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How to Profit
From the
World’s Favorite
Metal
A Sovereign Society Research Report on Silver
Copyright © 2013 The Sovereign Society, Ltd. All international and domestic rights reserved. This report may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly
prohibited without the express written permission of The Sovereign Society, Ltd. 55 NE 5th
Avenue, Suite 200, Delray Beach, FL 33483.
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How to Profit From the World’s
Most Popular Metal
A Sovereign Society Research Report on Silver
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How to Profit From the World’s Most Popular Metal
A Sovereign Society Research Report on Silver
Table of Contents
Let History be Your Guide..................................................................................... Pg. 5
Silver Through Time............................................................................................... Pg. 6
Five Reasons to Buy Silver Today
1. The Ultimate Antidote to the Declining Dollar and Failing Economy.............. Pg. 8
2. The Gold/Silver Ratio is Out of Whack............................................................ Pg. 11
3. Gold is Hoarded; Silver is Hoarded and Consumed..................................... Pg. 11
4. The U.S. National Stockpile of Silver is Empty............................................ Pg. 12
5. Booming Demand for Silver Eagle Coins..................................................... Pg. 13
What Our Technical Analysis Reveals About How to Play the Market................... Pg. 14
How to Buy Silver
1. Buying Silver Bullion vs. Silver Eagles.......................................................... Pg. 16
2. Scratch and Dent Silver at a 25% Discount................................................. Pg. 16
3. Buying Silver Stocks..................................................................................... Pg. 16
The Bottom Line................................................................................................... Pg. 18
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S
Let History be Your Guide
ilver has a long and rich history that dates back to antiquity. First mined around 5,000 years ago in Anatolia (modern-day Turkey), silver was used for coinage and as a precious metal for jewelry and architectural
adornment by the ancient Greek, Roman, Punic, Chinese and Italian Renaissance civilizations. These uses
have continued today.
Perhaps most importantly, silver’s intrinsic value is embedded deep in the human
psyche, and this is possibly what has made it the world’s favorite metal. In spite
of market vagaries, its value will never fall to zero. And, in spite of historic price
tumbles, it will always rise from the ashes.
Precious-metal investors are alarmed today, because silver looks like it might end
up being the worst-performing commodity of 2013.
But don’t be discouraged. Silver prices have long had a roller coaster history and,
despite their tarnished performance in recent months, the metal will rise again
before long.
Anatolia, which roughly occupies
the area covered by present-day
Turkey, is the site of the world’s
first silver mines.
Since reaching a 31-year peak of $49.80 an ounce in April 2011, silver prices have been plunging dramatically. As
this special report is being written, the white metal has plummeted to less than $20 an ounce — although that is
almost certainly a temporary knee-jerk blip on the back of all the fretting over the possibility that the Fed might
curtail its monetary stimulus program.
However, the initial catalyst for the recent dramatic drop in precious-metal prices was the fear earlier this year
that Cyprus’s central bank would be forced to sell its gold holdings and that other countries would follow. While
Cyprus denied the rumor, the country’s finance minister has since admitted that it planned to sell gold.
And although that sale of Cypriot gold would have
been small — less than $1 billion — investors suddenly woke up to the possibility that other European
countries might start off-loading their gold reserves
onto the market, particularly Italy, which holds
around $130 billion of the yellow metal.
Silver, long considered “poor man’s gold,” has been
basically following gold downhill.
China is also partly to blame for silver’s recent tumble. Investors have grown increasingly nervous about
the Asian giant’s inflated credit bubble as well as fears
about a slowdown in Chinese growth triggering a
major sell-off of the white metal.
A recent slowdown in the solar energy industry,
largely the result of a trade dispute between China
and the European Union, has also hit silver demand.
Recent sharp drops in precious-metal prices have
driven an even wider wedge between the two camps
with deeply held convictions (gold and silver bugs
vs. those who believe these metals are overvalued).
The Sovereign Society:
Who We are and What We Do
The Sovereign Society was conceived in 1998 by a
group of uncompromising advocates of liberty and free
markets. We felt strongly that individuals are born sovereign over themselves, not as chattel of governments.
