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Ed Zimmer
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Ed is a graduate of The School of the Ozarks (now known as College of the Ozarks) in Southwest Missouri. He spent 14 years in broadcast news in the Midwest covering, among other things, commodities. He is currently manager of a healthcare support facility doing over two million dollars a year in... More
  • Silver in hand is worth 9 times what is in an ETF 3 comments
    Oct 2, 2009 10:55 AM
       Remember the old saying, a bird in the hand is worth two in the bush?    Now is the perfect time to begin to apply that adage to your own personal financial situation.      I am not advocating a wholesale dumping of every investment and buying physical silver and gold, but with the recent slump in metals prices, it is time to take stock of what financial instruments you have and take responsiblity for your own future wealth.

       The COMEX is currently leveraged nearly 9 to 1 (possibly more since figures come out later today) in the silver category.    As many silver hawks are quick to point out, that means 8 of the 9 people are not covered and would have to take paper money instead of actual silver if push comes to shove.

      For the smaller investor, the cost of investing in a small home safe and securely placing it in your home can reap large rewards in something called peace of mind.    If things go to h--- in a handbasket, you have at least a little bit of something that the majority of people around you don't have.     All the silver on the COMEX (both available for cover and not) would not even provide an ounce of silver to everyone in the US of A.    So if you buy just a single American Eagle or 1 Troy Ounce, you already have more than two-thirds of what could be distributed.

      It is all about supply and demand.

      I understand that you can't eat silver (or gold), but silver is much easier to trade than gold (given it's current value) plus you get the added benefit of the health aspects of silver.  (See medical uses of silver).    It's not a shock that since silver was removed from coins, we seem to be more prone to easily transmitted illnesses.

     Back to the point at hand.      Silver can be accumulated over a period of time, taking advantage of price dips (I will be personally buying if it slips below $15 as I expect it to do) to begin building a supply of silver that the majority of people will accept in barter transactions.     Unlike produce (which rots), baked goods (which go stale) or meats (spoil), Silver holds a value that can be traded from person to person to person, for product or service once the two sides have come to an agreement on the value.    It holds its value until it is melted or divided and then the result still has value in trade.

       Trade your shares in an ETF and you don't get metal, you get paper money.   If its in a retirement account, you can't take the money without paying a penalty (unless you are a certain age).    In essence, the silver represented by an ETF is a promise that your paper money is still available, you just might play heck getting it.

      Again, I don't propose buying pounds of gold and silver and hording it.    I do seriously suggest that everyone who wants some peace of mind purchase some metal to have securely in hand, taking responsibility for their own financial future, instead of relying on banks, investment houses and ETF's.     What is "enough?"    That depends on each persons current position in life and who they have responsiblity for the well-being of.    For those with the funds, a little gold doesn't hurt.   For most of us smaller investors, silver is a more affordable choice which doesn't tie up as much, but provides for a fall back (preparation for a rainy day).   At current prices, 10 ounces of silver is less than $200 (once shipping and handling and insurance are all counted in).    At minimum, I would consider 10-20 ounces per family member as a cheap insurance policy against financial disaster and given the fact that there is only 500 Moz of silver supposedly available in the market, getting your share would put you in the minority of those who have something for when the "full faith and credit of the federal government" begins to show serious cracks.

       Look at silver as an insurance policy against what could go wrong, just like car, home, health insurance.    But unlike those other policies which you have to renew each year, once you purchase the silver and have it in hand, you don't have to pay for it again, unless you want more insurance.     You won't find financial insurance that cheap from anyone.

    Disclosure: Long GLD, SLV, Physical Metal, retirement accounts
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Comments (3)
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  • Ed I have always liked your writing, but now you are giving a bad name to anyone who likes silver. Please don't fall into the trap that the whole world is going to end, and everyone is going to bartering and using gold and silver to buy things. We are not going to end civilization as we know it. People will still use dollars, they will just be worth less in terms of silver and gold.

     

    This from a person who has a very large position in silver, gold and palladium. I like them, I think they are extremely cheap compared to what a future dollar will buy. But, I NEVER expect to use them to buy food.

     

    Unfortunately, when you sound like a nutcase(for lack of better term) spouting about the end of the world, it makes it tough to actually take the investment or you, seriously.
    2 Oct 2009, 11:08 AM Reply Like
  • When the Roman empire was coming to an end, no one EXPECTED it to end. Nevertheless, it DID. So, looking back in history, including early US history, we see that hyperinflation DID take hold on the soils of the young United States, under the Lincoln's administration when the North and the South fought against each other and the govt' issued something called the "Continental" - which was an issuance of fiat or debt based currency backed by nothing but promises. This currency, like all fiat currencies, went to its intrinsic value of zero - and was rejected by the people, and thus, the phrase "Not worth a Continental".
    5 Jan 2010, 05:40 PM Reply Like
  • Author’s reply » As I stressed, it is an insurance policy for the future, whatever that future brings. SIlver has a variety of benefits from health to wealth. Bartering is already going on (ask how many handymen want to be paid cash, rather than a check) and will only increase in the future as even web sites are offering the bartering of skills (you work on my roof and I'll work on your car) in which value is exchanged, but no money (meaning no taxes). I offered the idea of Silver as an insurance against the unthinkable, I'm sure Germans and Zimbabwean's didn't expect disaster to befall them the way it did with the German Mark and Zimbabwean Dollar. (We won't get into the relative value of the US dollar today compared to 1913)

     

    Silver, like gold, is also something that can be bartered with when the two sides in a transaction can't agree on a service or goods exchange. Having a lower relative value at the moment than gold, Silver can be used for smaller exchanges. Again, there would be no taxes to such an exchange.

     

    The main point is to actually have some metal in your possession, not paper promises or investments that may or may not be available for redemption. Anyone who has more than a couple of ounces of silver already has their share and more if silver were metted out to every individual in just the US. Insurance is for the prudent, to safeguard the future.

     

    On Oct 02 11:08 AM The Goy wrote:

     

    > Ed I have always liked your writing, but now you are giving a bad
    > name to anyone who likes silver. Please don't fall into the trap
    > that the whole world is going to end, and everyone is going to bartering
    > and using gold and silver to buy things. We are not going to end
    > civilization as we know it. People will still use dollars, they will
    > just be worth less in terms of silver and gold.
    >
    > This from a person who has a very large position in silver, gold
    > and palladium. I like them, I think they are extremely cheap compared
    > to what a future dollar will buy. But, I NEVER expect to use them
    > to buy food.
    >
    > Unfortunately, when you sound like a nutcase(for lack of better term)
    > spouting about the end of the world, it makes it tough to actually
    > take the investment or you, seriously.
    5 Oct 2009, 01:57 PM Reply Like
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