(Israel Friedman is a friend and mentor to Theodore Butler. He has followed silver for many decades. He has written articles for us in the past. Investment Rarities does not necessarily endorse these views.)

The U.S. mint sold 2,170,000 silver eagles and only 26,000 gold eagles in the month of January. By my calculation 83 times more silver eagles were sold then gold eagles. This is an enormous difference that shows you how much more interest there is in silver. Investors are starting to understand that silver is a better investment then gold. I congratulate Mr. Butler that by his writing about silver, more and more people are buying physical silver.

In my opinion, the beauty of silver is that any amount of silver you buy will reward you tremendously. Maybe only 0.5% of the world population has heard about silver and they are mostly American investors who bought in the last 15 years around 400 million ounces of silver.

Today, many silver investors are asking why silver doesn't achieve all time highs like gold. Mr. Butler answers this question every week by emphasizing the control of prices on the COMEX by 4 or less traders that hold more than 50% of the net short position. When you hold a position of more than 50%, you control the market. This may be changing now. The short position is the main reason why the price of silver is behind the gold price, but this creates the opportunity to buy silver.

Different people have different opinions or expectations for future prices. I personally believe that only silver can be characterized as real precious metal and gold is a second violin. I made this decision by understanding the rarity of the metal and its world stocks. Let's look at gold first: its world stocks increase almost 100 million ounces annually. Contrast this to silver, which is in a yearly deficit and is decreasing yearly. World gold stocks are around 5 billion ounces and silver around 1 to 2 billion ounces. I say with conviction that silver is more rare than gold and, in my eyes, is the only precious metal. I think investors are beginning to understand that a shortage can develop easily in silver, but not so in gold, because it is not used that much industrially. It is a lot easier for people to pay $15 or $20 for an ounce than $900 or $1,000, especially when the cheap one has the most value.

If 90% of the world population knew this, the prices of silver and gold would be different. In the short term, with gold prices over $900, silver would be in the hundreds. Mr. Butler doesn’t like my numbers. He says that they are too extreme and people are going to lose confidence in my writing, but I hope he will not censor me, because this is my opinion. Silver in the hundreds of dollars will come only with a shortage of silver. The 4 or less shorts will give up. With a shortage, world investors will recognize the rarity of silver.

Gold and silver seem to trade together, tick by tick. It is easy for many people to think they are the same commodity. Not true. Gold and silver are very different, even if they behave now as one. I am certain that will change, and perhaps very soon. You don’t have to look very far to see just how different silver is from gold.

Some of you want to hear how I see the future in silver prices and what I think about the world in my crystal ball.

(1) Life expectancy will rise tremendously and most of you will live over 100 in years to come.

(2) It will be very important to save and prepare for a long life.

(3) Investment in education----silver----farmland, in my opinion, will do the best.

(4) At some point, in 15 to 20 years, silver prices will be 5 times higher then gold prices. If my calculation is correct, a dollar invested in silver will do many times better than gold. In real estate value, I think 1,000 ounces of silver will buy a 3-bedroom apartment in Manhattan in Trump Towers.

I am a different thinker, and some gold investors don't like my opinion, but that is their problem.

Those who believe in silver value should buy eagles and force the mint to work overtime.

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

A powerfully bullish concentrated short position underlies the silver market. Inevitably, this concentration will cause upheavals in the silver market, just as it often does in other markets. You are undoubtedly aware that a low-level trader from the giant French bank, Societe Generale, caused a $7 billion+ loss through speculation in European stock index futures. This too large position was held by a single trader on a highly leveraged basis. The position was too concentrated with not enough margin. I have warned time and again about the dangers of concentration, especially the large short position in silver.

It is not as if the regulators are unaware of this problem. This issue lies at the heart of securities law and market regulation. The problem lies in the failure of regulators to prevent concentrated positions in the first place, or in not acting against concentration until it's too late. My solution lies in imposing much stricter margin requirements on the large concentrated positions. The big problems caused in the markets are always caused by concentrated leveraged positions. That's where the attention should be focused.

The most recent Commitment of Traders Report (COT) indicates, we are still deep into the danger zone in COMEX silver (and gold). The most recent report shows that the concentrated net short position in silver futures has hit new extremes, with the four largest traders short 57,846 contracts, or more than 289 million ounces. The eight largest traders are net short 71,575 contracts, or almost 358 million ounces. The four largest traders are now net short more than 165 days of world mine production, with the eight largest traders net short more than 204 days mine production. Never before has any commodity had such a large and dangerous concentrated short position.