To that end, we continue to seek out strategies that
uncover pockets of opportunities to profit in foreign currency, commodities, options, stocks and other investment areas, which to date have delivered millions of dollars in gains for our members. Our service also provides
in-depth technical analysis and investment advice that
will provide you with timely alerts so you know exactly
when to get in and get out of trades.
On the silver front, we provide recommendations about
investing in silver-mining companies, silver bullion, as
well as other related precious metals.
These are exciting times for the silver market. Some say
they are challenging times, but there has never been
a better time to become a member and learn how to
exploit and profit off the volatility of the metal called
“gold’s little brother.” For further information about The
Sovereign Society, click here.
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Silver Through Time
Silver was first mined in 3000 B.C in Anatolia, and then moved to Greece’s Laurium mines around 1200 B.C.,
where it powered the region’s expanding empires.
And then, around 100 A.D., Spain became
the new center of silver production and was
the chief supplier for the Roman Empire.
But, when Spain was invaded by the
Moors, much of the practice of silver mining moved to Central Europe.
From 1000 to 1500 A.D., silver saw a 500year period of major growth with the vast
improvements in technology and further
mine discoveries and production.
And then one of the greatest events in silver
history happened. The New World was
discovered in 1492, completely re-writing
silver’s role in the world.
These coins are typical of those produced in the Laurium silver mines
that helped to provide a currency for ancient Athens.
Between 1500 and 1800, 85% of world
production and trade was coming from
Bolivia, Peru and Mexico. Vast quantities
of silver were brought back to Europe, triggering a period of inflation.
Later, Nevada’s Comstock Lode discovery
of 1859 put the United States on the map
where silver was concerned. By the 1870s,
silver production doubled, growing from 40
to 80 million troy ounces annually.
A boom in technological advancement between 1876 and 1920 had production skyrocket to almost 120 million troy ounces
annually.
Global silver production soared again, between 1900 and 1920, to 190 million ounces
with further discoveries in Canada, the
United States, Africa, Mexico, Chile, Japan
and other countries.
The last 100 years show that advances in
technology and mining techniques were the
main reason for the rise in silver production. Some of these breakthroughs include
steam-assisted drilling and mine unwatering. Haulage, hoisting and silver processing
were also improved upon.
The advancement in silver-processing
helped with separating silver from other
Inside of an underground silver mine in Baden-Württemberg, Germany.
ores, which was significant because many
of the world’s high-grade silver ores had
been greatly exhausted by the end of the 1800s.
In 2012, yearly global mine production was a record 787 million troy ounces.
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But, here at The Sovereign Society we take the third view — how best to play current market conditions.
None of those current concerns mean that silver’s future is not bright with luster. Eventually, this metal will bottom, bounce and turn, if only because there are no more sellers. All the evidence suggests that silver is already
significantly oversold. The way we see it, most of the selling has already been done.
So, despite the debate about whether silver will continue its unholy descent and exactly where it might bottom,
there is no question that the metal is now once again in the buy zone.
And if history is anything to go by, soon after silver hits its bottom, poor man’s gold will skyrocket. Just take a
look at the chart below and let history be your guide.
The Fall and Rise of Silver
50
40
30
20
10
1967
1975
1983
1991
1999
2008
2013
Silver has only recently begun to recover from Silver
Thursday in 1980.
The past 33 years have been a roller coaster ride for silver prices, beginning in 1980. Silver’s tumble from a high of
$54 in early 1980 to less than $11 an ounce on March 27 of that year led to a massive panic in other commodities. Silver Thursday, as it became known, was the result of a failed attempt by the Hunt brothers — the two sons
of Texas oil billionaire Hudson Hunt — to corner the silver market.
And except for the occasional brief rally, it was still falling more than a decade later — before slamming to a bottom of just over $3 an ounce in the early 1990s.
Most people thought it would never rise again — but they were wrong.
This report will later reveal the five key reasons why silver is one of the most important hard assets for the
second half of 2013 and beyond, as well as the best ways to buy the metal and at what price you should buy.
