Special Report How to Buy Scratch and Dent Silver at a 25.3% Discount By Eric Roseman
The Sovereign Society 98 S.E. 6th Avenue, Suite 2 Delray Beach, FL 33483 USA USA Toll Free Tel: (888) 358-8125 Email: info@sovereignsociety.com Website: www.sovereignsociety.com Copyright 2011 by The Sovereign Society. All international and domestic rights reserved. No part of this publication may be reproduced in any form, printed or electronic, without prior written permission from the publisher, The Sovereign Society. Notice: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold and distributed with the understanding that the authors, publisher and sellers are not engaged in rendering legal, accounting or other professional advice or service. If legal or other expert assistance is required, the services of a competent professional advisor should be sought. The information and recommendations contained in this brochure have been compiled from sources considered reliable. Employees, officers, and directors of The Sovereign Society do not receive fees or commissions for any recommendations of services or products in this brochure. Investment and other recommendations carry inherent risks. As no investment recommendation can be guaranteed, the Society takes no responsibility for any loss or inconvenience if one chooses to accept them. Any information or statements contained in this publication are not to be considered by the reader as personalized investment advice. The authors and any agents of The Sovereign Society are not licensed under U.S. or other securities laws to address particular investment situations and nothing herein should be deemed as personalized investment advice. 2
How to Buy Scratch and Dent Silver at a 25.3% Discount Over the last few months I ve received a blizzard of emails from my subscribers, asking how to buy silver. And I can t blame them Silver has risen from $8.88 to $29.18 an ounce since October of 2008. Some of the brightest investing minds have latched onto the white metal: Jim Rogers says, If you put a gun to my head and said you have to buy one, I would buy silver rather than gold. 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? It s the only affordable asset that can protect your wealth from inflation and kick off 50%-100% returns. There are five key reasons why silver is one of the most important hard assets of 2011-2012. In this report, I ll share these demand-drivers with you and show you how to acquire real, physical silver at a 25.3% discount. So why is silver white-hot right now? #1) The Federal Government s Printing Presses are Stuck on High As you can see from this chart, the money supply continues to expand at a breakneck pace. This was one of the key reasons behind the 2009 2011 stock market rally and the bull market in gold. All that fresh money is chasing hard assets and inflating stocks, across the board. 3
I 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, gives you some 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. Way back in 3500 B.C., that number fell as low as 3-to-1. I doubt we ll see that level again. But the fact remains; today s goldsilver ratio is seriously out of whack. As of this printing, it takes over 47 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 or Silver must rise in value, relative to gold I believe the second outcome is more likely. Gold will retain its value and continue to push toward $1,500. But silver will increase in value at a much faster rate over the next 12 24 months. If the Gold-to-Silver ratio falls from 61, here s what could happen to the price of silver (These numbers reflect gold at $1,100/oz.) Gold-to-Silver Ratio Silver Price, per ounce 40-to-1 $38.25 30-to-1 $45.00 20-to-1 $67.50 15-to-1 $90.00 So you see, it would not be far-fetched to see silver jump from $30 to $50 or more. #3) Silver is Consumed Gold is Hoarded Today, well over 90% of the world s silver is consumed by industry. 4
Plasma TV screens use up to an ounce of silver per screen. Energy-efficient windows are treated with silver to reflect the sun s heat. And in the pharmaceutical, electrical and medical industries there are numerous high tech applications that require silver. Once it s 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. #4) The U.S. National Stockpile of Silver is Empty In late 2000, the Department of Defense issued a shocking report to the U.S. Congress: The U.S. National Defense Silver Stockpile Has Been Eliminated. As far as I know, this story was ignored by the mainstream media. But the impact on silver markets continues to be felt. This stockpile was once a huge supply source, holding more than 1 billion ounces of silver. But today, it s completely empty. That s bullish for silver for two reasons: 1. 2. A once-major supply source is gone (potentially for good). When the U.S. government needs silver, they have to compete for it on the open market. (As you ll see below.) #5) Booming Demand for Silver Eagle Coins In 2009, the U.S. Mint has sold more than 26,000,000 Silver Eagle coins. In order for you to understand how huge that figure is, check out this chart of Silver Eagle sales over the past twenty years: Source: U.S. Mint As you can see, demand has gone straight up. That s why the Mint was 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 5