Never has the concentration for the 4 largest short traders been more lopsided when compared to the concentration of the largest 4 long traders. The January 29 COT shows a concentrated silver short position more than 4 times as large as the long concentration, something not witnessed, to my knowledge in any market ever. In almost all major markets, the size of the concentrated long and short positions are closely comparable. There is something very strange for silver to be so far outside these normal parameters.

It is precisely this extreme aberration in the silver concentrated short position that points to manipulation and disorderly trading conditions in the future. Ultimately, it must lead to an explosion in price. It is a problem with a solution that the regulators at the CFTC and the NYMEX refuse to confront, to their great shame. It is a reality that all investors must cope with, until its inevitable resolution. It is the central issue in silver and there is no way to resolve it without dramatically higher silver prices.

My neighbor invested solely in stocks. However, a few years ago I convinced him that silver would be a worthwhile holding. He argued against taking silver into his possession. He thought it to be cumbersome. He had never previously considered holding bars and coins. Eventually he followed my advice, but he also bought silver mining stocks and paper silver.

I delivered the bars and coins to his door. He put them in his gun safe. I had previously told him that he could keep the silver in a bank safe deposit box, a home safe, or even a hiding place in his basement. He claimed he needed a gun safe anyway so he bought one for the silver and other valuables.

Eventually his financial situation changed. He sold the silver stocks for a small profit. He applied for the presidency of a small firm and did not get the job. Subsequently, he sold his paper silver. He took the summer off. Then he got a job as president of a much larger firm. He’s planning to move now. I’m saddened because he was one of the few neighbors I’ve had that I really liked. "What are you going to do with your silver?" I asked him. "I’m taking it with me," he advised.

The mining stocks went, the paper silver went, but the actual physical silver stayed. That’s the way it is. Once you get the real silver, see it and heft it, you tend to hang on to it. All the other ways to own silver are so easy to sell that they don’t stay with you. That’s the beauty of getting actual physical silver bars and coins into your possession.

By holding on to the silver for the long term you maximize your profit potential. Silver could explode in price to record levels. You don’t want to sell too soon. Paper silver inevitably gets sold too early because the lure of a short-term profit is too persuasive.

Also, it’s not a bad idea to have some silver around in case of runaway inflation. I know this possibility seems remote and far from mainstream economic thought. However, when the government creates money to pay its debts, or borrows excessively, it can cause currency debasement on a grand scale. Should this unlikely event come to pass, you would want to have an historical medium of exchange available.

We strongly advise you to put 10% of your net worth into silver. You must turn your back on stock brokers, money managers or financial advisors who dislike anything but stocks. They oppose buying a bunch of silver and putting it in a safe place in your house or bank box. Most people are heavily into stocks, or rely on money managers who put them into stocks. When financial decisions are so unanimous, danger lurks. The money is made by those who separate from the herd.

Put 10% in silver. Get it into your hands. Those who followed our advice are up 300% so far. Our silver analyst, Ted Butler, is a silver genius, and he says there’s much more upside to go in silver. We’ve made our clients well over a billion dollars, so our advice has been good. Buy silver now. Do whatever it takes to put 10% of your net worth into silver. Call us with any questions.

For the past seven years Investment Rarities, Inc. has underwritten and published research by Theodore Butler. He has seen fit to preach the gospel of silver as a means to riches. He’s done so with expertise, knowledge and originality. Mr. Butler has never failed to look out for the interest of our readers. He doesn’t tell you to buy silver because he said so; he gives you the reasons and facts and asks you to check those facts out, and then decide on your own. Those who followed this advice have been greatly rewarded.

Mr. Butler recently wrote, "I believe we are entering into a long-term era of natural resource revaluation. Only the price can regulate and balance supply and demand. There seems to be no likelihood of a let up in upside price pressure for natural resources over the long term. We have too many people joining the demand side of the equation and too few large low-cost mineral discoveries adding to the production side. Even domestic recessions should not alter this long-term trend.

"If you accept my thesis of an inevitable rise in mineral prices, how can you profit from it? The answer is to buy silver. A more complicated answer is to buy any depleting industrial metal or mineral, at the cheapest price possible. But how does the regular investor make a direct investment in real oil, natural gas, copper, lead or zinc? In reality, you can’t effectively buy them, and they’re not cheap anyway, even if they may go higher. Compare that to silver. It can be bought by anyone in any denomination. And the profits being reported by the silver producers, where they exist at all, certainly do not suggest a high price. Real silver is still do-able and not expensive.