The equilibrium price for the metal has increased dramatically since the millennium. Silver traded up to $48.70
in early 2011, chiefly because industrial and investment demand has been strong and growing.
But the question still stands: Should you buy silver?
We are not alone in our strong belief that the answer to this question is a resounding “yes.” Some of the brightest
minds in the investment world have latched onto the white metal.
Jim Rogers, the legendary contrarian investor, says: “If you put a gun to my head and said you have to buy one, I
would buy silver rather than gold.”
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Emperor Nero’s Debasement of Silver
In 64 A.D., Rome burned. In what would later become known as the Great Fire of Rome, many districts were
either completely destroyed or seriously damaged. Emperor Nero needed to rebuild his great city. But there was
one small problem: He couldn’t pay for it.
But Nero devised a plan. He demanded the Mint debase the denarius by removing large portions of the silver
content. Silver was normally kept at 1/84 the weight of the roman pound (3.90 grams). But it was reduced to 1/96
of a pound (3.41 grams). And then the value was reduced even further by the introduction of a base alloy. Yet
they were still issued at their same valuation.
Sound familiar? Isn’t the Fed using QE and money printing to do same thing to the U.S. dollar and stealing from
its citizens, just like Nero?
Rome’s denarius was silver. The coin had intrinsic value. But in the end, Nero’s debasement completely destroyed the people’s trust in its value. Much like how the trust in the American dollar has weakened.
By hedging your bets and investing in silver, you’re creating a safe haven. It’s a way of protecting yourself from
toppling along with Rome when it eventually falls.
At one point, Warren Buffett acquired an incredible amount of silver, estimated at one-fifth of the world’s supply.
And Robert Kiyosaki, author of Rich Dad, Poor Dad, tabs silver as his #1 investment.
Why is silver so sought after?
Basically, it is the only affordable asset that can protect your wealth from inflation and kick off 50% to 100%
returns.
This report will reveal all of the demand-drivers and it will also show you how to acquire real, physical silver at
around a 25% discount.
Five Reasons to Buy Silver Today
#1. The Ultimate Antidote to the Declining Dollar and Failing Economy
The numbers are staggering.
The U.S. national debt is rapidly approaching $17 trillion and unfunded liabilities of more than $123 trillion
for various entitlement programs.
Those figures explain why the Federal Reserve will not be raising interest rates anytime soon and why we
keep saying that, in spite of recent Fed murmurings to the contrary, rates won’t move until at least 2016.
And when they do begin to move, the pace will be so gradual that we’ll be stuck in a low-rate environment
through late this decade.
But think about what would happen if rates went back to 4.5%, as they were prior to the financial crisis.
The day-to-day cost of running the country could spiral out of control, as debt repayment would consume the
dollars needed to run the government.
The equation, thus, is very simple — U.S. interest rates can’t go higher in the short term because America’s
shaky finances will collapse.
Therefore, the necessarily low interest rates, coupled with one of the largest debts history has ever known, are
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bad signs for the U.S. dollar.
However, from this situation, comes opportunity.
Silver is now languishing under $20.
Silver’s current slump is largely based on improving investor sentiment regarding America and the troubled
European Union.
America is slowly shaking off the worst of the financial crisis, and the euro zone, despite nagging issues, is creeping ever so slowly toward recovery.
We don’t believe this recovery will last. We believe more trouble is brewing. The national debt is continuing to
rise toward a crisis and the U.S. dollar is growing flimsier by the day.
When it becomes clear that the world is not recovering even a tenth as fast as it should to wipe our debt crisis
and all the trouble caused by the weakening dollar, silver will come back into focus.
If the metal returns to $48.70, as it did in 2011, buying at today’s prices would mean more than doubling your
money.
And along with silver bullion comes opportunities in silver miners, whose prices usually always rise on the back
of the metal.
There has probably never been a greater need for money that doesn’t derive its value from government regulation, but it seems as if the most popular safe havens are the U.S. dollar and Treasury bonds.
It is hard to see how government controlled paper assets can be more popular than real, hard money.
