When to Exit Silver?

October 19, 2011 at 14:34


James Turk, Founder/Chairman of Gold Money has said, “Most people are probably aware that I am more bullish on silver than gold from a long-term point of view, but they are also aware of my proviso. Silver is more volatile than gold. For example, look what the gold/silver ratio did in 2008, climbing from 46 to 84 in a few months after the Lehman collapse. More recently, the ratio declined from 60 to 39 in about 6 months. This volatility means that silver is not for everyone. But if you are willing to accept the volatility, then I recommend having 1/3rd of your bullion portfolio in silver and the remaining 2/3rds in gold. As the ratio falls, the percent of silver in your portfolio in dollar terms increases. I expect the gold/silver ratio to fall within the next 2-4 years to at least 20-to-1, and I would not be surprised if it reverts to its historical average of around 16-to-1.”

Recently, Eric Sprott of Sprott Asset Management was quoted that record low gold/silver ratios are to come and are headed to 20:1 or lower – Some experts feel it could even overshoot to 10:1 because gold may face strong resistance at $2000, while silver will simultaneously barrel on its trajectory.It makes sense to have the largest portion of your physical metal holdings in physical gold as it offers easier storage, has less volatility and has been the money of kings for over 5000 years.  If you are in a position of holding a lot of silver and little to no gold, a practical way to attain this goal while at the same time capitalizing on silver`s impending breakout, is to watch the gold to silver ratio decrease and swap a portion of your silver holdings for gold at particular milestones. 

Here’s Bix Weirs 20 reasons to exit silver:

1) The removal of the gigantic concentrated short position on the COMEX Silver market as reported in the CFTC Commitment of Traders and Bank Participation Reports.

2) The announcement of charges filed by both the CFTC and the FBI in the pending investigations of Silver market manipulation by JP Morgan.

3) The shut down of the iShares Silver ETF (SLV) and the subsequent attempt by SLV investors to transfer into physical silver in their own possession.

4) The implementation of COMEX Position Limits in Silver of no more than 1,500 contracts and the enforcement of the Disruptive Trading Practices law.

5) The winding down of the outrageous and manipulative Silver derivative positions held by both JP Morgan and HSBC as reported by the Bank for International Settlements.

6) The mass redemption of paper Silver currently held in Pooled Silver Accounts and Silver Certificate Programs into physical silver held in the possession of the owner.

7) The Silver to Gold Price Ratio reflects the true physical relationship between above ground gold and above ground silver that is available for sale on a free and open market.

8 ) The realization by industrial users of silver that the supply of physical silver is rapidly depleting and with the future of producing their products in jeopardy they begin stockpiling physical silver.

9) The reversal of Silver’s ever increasing use in industrial applications due to either high prices or the discovery of a viable substitute with similar physical properties and attributes.

10) The realization by the remaining 99.9% of the investing public that does not currently own any physical that Silver is extremely undervalued and should be held by all investors interested in portfolio safety and value appreciation.

11) Acknowledgment by the Bullion Banks and US Government that they have been involved in the price suppression of Silver for over 50 years in order to support and extend the global confidence in un-backed fiat US Dollar.

12) All Silver statistical reporting companies have completely revised their historical numbers to reflect the true supply/demand realities of the past and admit to the massive annual physical silver deficit going forward.

13) The USGS alerts the world to the reality that at the REAL current Silver consumption rates there is less than 10 years of known below ground Silver reserves remaining in the world.

14) The realization by investors that significant increases in the price of Silver would not curtail industrial demand as silver is mostly used in very small amounts in each product produced.

15) The mainstream media highlights that the investment drivers for Silver far out weight the investment drivers for Gold.

16) The US Mint starts to produce US Silver Eagle coins “in quantities sufficient to meet demand” and no longer illegally rations their dwindling supply.

17) When investors stop saying that silver is “too hard to store” and start worrying that silver is “too valuable to leave in a bank’s safe deposit box”.

18) When Central Bankers around the world stop printing money every time there is a “bump in the road” on their never ending quest to foster perpetual growth and end the extraordinary transfer of wealth from “the many” to “the few”.

19) The US Government and the Citizens of the United States recognize and acknowledge that Article I, Sec. 10 of the US Constitution specifies that only gold and silver coin can be legally used as money and the Coinage Act of 1792 defined the US Dollar as “three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.”

20) The price of silver has risen so high that it has fulfilled all my hopes and aspirations as an investor and I can now sit back and enjoy those other pleasures of life that I had put off in pursuit of FREEING THE SILVER MARKET FROM THE CLUTCHES OF MANIPULATION!