares at an acceptable, perhaps even lower price. The leading silver analysts suggest to NOT try to pick price bottoms when purchasing silver. Just get going, as soon as you have gathered enough information. Then e.g. use some money every month/quarter and continue your purchases. This way you will average out the cost as prices move up or down - and you should do great. People can lose money in volatile markets, even when they're going up. - Howard Ruff Unless you take the time to really understand the fundamentals of the silver market I suggest that you stay away from investing in silver. The price moves - both up and down - are often so dramatic, that you may otherwise develop an ulcer - and/or sell at the exactly wrong time. I have seen this happen several times, when someone doesn't have a solid anchor with a well-researched, deep knowledge of the silver fundamentals. You should also be prepared to hold your silver or silver company shares for several years to enjoy truly outstanding profits. In-the-ground metals: When a mining company estimates their silver resources in-the-ground, these are often classified as "measured", "indicated", or "inferred", in accordance with the confidence level of the estimate. Basically, the closer together the drill holes are, the higher the confidence level about the results. Because of frauds in the past Canada instituted what is called 43-101 compliant results, which have to be calculated according to very specific rules - so people can have more confidence in the results. The U.S. SEC allows miners to report only one type of ounce totals, Proven and Probable (P&P) Reserves. These are ounces determined by drill holes spaced as little as 15' apart. Plus, the deposit's economics have been verified by an independent feasibility study that shows the capital required to build the mine and processing facility. Other designations used e.g. in Canada have wider drill spacing so the ounces are less certain to exist and/or the deposit has not been shown to be economic. For example, sea water is known to have billions of ounces of gold... but the grade is so low that it's not currently economic to attempt recovery. An Educated Due Diligence is to: BS -- Buy Silver, MS -- More/Same, Ph.D -- Pile Higher/Deeper Fortune favors the well-informed. TRADING/INVESTING: Never go long silver on margin. Never sell short on margin. Own and control the physical silver. If you store the silver somewhere, be sure you get a storage certificate with the serial number and weight for each bar. Never buy silver that is commingled, pooled or leased. Never let a dealer store your silver. Don't buy any kind of paper silver. When prices rise drastically, much of the paper silver will not be delivered and many of the sellers will likely go bankrupt - with the buyers left holding the bag. You can either purchase physical silver and/or purchase shares of stock in companies that mine or prospect for silver. Don't buy any stocks without spending the necessary time to get to know the industry and the specific company. The leading silver analysts suggest to first accumulate physical silver and then if you want to, next get into silver mining stocks. There are no pure silver mining stocks that I know of. Around 75% of the silver produced comes out of the ground as a by-product from copper, lead, zinc and/or gold mines. In 2006 production from primary lead/zinc mines supplied 33% of the total silver produced. Copper mines supplied 26%. Primary silver mines supplied 25% and Gold mines 13%. Some people argue that historically, each year precious metals have two cycles for entry and exit. They say the time to perhaps sell down is before late May through August.  The saying goes: Leave in May come back by Labor Day. Even though late spring/early summer corrections are viewed as a fixture in the market, they are maybe not quite as predictable or standardized as the saying might indicate. 15 year averages of seasonal price patterns for gold tend to bottom in May, rally into June, and trade negative on net into late July, for a final bottom, prior to strength which drives the gold market into fall and winter. 29 years of seasonal averages tend to remain negative on net beyond July into late August and mid September. - Jim Sinclair In over 30 years of following gold we often see a price bottom in July or August. - Monty Guild Advice from www.goldstockanalyst.com - and it may apply equally to silver stocks as well. TOO FEW COMPANIES: Owning just a few (silver) stocks increases the likelihood that if there is a problem with one of them, this will wreck havoc on your portfolio. Don't try to swing for the fences with just a couple...silver stocks. You're too likely to strike out, or be ignored by Mr. Market. TOO MANY COMPANIES: Owning too many (silver) stocks is a common fault of those that attend Gold Shows or subscribe to newsletters with several dozen stocks on their "buy" list. Investors hear or read a good story and buy. Before long they own 20, 30 or more... far too many stocks and thus they are doomed to simply match Indexes such as the XAU or HIU. Most newsletters are guilty of recommending too many stocks as it increases the chances of a big win they can boast about, but it does little good for anyone's portfolio to own all their recommendations.... which is why they don't report total portfolio results. THE BEAUTY OF "10" is two fold: Investing in 10 different companies gives enough diversification. Having a basket of 10 broadens the possibility of a big success. (On the other hand, Warren Buffett suggests to own stocks in just a few companies that you understand thoroughly - and then keep a close eye on any developments in these companies/industries). The discipline of 10. If you find a new stock and you want to buy it, sticking to a maximum of 10 companies forces you to re-examine the entire portfolio and decide if the candidate's chances are better than the stocks you already own. ALL OUNCES ARE NOT EQUAL: An ounce is an ounce is an ounce... right?  