We have demonstrated many times that precious metals serve more as a currency than a commodity today…
and you can see what we mean in these two charts.
The chart directly below plots gold against the dollar from late-1980 through 2012. The two move in almostperfect opposition, just like every currency pair in the world.
The implication is that as the dollar weakens or strengthens, gold pursues the opposite path.
250
Gold vs. the Dollar
200
150
Dollar
100
50
Gold
1980
1990
2000
2012
0
Historically, precious metals have shown that when the
dollar goes down, they go up.
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This opposition is important, because of what the second chart says about the dollar as it relates to America’s increasingly incompetent fiscal and monetary policies.
The Dollar is Partly Tied to America’s
Ineffectual Monetary Policies
Post-Volcker
Years, when
U.S. Defeats
Inflation.
Dollar Rallies.
America Moves
Toward Surplus.
Treasury Kills
30-year Bond for
Lack of Need.
Dollar Rallies.
150
140
Bush-Obama
Spending
Spree. U.S.
Accumulates
History’s
Largest
Sovereign
Debts. Dollar
Tanks.
130
120
110
100
90
80
1985 Plaza Accord. U.S.
Trade Deficits Soaring, and
Officials Talk down the
Dollar. The Dollar Tanks.
1973
1983
70
60
1993
2003
2012
The dollar’s long-term health is at least partially linked the
underlying health of America’s monetary situation.
Meanwhile, the above chart, which runs from 1973 through 2012, shows the same dollar index as the first chart, but we’ve
included notations describing the overarching monetary theme for each broad period of dollar strength and weakness.
Together, these two charts tell you that the U.S. dollar will not strengthen meaningfully over an extended period
unless America’s monetary environment improves. And right now, America’s monetary environment is playing
out in the exact opposite direction.
In a nutshell, Washington’s policies are pushing our currency toward a cliff, weakening the inherent value of the
greenback the closer we get to that edge. If that happens, the world’s only store of known, respected value will be
silver and gold.
For that reason alone — for the insurance they provide — these precious metals demand a place inside your portfolio.
But inflation is another solid economic reason to hold silver among your store of assets. As you can see from the
chart below, the money supply has continued to expand at a breakneck pace.
3,200
Money Printing is Shooting
Through the Roof
2,400
800
1980
1990
2000
2010
From 1980 until 2009, the amount of money being
printed was steadily rising, but quadrupled in 2010.
Holding hard assets, like silver, provides insurance in
the event of a dollar collapse.
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0
Billions of Dollars
1,600
This was one of the key reasons behind the 2009 to 2011 stock market rally and the bull market in gold. All of
that fresh money is chasing hard assets and inflating stocks across the board.
We have no doubt that this is an inflationary epidemic in the making. Sooner rather than later, all these newly
created dollars will put serious upward pressure on prices and send commodities skyrocketing.
Holding hard assets, like silver, provides insurance in the event of a dollar collapse. Unlike paper money or stocks,
it can’t be printed by the government, or issued on-demand by publicly traded companies.
#2. The Gold/Silver Ratio is Out of Whack
For thousands of years, the ratio of gold to silver was 16 to 1, or less. In 3000 B.C., the ratio was set at 3 to 1.
Although we are unlikely to see that level again, the fact remains that today’s gold-to-silver ratio is seriously out
of whack.
As of this printing, it takes around 65 ounces of silver to buy one ounce of gold. That means, to fall in line with
historic norms, one of two things has to happen:
• Gold must fall in value, relative to silver.
• Silver must rise in value, relative to gold.
I believe the second outcome is more likely.
If the gold-to-silver ratio falls from 65, here’s what could happen to the price of silver. (These numbers reflect gold
at around $1,250/oz and silver at around $19/oz.)
Gold-to-Silver
Ratio
65:1
40:1
30:1
20:1
15:1
Silver Price,
per ounce
$19.00
$31.25
$41.66
$62.50
$83.33
It would not be far-fetched to see silver jump from $25 to $50 or more.
#3. Gold is Hoarded; Silver is Hoarded and Consumed
Today, more than 90% of the world’s silver is consumed by industry.
