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Silver Down 52%. Gold Down 27%.

Written by Gary North on April 18, 2013

If you bought silver to protect yourself against the inflation that is not happening, you have taken a major loss.

Silver at its peak in 2011 was at $48.70. Today, it is at $23.30.

Gold at its peak in 2011 was $1,895. Today, it is at $1,387. That is down 27%.

Silver bulls never warn their followers of how terrifyingly volatile silver is. They tell them that silver is the poor man’s gold. I tell people that it’s better by far to buy the rich man’s gold: gold. The reason why silver is the poor man’s gold is because silver investors lose so much money.

I wrote about this in 2006.  I will continue to write about it.

Silver bulls are busy trying to explain away what happens every time the precious metals suffer a hit: silver falls twice as much as gold does.

It’s OK to have 20% of your precious metals money in silver.  In times like this, it’s a bargain . . . if you can find “junk” silver coins at the cash price, meaning no premium for coins. If you buy silver coins after one of silver’s smash-ups, you will do well when it comes back. But people buy silver at the top, and then they get smashed.

If you think the precious metals have bottomed, silver eagle coins are a good speculation today — better than gold eagles. That’s because so many naive people were sucked in by the silver bulls. You can make a profit at their expense.

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30 thoughts on “Silver Down 52%. Gold Down 27%.

  1. Rabelrouser says:

    Manipulation in the commodities markets are based on the futures speculation, or that manipulation allows those with the means to delete the market of its supply to form their own personal stock pile for future economic problems. By removing those supplies from the market during the various down turns/manipulations; fewer individuals are able to take advantage. As of tuesday there is a 10-16 day backlog for delivery of silver coins; the supply is steadily shrinking.
    You have been warned.
    Consider those other commodities that just get you through the day.

  2. On the other hand, from their market lows, during the 2008 financial crisis, to their respective highs of 2011, gold gained 182% while silver gained 492%, so, with respect to timeframes, it depends on how you look at it when you say "silver investors lose so much money."

  3. If I wasn't broke due to this economy which deteriorated starting in 2008, I would be buying silver and some gold. Silver can be easily used to make everyday necessary purchases. Gold is too expensive. What about Copper rounds….I am in serious financial trouble as I am a small business owner and trying to keep my head above water. I did manage to buy $400 in Copper rounds at $.99 each. They are now up to $1.49. It isn't a matter of not knowing what to do, it is a matter of how this economy is collapsing my business.

  4. To @neildavis2002 – you are correct. By picking specific time-frames, and the appropriate numbers, either argument (or something in-between) can be “defended”. So making a “flat-out” statement that buying at the peak and looking at where you are now means you are loosing, while technically correct, is not complete. It also assumes that people seeking inflation protection bought at the peak. As an additional furthermore, it assumes that those who supposedly bought at the peak will immediately sell during this particular decrease in the price of the metals as denominated in fiat currency.

    But there is another conceptual error in the statement: the assumption that gold and silver are “inflation protectors”. They are NOT. Gold and silver are INSURANCE against the progressive destruction of the fiat paper currency which has been going on at an accelerated pace since 1971. They are “fall back” positions for those who are wise enough to keep a historical store of value available. In other words, they are insurance against a currency collapse. That’s why having 10-15% of your wealth in these metals is never a bad idea. Just like you should have “paper cash” available in the case of bank closings.

    If we are still looking at our economic environment following historical paradigms we will be like the Swiss watch makers who refused to consider the quartz movement as a paradigm changer in the watch making business. That miscalculation cost the Swiss over 50K jobs and the loss of global dominance of the watch market. It’s a different world out there. We have to look at things differently, and to claim, based on a selected time frame that this or that is the consequence, is incomplete at best. I think Gary has to re-think this one and try again… or an old puertorrican proverb indicates – he needs to wind the top one more time and spin it again (and if anyone is too young to understand this one. just google spinning top or something like that) 🙂

  5. This commentary is mistaken at best, silver is real money although the paper markets are manipulating it and central banks are dumping it into the market in some places to keep you away from it and into their fiat paper commodities and currencies. My silver dealer can barely get it, it is becoming as scarce as ammunition.

  6. I follow both SLV and GLD and Silver bulls do include caveats about the volatility, so much so that at times listeners choose to willfully tune out that part of the message. So I would say the word "never" is a bit strong.

  7. Ranchman says:

    Amen, K. I couldn't agree more. I'll continue to stack!

  8. shellback says:

    interesting – your conclusions are not entirely correct. I bought a large amount of Silver at $11. I sold it when it hit $48. So not all of us are losers. The adage holds for PM's as it does for anything – buy when others are selling (like NOW), and sell when others are buying….Or hold onto it as a store of your wealth against the coming crash and utter destruction of the US Dollar.

  9. daves5dea says:

    I consider most of what Gary North says as decent Libertarian advice, but sometimes I do believe this man hasn't a clue concerning the value of precious metals as our fiat money system goes ever further South. Believe what you will but silver is used and in demand extensively.

