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We have opened a new precious
metals silver and gold store in Oakland, California.
Monday, was the opening day.
Oakland Silver and Gold
http://www.oaklandsilverandgold.com/
3929 Piedmont Ave.,
Oakland, California 94611
osg2010@gmail.com
See the silver and gold
on display in a 45 second video.
http://www.youtube.com/watch?v=gg8U1dyvScU
We are selling gold and silver at prices that are way, way, way too cheap,
compared to the bullion ETFs.
Our premiums over spot are about 6-9%, and one ETF is at 12% over spot, and
another is at 17% over spot!
The entire point of a bullion
ETF is to offer 1000 oz. silver bars in an easy to purchase way, such as
buying stock, which should be cheaper than typical silver products, since ETF
silver is in the form of bulky and unwanted 1000 oz. bars that individual
investors don't like to take delivery of, and the ownership is
fractionalized, rather than taking the time, energy, and cost to turn that
bullion into real 1 oz. rounds.
Yet, two of the most honest
ETFs have prices for the underlying bullion at higher than our prices for
bullion that we can ship to you!
We, at JH MINT (www.jhmint.com) offer gold bullion as cheap
as 5.9% over spot, and silver as cheap as 7% over spot.
Yet bullion in these two ETFs
cost from 12.4% to 17.4% over spot!!!
Quote, from Bill Murphy, at www.lemetropolecafe.com:
"The CEF bullion vehicle
closed at a premium to NAV of 12.4% and its peer PHYS at a remarkable premium
of 17.417%. This is the highest since before CEF’s last offering in early
November and probably the highest ever for PHYS which only started trading in
late February."
February was a record month
for sales at the JH MINT, and we hit a new record in April. And the
week broke a new record for us, too.
This price anomaly may
not last long. Given the odd pricing structure, we should sell out
very soon. I'd also expect our wholesale suppliers to being selling
out, and product will be harder to come by, and/or choices will be limited.
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It may be of interest to you
that I have been courting a billionaire who has a net worth that exceeds $10
billion. I believe it is actually more like $20 billion. I've
been writing to him about silver for quite a few years now, and I finally got
his permission to tell you about him. I've been telling him for years
how tiny the silver market is, that a mere $1 billion invested into real
silver would simply dwarf the entire market, and move prices up
substantially, and could cause silver to sell out worldwide.
I continue to answer his many
questions, and sometimes I grow a bit impatient with him. I'm trying to
mature, and be more cordial with my emails.
Here's a letter he sent me
last week.
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Maybe you can help me get more
clear on one issue in silver investing which is preventing me from taking a
larger position.
An issue I would like clarity on is the supply of silver inventories.
500M to 1B ounces is commonly given for above ground inventories.
However, roughly 150M oz/year of silver jewelry and 50M to 75M oz/yr of
silverware have been sold into the market place every year for the past 20 to
40 years. Most of the ounces from those two sources exist today
above ground. Most of those ounces could easily be shipped to refiners,
melted, and turned into silver bullion. (Most of it is not silver
plated). It comes out to over 8B ounces over the last 40 years just
laying around above ground.
Also, the huge amount of ounces from all the pre-1965 silver coinage exists
today and could be considered above ground inventory.
Given the huge supply from these three sources being out there in the world,
what are the main reasons the Silver Institute, CPM Group and others do not
include these massive amounts of silver ounces in their "above ground
silver ounces" numbers?
The argument of "only silver ounces which are considered .999% are
counted because those are the only ones industrial users can use" seems
like a very weak argument because refiners can turn sterling silver, silver
jewelry, and real silverware into bullion very quickly if there was a need to
do that.
I know what the demand for silver is and how the demand for silver is going
up as new applications for silver increase every year; however, price is
determined by both demand and supply. As a silver investor, I
believe I should know what the supply of above ground silver really is in
order to make a sound decision on silver price potential.
Right now, I feel like I only have about half the necessary information (the
demand side) to make a clear investment decision on silver.
Of course, I want to take advantage of investing in silver if there is only
500M to 1B ounces above ground a year and silver would realistically run out
by 2020 as the USGS says. But what about the other 8B plus ounces out
there above ground already and the 200M oz a year going forward which will
become above ground inventory ounces as well which can easily be melted and
turned into bullion for industrial use.
Yes, I could see silver price going over $200 oz or to the price of gold;
however, the supply side issues described above require more light shown on
them for a fundamental investor to make a sound decision.
What are the choices to go over this with you? Or are the issues very
easily explainable?
Are there any links which discuss this important part of the fundamentals for
owning silver? So far, I have not seen only one to three vague articles
on it and that is it.
Thank you.
=====
I replied:
These are very good questions,
and answers are a bit complex. This may be a good subject for my next
newsletter, as you are not the only one asking.
Let me see what I can do for
you briefly, and please respond if this answer is acceptable.