According to the Silver Institute, 465.9 million ounces of silver were used for industrial applications in 2012.
In addition, more than 185.6 million ounces of silver were committed to silver jewelry and 92.7 million ounces
were used in coins and medals. In total, world demand for silver in 2012 was 1,048.3 million ounces.
During World War II, the U.S. loaned out silver from its strategic stockpile for industrial uses because of a
shortage of non-ferrous base metals, such as copper, nickel and tin, which were then being diverted toward the
war effort. This practice served to highlight silver’s industrial qualities and, as a result, was a major turning point
in consumption.
Silver is not only precious and rare. It’s also a noble metal because it resists corrosion and oxidation. At the same
time, it is as an extraordinarily efficient conductor of electricity and heat. Today, silver is used in wiring, electronics, batteries, bearings, catalysts and solder, to name just a few of its practical applications.
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On top of that, its antibacterial qualities have lead silver solutions, known as colloidal silver, to be approved
in the early 20th century by the U.S. Food and Drug Administration. Today, colloidal silver is marketed as an
alternative, homeopathic medicine. It is also used as a water-purification agent. Many hospitals filter hot water
through copper-silver filters to destroy MRSA and legionella infections. Ceramic filtration systems coated with
silver particles are currently being used to provide safe drinking water in developing countries.
With other unique properties, like its strength, malleability, ductility, sensitivity to light and high reflectance, as
well as the ability to endure extreme temperature ranges, it is an element that cannot be substituted.
Plasma TVs use almost an ounce of silver per screen. Energy-efficient windows are treated with silver to reflect
the sun’s heat. It is even present in our clothing as silver nanoparticles, used to inhibit the growth of bacteria
and fungi.
And in the pharmaceutical, electrical and medical industries there are numerous high tech applications that
require silver. Almost everywhere we turn, silver can be found, performing an important function in our day-today lives.
Much of modern-day silver production comes as a byproduct of other metals, such as copper, lead and zinc. The
largest producer in the world is Mexico, followed by Peru, China, Australia and Chile. Poland, Russia, Bolivia,
the U.S. and Argentina are also big silver producers.
But it is not just supply and demand that determines the price of silver. Stockpiles are also key, although the
total global figure is very difficult to establish. While the silver stockpiles of many Western and European countries are transparent and reported, large silver-producing countries, like Russia and China, are unlikely to ever
reveal their true total stocks of the precious metal.
The U.S. strategic stockpile is in particularly dire shape.
At the same time, the total amount of silver-backed ETF investment instruments is estimated at around 500
million ounces. The ETF market in silver has added a new dimension of liquidity, making silver more available
to everyday investors than ever before.
However, once silver is consumed by industry, it’s often gone for good. Compare that to gold, which is sparingly
used in electronic components and rarely destroyed or used up. All of this impacts the silver price by reducing
supply.
#4. The U.S. National Stockpile of Silver is Empty
Supply constraints also raise the demand for silver. Scarce resources may lead to shortages.
The U.S. has several historic primary silver districts. Most of them were shut down in the bear markets of the
1980s and 1990s. Today, most silver production in the U.S. is a byproduct of copper and gold mining, both of
which, in the U.S., are in decline.
Primary silver deposits are extremely rare. Less than a third of the silver mined globally comes from primary
silver mines. The average yield of the top primary silver miners dropped 34% between 2005 and 2011. It was
even worse in 2012, dropping 13%. Silver grades are actually declining. And as ore grades decline, it takes more
energy to produce the same or less metal. Most silver mines today are producing their best stuff, yet over the last
seven years, ore grades have dropped more than 40%.
There has been little new silver production in the U.S. and very few silver discoveries. And the impact on the
silver markets is obvious.
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The U.S. stockpile of silver was once a huge supply source, holding more than 1 billion ounces of the metal.
But today, it’s empty.
And that’s bullish for silver for two reasons:
• A once-major supply source is gone, which is potentially good for a rising silver price.
• When the U.S. government needs silver, it has to compete for it on the open market.