Silver is a material known, mined, used, and valued since the dawn of civilization. It will be used and valued until civilization ends. For the past 150 years or so, tremendously varied and new uses were discovered for this age-old material, which contributed to the progress and modernization of our society. This came about because silver is the best conductor of electricity and heat, the best reflector of light, is integral in the photographic process and has important health benefits. Because of all these new, growing and unanticipated uses of this material, demand has greatly exceeded production. This has necessitated the draw down and consumption of almost all the silver that was mined and accumulated for 5000 years. Every measure of total known world inventories in the past half-century show declines of greater than 95%.

It is important for real silver investors to recognize that the past six years were merely a warm-up for the next few years. There is obvious tightness in just about all industrial metals and minerals. The long-term fundamentals and demographics greatly favor natural resources. Of all the candidates for investment, silver stands out as the best due to its ease and practicality of ownership and its relative low price, which creates a compelling risk/reward equation. However, the unique short position in silver gives the owner of physical silver an advantage of unprecedented dimensions. It does not matter how the short position is resolved, it must be resolved and that will be an astronomical windfall for the real silver investor.

Gold and silver have a history of stopping inflation from eating up the value of savings. Thankfully, you can include these precious metals in your IRA or Self-Employment Plan. Our recommended strategy of holding silver or gold for the long term fits perfectly with a self-directed retirement account.

One of the main objectives of an IRA should be to maintain the purchasing power of your dollars over the coming years. This is no easy task. In order to ensure a comfortable retirement, you must offset the ravages of accelerating inflation. In our youth we never heard of billionaires and billion-dollar deals. It was millions then. That’s just one indication that unbridled money and credit expansion continuously erode the dollar.

It’s a rather simple process to include precious metals in your IRA. We work with GoldStar Trust Company to help you procure the metal and provide the custodial services needed to properly set up an IRA, or transfer assets into it. Call us for more information.

Back in the 1960s when we wore duck tails, a fifty-cent piece was known as "half a rock." Today half a rock is worth seven dollars. You could say the silver value of the coin has appreciated, or you could say the paper dollar (in this case the copper-nickel half) has lost that much purchasing power. In reality, the rise in silver has offset the ravages of inflation.

People began to hoard our silver coinage in the 1960s. The U.S. Mint had trouble keeping enough "silver" (as coin change was called then) in circulation. Each year the U.S. Mint struck larger quantities of coinage, until in 1964 they flooded the country with coins. Then they gave up. No matter how many silver coins they struck, it was not enough. The people kept taking them out of circulation.

Silver had risen from around 90¢ an ounce in 1960 to about $1.30 in 1964. A silver dime would soon be worth 11¢. When the U.S. switched the $5.00 and $10.00 silver certificates to fiat paper so they could use the silver reserves behind these dollars, the public suspected silver would go higher. They hoarded silver coins to the point the government switched to copper-nickel coins with a negligible intrinsic value. By 1974 silver reached $6.40 an ounce. Thirty years later, in 2004, it was about the same. Funny how it stopped going up when the big shorts moved in.

You can still own these half dollars that were picked from cash registers and pocket change over forty years ago. The 1964 half commemorated the late President, John F. Kennedy and was struck in 90% silver for one year only. The assassination of the president made for a short run of the Franklin half from 1948 to 1963. These coins, in circulated condition, show very little wear because they were hoarded. The standard trading unit of these coins is $1,000 face value. That’s 2,000 half dollars with 715 ounces of silver were it to be melted. Unfortunately, many of them have already been melted down for industrial use. A full bag with a face value of $1,000 weighs 56 pounds. The canvas bank bag with the 2,000 coins inside is about the size of a bowling ball. Because of the weight, we break it into two half bags that weigh 28 pounds each and ship it U.S. mail in a well-taped carton stamped "Machine Parts" for security reasons.

These are beautiful and historical old U.S. coins. I doubt they will be around forever. Eventually, they could be more desirable than bars or coins that can still be made. You should own a bag of each. Call us today at 1-800-328-1860. We check every bag to make sure they are all pre-1965 coins. This is important. Get some of these great old silver half dollars now.

Sincerely,

All Rights Reserved © 2002 Investment Rarities, Inc.
For Web Site Questions Contact the Web Master
Disclaimer