WRONG!!!  Don't be confused by the various "ounce" totals thrown around by the companies. BUYING THE ENTIRE POSITION AT ONCE: When you find a stock that your research indicates is undervalued, it doesn't mean that Mr. Market will suddenly see the same upside and start buying right after you've bought. It takes time for value to be recognized. NEVER buy your entire position at once, whether it's a new stock or establishing a position in the precious metals sector. Scale in.... 50% of your final total investment is the maximum to start. You may well get a chance to buy more at a great price later. If you don't get this chance, you'll have a low cost initial basis and there's nothing wrong with adding to a winning position. When it comes to the silver and gold markets, misinformation is the rule rather than the exception, as goes for Governments and Wall Street. If you are interested in a specific company - go to the company web site, don't rely on information popping up somewhere on the web. Call the company and get their story. In smaller companies, the President of the company may sometimes answer the phone. For information about the general silver and gold markets I have made reference here to some of the individuals and web sites I have found it well worth listening to and reading. SILVER COINS: US coins were made from 90% silver until 1964. After that dimes and quarters had no silver content, while the $.50 piece contained 40% silver.  These half dollar pieces with 40% silver lasted through 1969 and then they lost all of their silver content as well.  Silver Eagles We currently have gold and silver coins known as American Eagles. They do not circulate in the daily transactional system as true values are far higher than the face values on these coins. For example a single Silver Eagle coin with a $1 face value is now trading up toward $20. The American silver coin is 99.9% silver, and the American gold coins are 91.67% or 22 karat gold. The silver eagle contains 1 oz. of pure silver. The face value is 1 dollar. It is one of the most magnificent silver coins of the world. Silver Canadian Maple Leaf It is made from 99.99% silver and contains 1 oz. of pure silver. It has a face value of $5 CAD which is a floor for your investment if deflation is your concern.     Silver Rounds/Medallions These are coins struck by a private mint. They carry a much smaller premium than the Silver Eagles or Maples.     Silver Bars They come in all sizes, all contain 0.999 pure silver. 1oz., 10 oz. and 100 oz. bars are the most common. They are stackable, thus convenient for storage. The 1 and 10 oz. bars have a shiny finish and sometimes comes in plastic sleeves. On the other hand, the appearance of the 100 oz. bars is more unassuming, but they may offer the most efficient way for individual investors to store pure silver bullion. 1,000 oz. bars get to be very heavy to move about, but can be nicely stored in a bank safe deposit box. Pre-1965 quarters and dimes These are known as junk silver or bag silver - a nicer description is Circulated Silver Coins. The quarters and dimes were issued as legal tender before 1965, each containing 90% silver. A full bag of $1000 face value contains roughly 715 oz of pure silver after wear and tear is taken into account. They tend to offer the lowest premium over daily silver spot prices. Kennedy half dollar The Kennedy half dollar contains 40% silver. A full bag of $1000 face value contains roughly 295 oz of silver. They are legal tender.   Of all the industrial or precious metals, or resources in general, the one that has the absolute best chance to explode to unprecedented price levels is silver. That's due to the unique and highly combustible mix of impending shortage and the immense concentrated paper short position. The world has never witnessed an actual physical shortage of a precious metal with such a large and documented short position. Bottom-line, the one commodity with the potential to shock and awe and make people rich is silver. - Ted Butler, leading silver analyst The role of silver in the economies of the world is reflected e.g. in the following: The currency of India is named the rupee, which comes from the Sanskrit word 'raupya' which means silver or coin of silver. The French word for money is 'argent' which comes form the Latin word argentums which means silver. The British currency is the Pound Sterling. My recommendation is to avoid high priced silver collector coins. Buy coins for the metal content and metal value, not for some often non-existing collector or rarity value. Silver coin dealers have tons of special editions, memorial coins etc. that they will be happy to sell you for a very small markup over the daily silver value. Some of the web sites at the end of this article will give you an indication of how low of a premium you should expect to pay to a good and reputable metals dealer. I have at times been able to buy at 30 cents markup/oz. - with free shipping and insurance included. U.S. ECONOMY: Common sense tells us that the more dollars are in existence, the less the value for each dollar. This is the basic meaning of inflation. Some people falsely believe that the greenback, the US dollar - is almost almighty. At one point it time it may have been so, but now this is a great illusion. The US dollar is backed by the national debt and the IRS' ability to collect taxes. A dollar bill is really just a piece of paper with some ink on it. It does not have any intrinsic value. None. Zip. Zilch. Zero. Nada. Illusion. The only value it has is the faith in it, by an unfortunately very uninformed and ignorant public. The current U.S. administration is piling on national debt at an alarming rate. Prepare financially and psychologically for the fallout that will most likely occur when people realize that Uncle Sam is broke. Expect a drastic pruning of and the weaning of people from Social Security, Medicare and other alleged