#5. Booming Demand for Silver Eagle Coins
The U.S. Silver Eagle explains the demand for silver.
There are serious issues with supply. People are starting to snatch up silver like it’s about to disappear off the face
of the earth, despite the price of bullion. And this brings us to the Silver Eagle coin. In Q1/13, its sales were
42% of the total sales for 2012. And last year, the U.S. Mint’s silver coin sales actually surpassed the amount of
silver mined in the U.S.
In 2012, the U.S. Mint sold more than 33,742,500 million Silver Eagle coins and as of June, they have already
sold $25 million for 2013. To grasp the enormity of that figure, check out the chart below of Silver Eagle sales
over the past 20 years:
50
45
Silver Eagles are in Demand
35
Millions
25
15
5
1986
1994
2002
2013
0
Source: U.S. Mint
Already, the midyear figures for 2013 Silver Eagle sales
are at 25,043,500. So, if that were to double by December,
sales would be 50,087,000.
As you can see, demand has surged. That’s why the Mint has been forced to ration silver coins in every year since
2008.
And since the U.S. has no remaining stockpile of silver, every ounce that goes toward these Silver Eagle sales has
to be purchased on the open market. The U.S. Mint is required by law to produce Silver Eagles in quantities sufficient to meet the public demand.
That demand has been so heavy that the Mint actually had to suspend sales of Silver Eagles just a couple of weeks
into the New Year — and it still smashed the all-time monthly sales record in January by selling 7.5 million of
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the hugely popular coins. And by the end of February, the U.S. Mint sold nearly 11 million Silver Eagles, a third
of its entire 2012 sales.
That scorching demand shows no sign of abating, even as the spot of silver continues to fall. So, while the demand
for coins is small compared with the industrial use of silver, it reveals that gold’s little brother has remained the
world’s most popular metal.
And as more and more Americans wake up and realize they’re being looted by inflation, this could ultimately add
a real boost to silver prices, particularly to the value of coins, which are an excellent, time-tested and portable
store of wealth.
Should you buy Eagles? That depends on your personal investment situation, but there are numerous investment
opportunities.
If you’d like to buy silver coins with your IRA, Eagles are a simple, compliant way to pad your retirement account.
The downside is that they come with a giant “premium.” Quite often, you’ll be asked to pay between 10% and
30% over the spot price to get your hands on these coins. But, of course, the premium is returned when you sell.
But, as you’ll see in a minute, it’s possible to secure real, physical silver for a much smaller premium, as low as
between 2% and 3% over spot.
What Our Technical Analysis Reveals About How to Play the Market
If you’ve decided take advantage of this opportunity in silver, there are a few more things to know.
Since peaking on April 2011, silver has dropped more than 50% and is now approaching an area of strong support between $15 and $20. An area of support indicates traders are likely to buy silver if it trades around that area.
That’s why it’s a great idea to buy silver around that price.
50
The Price at Which You
Should Buy Silver
40
30
Area of Strong Price Support
20
10
2003
2006
2009
2012
0
We are closing in on silver’s area of strong support.
In 2008 and 2010, $20 acted as resistance, which means traders were selling at that level. But once a resistance
is broken, it becomes support. So we expect a lot of buying pressure around that level.
Silver recently touched $19 and there are already some investors who are jumping back in.
Another thing to keep in mind is that all parabolic moves tend to follow the same pattern. All parabolic moves
end in crashes, and the price tends to fall all the way to where the move started.
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Notice that silver had a parabolic move that started in July of 2010, when silver was trading at $18. Since peaking
in 2011, silver has crashed. And it’s now moving toward $18.
In the short-term, silver may still have a little bit of downside. But you don’t want to try to pick the absolute bottom because that’s really hard to do.
We think it’s a good idea to buy silver below $20. And we suggest buying it up to $25. But, whatever price you
buy at, put a stop-price at below 25%.
Silver promises to shine once again. So keep your eye on this precious metal. As soon as it gets going, it will take
no prisoners!
Eagles and Bars
The table below reveals costs and saving when buying bullion bars over Silver Eagles.