First of all, you will never
"know" for certain the inventory that exists when it is distributed
among millions and billions of people.
Second, it is not
"inventory" in any sense of the word, given that this belongs to
the millions and billions of people that hold it, and that silver does not
belong to JP Morgan who has the short position!
Third, the people who buy
silver in jewelry and flatware forms pay a hefty multiple for that silver,
like 3 to 10 times over the price of silver.
Fourth, when that form of
silver is sold, the people get about 40-60% of the spot price of silver,
which is a significant discount to spot, because of the high costs of
refining silver.
Fifth, when the silver price
rose in 1980, a lot of that kind of silver was melted down, and most of the
nations refineries were backed up by about 6 months, so it is not so easily
and quickly refined.
Sixth, recycling is a part of
current supply/demand stats in silver counted by the CPM Group, which is up
to about 200 million oz. per year, more than you counted as going into those
forms of silver. Some recycling consists of sterling coins that nobody
buys, or old generic 1 oz. rounds that are beaten up, irregular in shape, or
odd weight bars or large novelty coins that are not easily commoditized for
inventors.
To expand on points 3-4 for a
bit. If a person pays $25 for a silver ring that contains 1/5th of an
oz. of silver in it, they are literally buying silver at $125/oz. That
silver cannot be sold for profit until AFTER silver hits over about $200/oz.,
due to refining and middlemen costs.
Therefore, silver jewelry and
tableware is not considered a form of silver that can stop this rally, unless
gains of greater than 10 fold return happen.
When silver was at $5/oz.,
some people were predicting that silver scrap would flood the market to lower
the price if silver went above $7/oz. Clearly, that never happened, and
thus, it can't realistically be said to be a prediction, but rather a futile
attempt to talk down the silver market and to scare away potential investors.
I hope that most directly answers
the bulk of your questions. If not please elaborate on where I should
elaborate further.
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In case you are wondering who
the billionaire is, let me tell you, by way of getting to the statistics:
I share these statistics
regularly, such as in my last email. One man highlighted the following
sections:
People continue to ask,
"Which is better, silver, or gold?"
I tell people, we like silver best, because it's a much smaller market.
World annual silver
mining is about $10 billion, but world annual gold mining is about $80
billion.
But most of the silver market is consumed by industry, as silver is
used in all sorts of electrical contacts and devices. In fact, industry
consumes more silver than world annual mine supply, and the gap is being met
by recycling.
So the amount of
silver left over for investors is shockingly small, perhaps only $2 billion.
The silver story is surprisingly simple. The entire world once used
silver as money, but today, no nation on earth has silver circulating as
currency. This reduced monetary demand has created a very low price.
But silver remains a better store of wealth than ever, due to the increased
scarcity, and the growing awareness of silver ownership as a way to make
money.
Money is more than a currency or medium of exchange, it's also a store of
value. As demand for silver, as a store of value, increases, so will
the price, and this demand will continue as a positive feedback loop that
will eventually destroy paper money.
But the real shocking fact of the silver market is that 99% of silver
investors are getting scammed by paper silver, that is basically all fraud.
The proof of this is the BIS report, from the Bank of International
Settlements, here:
http://www.bis.org/statistics/otcder/dt21c22a.pdf
The proof is in the
numbers. The BIS keeps track of the derivatives of the banks
worldwide. It shows that the notional value of "other precious
metals" over the counter derivatives, which are mostly all silver,
increased from $100 billion to over $200 billion in six months.
When the entire annual
physical silver investment market is only $2 billion, and when the paper
silver investment market increased by $100 billion in six months, there is
only one way that can happen. The silver investment must be all fraud.
=====
So, getting back to the
identify of our billionaire friend. Total wealth in the USA has been
estimated as exceeding $70 trillion. I'll go with $40 trillion, as I
know that is "household" wealth, that exceeds that. If you
divide that by 300 million, the population of the usa, then wealth averages
out to $40,000,000 million / 300 million = $133,333 per person in
assets. People who read investment newsletters have a significantly
higher net worth, on average, but let's go with that.
I have 80,000 emails on my
email list. 80,000 x $133,333 = $10.6 billion. I would suppose
that my readers are significantly wealthier than average, as that's what the
statistics also say.
Thus, the billionaire is
you, my dear reader. Collectively, it's you.
Many of you have asked me,
"Jason, why don't you start a fund to help pool people's investment
dollars together to buy silver?"
Answer? Because such
funds already exist. Because such funds are not as safe as if 10,000
different people buy silver. Also, today individual silver is also
cheaper than fund silver!
Many people say they won't act
to buy silver until after a billionaire buys it. You ARE that
billionaire. And just as there is not enough silver for a multi
billionaire, there is NOT NEARLY ENOUGH silver for all of you.
That's why I say, get some while you still can.
WE ARE ONLY SELLING SILVER, BECAUSE WE CAN STILL GET SOME, TOO!
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