government "benefits. To build a better future we will likely need to drastically prune, if not completely abolish, the welfare-warfare state. Taxes may well rise steeply. Significantly higher inflation and interest rates are very possible. That, in turn, augurs poorly for most financial assets. History shows us that every government that has so incompetently managed its finances has tried to "print its way out of trouble." Inflation - that is, the Central Bank's expansion of the money supply - reduces the purchasing power of your money tomorrow. - Chris Leithner Just because the U.S. economy is leaking and may be headed under water, doesn't mean that we as individuals have to go down with the ship. - David Galland U.S. National Debt - Read It and Weep   A report about The Pentagon's balance sheet compiled in 2003 by the Inspector General stated "we identified $1.1 trillion [yes, that's a "t" and not a "b"] in department-level accounting entries ... that were not supported by adequate audit trails or by sufficient evidence to determine their validity. [In conclusion], The Department of Defense did not fully comply with the laws and regulations that had a direct and material effect on its ability to determine financial statement amounts." The financial management of most (up to 20) of the federal government's 24 largest agencies fails to meet requirements enacted by Congress. - Chris Leithner Silver is a very limited resource and has intrinsic value. It has been used for thousands of years, in very many cultures around the world as a means of exchange and payment. In an economy with hyperinflation or deflation silver still has tangible, solid value. Even in the U.S. - supposedly the home of the free, and the pinnacle of capitalism - the government decided that it can be dangerous if their citizens own precious metals. It is only as recent as 1975 when it again became legal for U.S. citizens to own gold. When even the U.S. government so recently has shown this need to control what its citizens do with their money, this ought to make you reflect on your options and perhaps also as to why they did this. They obviously know that their paper currency is basically worthless. In 1929, probably less than 5% of Americans invested (or speculated) in the stock market. Today about half of U.S. households have the lion's share of their savings and retirement assets in the stock market or equity mutual funds. When the crash comes, America will be far more devastated than in 1929 or the 1930s. -The McAlvany Intelligence Advisor CHANGE MAKES SOME PEOPLE UNCOMFORTABLE...IT MAKES OTHER PEOPLE RICH. - Monty Guild Getting technical: A report from June-07 shows that for (i) senior, (ii) intermediate, and (iii) junior/emerging gold producers, break-even cost is (i) $521/oz. (ii) $464/oz., and (iii) $556/oz. Total cash costs are estimated to be: (i) $355/oz., (ii) $319/oz., and (iii) $351/oz. Total Cash Costs is defined as: cash operating costs plus royalties and production taxes. Break-Even Costs is defined as: Total Cash Costs plus depreciation, G&A, exploration costs and interest expenses. Depreciation, G&A, exploration, and interest expenses, averaged (i) $166/oz., (ii) $145/oz., and (iii) $205/oz. for the respective categories. Why we are so interested in the companies that have just reached status as actual miners, is that they are still relatively small, and they are bringing a good level of production on-stream. Their break-even costs will fall, and production will rise - i.e. revenues and profits will increase. Almost all the silver that has been mined from the time of the Pharaohs, the Romans, Marco Polo and the Conquistadores is gone. It has been used up in industrial products. It has taken 60 years to obliterate the silver inventory that it took the world 5,000 years to accumulate. Silver and gold trading has not been a free and open market for very many years. The silver market was recently in the doldrums for over 20 years. The silver market is very, very small. There are very few pure silver mining companies. These are some of the reasons that very few analysts have any real knowledge of the silver market. Ted (Theodore) Butler and David Morgan are the only insightful silver analysts who share their views in public, that I know of. If someone tells you that silver demand will go down because of the use of digital cameras, that is a dead giveaway that this person doesn't know the silver story. There will never be a faster or more certain opportunity to make 10 to 20 times your money. In my opinion, there will never be a more bullish coming together of factors, for any asset, than there is for silver today. It is quite literally bullish beyond our ability to fully comprehend. - Ted Butler, leading silver analyst The more I study, write and think about silver and the supply/demand situation, the more sense it makes to own physical silver and silver mining company shares. If you strongly disagree with some of what I have written, then continue right along till you have gathered enough information on your own to form a well-informed decision about whether you should invest in silver or not. May you enjoy tremendously profitable investing - and be able to fulfill many of your current goals and dreams, as a result of it. All the best, Roy Some web-sites that may be of interest are: www.investmentrarities.com The company that sponsors Ted Butler. Much of the material here is from their resources. www.butlerresearch.com Ted Butler's web site, with archives of his silver articles. www.silver-investor.com The web site of David Morgan www.tulving.com(reputable seller of physical silver. High minimum purchase required) http://bigcharts.marketwatch.com/(for those who are into charts) http://goldinfo.net/silver600.html (for one interesting, very long-term silver chart) www.silverinstitute.org(for information about silver, and an annual survey) www.ameritrade.com(broker that allows you to purchase Canadian stocks OTC in the U.S.)