Amount of
Silver
Cost of Silver
Eagles
Cost of Mint
Bullion Bars
Potential
Savings
10 ounces
$238
$209
$29
100 ounces
$2,380
$2,090
$290
1,000 ounces
$2,3800
$20,900
$2,900
2,000 ounces
$4,7600
$41,800
$5,800
Please keep in mind, these prices are approximate. And the less you buy, the higher the premium over spot price.
To be safe, we recommend that you buy silver from a trusted dealer.
The Sovereign Society has been in contact with several dealers over the years, including:
Rich Checkan
Asset Strategies International
1700 Rockville Pike, Suite 100
Rockville, MD 20852
1-800-831-0007 or [email protected]
Kitco
64 Lake Street, Suite 101
Rouses Point, New York 12979
1-877-775-4826 or Kitco.com
American Precious Metals Exchange
P.O. Box 7867
Edmond, OK 73083-7867
1-800-375-9006 or APMEX.com
We receive no compensation for mentioning them.
When you call or visit their websites, just mention that you’d like to buy silver bullion, with no preference for
condition or mint mark. They will let you know which options are available and how much they cost. The prices
change daily, along with the spot price of silver.
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How to Buy Silver
#1. Buying Silver Bullion vs. Silver Eagles
Silver bullion can be purchased in individual units and is one of
the best and most-discounted ways to buy silver. It can be acquired
for as little as one ounce or as much as 1,000-ounce bars, depending on your budget.
At present, one-ounce bars are selling for around $20.91. That’s
a huge discount over what you’d pay for Silver Eagle coins. That
means you could save hundreds, even thousands of dollars, depending
on how much silver you buy.
New bars can be purchased directly from silver mints.
By buying bullion
bars over Silver
Eagles, you could
potentially save
thousands of
dollars.
However, you can also buy bars on the secondary
market. This is often the greatest silver bargain you can
find and it tends to be cheaper than new bars bought
directly from silver mints.
#2. Scratch and Dent Silver at a 25% Discount
Another popular way of acquiring silver is to buy
“junk” or scratch and dent coins. These are pre-1965
quarters and dimes that hold no collectible value —
but contain a percentage of silver.
Reputable coin dealers sell bags of “junk” silver from
$100 to $1,000 face value. You can get your hands on
these for a 25% discount per ounce on the current spot
price of the metal.
“Junk” silver is any silver coin in fair condition that has no
collectible value above the worth of the silver it contains.
Not bad!
This scratch and dent silver can be a little banged up and often comes with a variety of mintmarks. But you still
get a full ounce and for a very fair price.
#3. Buying Silver Stocks
There is another way to take advantage of the coming rise in the silver price: Invest in silver-mining companies
on the stock market. But, it is crucial that you pick the right ones at the right price.
This investment path provides you with more liquidity and can be easier to buy and sell than investing in silver
bullion or Eagle coins.
With silver stocks, each dollar invested could be magnified several times as underlying metal prices move. Most
investors’ ideal strategy is to allocate their cash into undervalued assets and then watch as their investment
grows. Basically, we want to buy a dollar for 50 cents — and that’s exactly the kind of opportunity many silvermining stocks represent.
Many high-quality, precious-metal stocks are a good value today. Major miners are building shareholder value
through exploration and acquisitions — and when the silver price rises, many of these stocks will skyrocket.
There are a number of stocks to play and the subscribers of many of our advisory services are extremely familiar
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with them. In this report, we are going to share our top three silver stock picks with you.
Silver Wheaton (SLW): This company’s story has success written all over it. The company began when a small
group from the Wheaton River Mining Company broke off after the group merged with Goldcorp and began
buying silver-production operations at mines around the world. It is now the largest precious-metal streaming
company in the world, and it’s definitely one of our favorites.
The Silver Wheaton model is to give a company with a development-ready silver asset a significant chunk of
cash to help with construction and production. In return, SLW gets the right to purchase a chunk of the mine’s
silver output for a fixed amount.
In the nine years since the company was founded in 2004, its operating model has allowed investors, as well as
producers of byproduct silver, to capitalize on the metal during times when it is undervalued.