Eagle sales has to be purchased on the open market. (The Mint is required by law to produce Silver Eagles in quantities sufficient to meet the public demand.) Compared to the industrial use of silver, this is not a huge demand factor. But as more and more Americans wake up and realize they re being looted by inflation, this could amount to a significant boost for silver prices, particularly 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. 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, they come with a giant premium. Quite often, you ll be asked to pay 10 30% over the spot price to get your hands on these coins. But as you ll see in a minute, it s possible to secure real, physical silver for a much smaller premium, as low as 2 3% over spot. How to Buy Scratch and Dent Silver at a 25.3% Discount vs. Silver Eagles There are several ways to buy silver and save hundreds even thousands of dollars. One popular way is to buy junk silver coins. These are pre-1965 quarters and dimes that hold no collectible value. Reputable coin dealers sell bags of junk silver from $100 to $1,000 face value. You can get your hands on these and pay anywhere from $30.20 to $30.45 an ounce for silver. That s a modest 4% to 5% over spot. Not bad! But truth be told, you can do even better The Best Way to Buy Silver Bullion Often, the greatest silver bargain you can find is in the form of bullion bars that sell on the secondary market. These tend to be a bit cheaper than new bars, which are purchased directly from silver mints. 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 for a very fair price. Silver bullion can be purchased in individual units 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 as little as $30.84. That s a huge discount over what you d pay for Silver Eagle coins and a smaller commitment than you re likely to find with junk silver bags. 6
That means, you could save hundreds even thousands of dollars, depending on how much silver you buy. Amount of Silver Cost of Silver Eagles Cost of Bullion Bars Potential Savings 10 ounces $330 $308.30 $21.70 100 ounces $3,300 $3,083 $217 1,000 ounces $33,000 $30,830 $2,190 2,000 ounces $66,000 $61,660 $4,340 Just keep in mind, these prices are approximate. And the less you buy, the higher the premium over spot price. To be safe, I recommend you buy silver from a trusted dealer. The Sovereign Society has been in contact with several over the years, including: Rich Checkan Asset Strategies International 1700 Rockville Pike, Suite 100 Rockville, Md 20852 1-800-831-0007 or rcheckan@assetstrategies.com 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. (These prices change daily, along with the spot price of silver.) How to Make Sure Your Silver is Safe Unlike gold, it is not practical to hold large amounts of silver in a safety deposit box. (For size reasons.) But if you do choose to hold some at your local bank, be careful. History shows that safe deposit boxes are NOT insured by the FDIC. That means if your bank goes under, it could take your silver with it! Be sure to find out if your homeowner s or renter s policy covers safety deposit boxes against damage or theft. A smart way to store silver is in a heavy safe. One that can t be easily lifted, and offers protection from fire and other natural perils. 7
You may also be able to structure your silver holdings through an IRA, effectively buying silver with pre-tax money! If you re interested in an offshore IRA, contact Sovereign Society Council of Experts Member Larry Grossman of Sovereign International Asset Management at 727-784-4841. (But please note: Sovereign International Asset Management is NOT a bullion dealer. They are custodians for Offshore IRAs.) What s Next for the Economy? Nobody knows what will happen next in this topsy-turvy economy. But as world governments continue to borrow, spend and flood the globe with trillions of dollars of funny money one outcome is certain: Unprotected savings will take a direct hit. Unfortunately, most investors will be caught off guard. Their spending power (and quality of life) will be crippled by inflation. But those who do prepare, and diversify into silver bullion (and don t overpay in the process) will reap the benefits as the dollar and other fiat currencies take a tumble over the next 12-36 months. Is Silver Bullion right for you? Without question, most portfolios would be better off with a silver lining. But how do you know if silver bullion is right for you? My general advice is: don t buy too much of any one investment, no matter how much you like it. As a basic rule, you don t want to allocate more than 15% of your portfolio toward one asset class or stock in this case physical silver. For a good idea of how you could structure a winning portfolio, follow along with my weekly investment research service, Commodity Trend Alert. Bottom line: silver should be trading over $50 an ounce today. The fact that it s under $30 means you can effectively buy it at a HUGE discount, in advance of its next major rally. My target for silver is $75 an ounce. If that s remotely correct then silver can gain another 150% from current levels. If silver reaches its approximate 1980 inflation-adjusted equivalent then prices can surge another 325% from current levels. At $29 an ounce, silver offers an exciting entry point for new investors and massive upside potential in 2011. 8