The chart on page 15 shows how SLW’s share price pops when the price of silver climbs.
1,200%
Silver Wheaton vs.
Gold’s Little Brother
1,000%
800%
600%
Silver Wheaton
400%
Silver
200%
0
-100%
2005
2007
2009
2011
2013
When the price of silver rises, companies like Silver
Wheaton rise even more.
When we called the last silver boom in 2006, our subscribers enjoyed a near-200% gain on the rise that followed in Silver Wheaton’s stock prices. Silver Wheaton has long been a “best of breed” company, and we believe
it is currently undervalued and oversold.
Action to take: Buy SLW up to $22. Use a 25% trailing stop-loss. As of the writing of this report, SLW’s
price is $20.53.
Global X Silver Miners ETF (SIL): This Exchange-Traded Fund is an interesting option for silver investors
who want to avoid single-stock risk exposure. Global X Silver Miners ETF is non-diversified and it tracks the
Solactive Global Silver Miners Index.
At least 80% of its total assets are in the underlying index and in ADRs and GDRs grounded on the index’s
securities. This underlying index measures the equity-market performance of silver-mining companies around
the world.
SIL gives access to a wide selection of silver mining companies that will benefit from the rising price of silver.
And with the substantial obstacles that make entering the silver industry difficult (building mines and production facilities calls for significant capital), the silver miners already in existence have a first-mover advantage.
Existing mining companies provided the bulk of the supply increases for 2012 because they had expanded operations to meet increases in demand.
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In the past year, SIL hit a low point of $12 and a high of $25.78.
Action to take: Buy SIL up to $13. Use a 25% trailing stop-loss. As of the writing of this report, SIL’s price
is $12.12.
Endeavour Silver Corporation (EXK): An investment in this company depends on your appetite for risk. Endeavor Silver Corp (EXK) is a highly speculative play, but if it pays, it will pay big.
The company has increased production every year since it started in 2004. It is a premier, mid-tier mining and
exploration company focused in Mexico. It holds 100% interests in its mining divisions.
Last year, Endeavour produced silver at $5.08 per ounce, the lowest in the sector. And earlier this year, Endeavor Silver purchased the El Cubo mine from Aurico Gold, and it says it expects the acquisition to increase its
production from the 4.5 million ounces of 2012, to about 5.3 million ounces.
The company’s share has collapsed 75% since April 2011, just after silver’s dramatic tumble from grace. However, when silver climbs, this company’s shares could skyrocket.
Recently, the company released a revision of their reported Q2 revenues that were understated by 12%. Their
revised revenues for Q2 of 2013 are $71.3 million, up 76% from Q2 of last year.
Action to take: Buy EXK up to $4. Use a 30% trailing stop-loss. As of the writing of this report, EXK’s
price is $3.52.
The Bottom Line
Silver should be trading at more than $50 an ounce today. The fact that it’s under $20 means you can effectively
buy it at a HUGE discount, in advance of its next major rally.
At these prices, silver offers an exciting entry point for new investors and a massive upside potential for the rest of
2013 and beyond.
Historically, when silver rallies, it explodes! Once silver starts to move up, a hungry crowd of traders and investors will push the price much higher.
You may not have the power to change what the government is doing, but you do have the power to change
what you’re doing about it.
For further information about our expert advice and recommendations on how to play the precious-metals and other
lucrative investment market, click here and join the growing and profitable membership of The Sovereign Society.
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Legal Notice: This work is based on what we’ve learned as financial journalists. It may contain errors and you should not
base investment decisions solely on what you read here. It’s your money and your responsibility. Nothing herein should
be considered personalized investment advice. Although our employees may answer general customer service questions,
they are not licensed to address your particular investment situation. Our track record is based on hypothetical results
and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk.
Don’t trade in these markets with money you can’t afford to lose. Sovereign Offshore Services LLC expressly forbids its
writers from having a financial interest in their own securities or commodities recommendations to readers. Such recommendations may be traded, however, by other editors, Sovereign Offshore Services LLC, its affiliated entities, employees,
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