  10. If you are basing the value of your gold and silver on the notion of how many worthless notes it is worth, you got scammed. You didn't lose unless you sold your silver and gold for worthless notes printed on cotton. Funny how nobody stood up and cheered when gold and silver were on bull runs.

  11. I agree. The biggest problem with silver or gold is the massive markups that sellers add to the actual cost. The video that you watched yesterday at tpe.goldeagles.biz shows that those markups can be avoided. If you can buy at anywhere from 5-30% below the inflated "retail" prices that many sellers price their metal at, you do not have to hope that metal will go up massively in order to be able to break even on your investment. Even a very modest rise in prices gives you an immediate profit. I guarantee you that the big dealers do not pay that markup–why should you?

  12. Right! Now, if you can eliminate the massive markups that dealers add to the actual cost of the metal when you buy, and the discounts they apply to what they will pay you when you sell, you will have a really good investment medium in both silver and gold. If you watched the video yesterday at tpe.goldeagles.biz, you actually can eliminate both of those costly penalties. Remember when you paid a huge commission any time you bought –or sold–stocks? Now you have online trading that vastly reduces or even eliminates those huge costs that can make a winning investment into a loser. The same is now true for silver and gold. When you cut out all that unnecessary wasted money, you have a really good investment that will be good even if the SHTF. (if you do not know what that means, google it!)

  13. Good for you! Bravo! gold and silver have one important property that cash, stocks, metal certificates, ETF's, and mutual funds do not have–you will still have them after the SHTF and they will still have value. They are real money, not fiat currency. Sure, they can still be manipulated by the big financial institutions; but only temporarily. Nobody can make silver or gold worth zero. They can easily make that paper Federal Reserve Note, or your stock certificates, or even your shares in a gold mine worth zero. Physical silver and gold are real. Now, if you can eliminate the markups that you pay when buying and the discounts you give when selling, you do not need the price to quadruple like yours did in order to make a profit. The video we watched yesterday at tpe.goldeagles.biz shows that you can do that. Buying silver at today's price without the unnecessary markups can only be a smart move. Sheesh!

  14. I think, if anything, that that proves Dr. North's secondary point- silver is VERY volatile. It can rocket up, and it can fall like a stone.

  15. Jan if you bought copper rounds at $1.oo/ea. you are paying $16.00 a pound. That is A HORRIBLE INVESTMENT. Copper will never be 16/lb. I believe copper will be good investment in the future,but you have to aquire it cheap or free for that matter. I sort copper pennies when i'm bored and collect copper wire scraps from construction sites(I'm in the business) this way i get my copper for free . Last year i saved over 200lbs in wire scraps and sorted 300lbs of pennies in my free time, thats about $1,600.00. I will cash that in when copper hits $5.00/lb if I have the patience.But good luck with the cooper and stay away from those rounds thy're a scam.

  16. Kelly, I don't have paper either any more, but I do believe that Paper is bad, very bad but I have talked to a lot of people who do not feel that paper is a problem. The Lakota Nation had on their web site (that is how I heard about copper rounds) to not have paper money that it is fiat money and recommended that they buy copper rounds. Now, this is how I was thinking, that if you only have gold and silver and you want to buy a loaf of bread it would be more in line with copper than silver or gold. But I suspect from what people are saying that it isn't true.

  17. I just finished reading everyone's messages and I am very proud to be an American. Everyone of you is informed and willing to share information. You are all great Americans. Hopefully, our nation has more people like you and we will survive the upcoming crash….which I do believe will happen.

  18. G. Kuhns says:

    I still think gold will go to $2000. I suspect the talk of European nations selling their gold motivated a sell-off – but there will be a lot of buyers as the price comes down.

  19. N. Gaskins says:

    Regardless of the opinions of those who attempt to forecast the future of precious metals, silver and gold will always be the true currencies when all others fail. When FDR confiscated gold back in 1933, it was obvious that the government believed that gold was so valuable and precious that ordinary citizens should not possess it so another less valuable precious metal, silver became the national standard. Now that we have no precious metal backing at all to our dollars, silver and gold will be the foundation currencies that we will fall back on when the federal reserve note house of cards crashes.

  20. All true, but no one is taking into account Govt. rationing and control of ALL essentials.
    You can have all the gold and silver you want, but your ration coupon book will be
    the most valuable thing in your possession. Gold and silver will work in black
    markets only – outrageous equivalent inflated prices there too – otherwise the
    Govt. will have mostly complete control of all food, gasoline, electric power,
    I am beginning to see the only way out is to get these Communists out now
    before they eventually control and ration all the basics back to us; which is
    their endgame. Apart from that you will also be looking at civil unrest on a
    scale unimaginable. Populace will win but these Bolsheviks won't give
    a damn how many people get killed trying to hang on to Lenin's dream.
    Communism failed in the USSR, it hasn't failed in the USA yet.

  21. Well… anybody who has gold or silver HAS NOT LOSA A THING…… unless you have sold it! Now, think about it.

  22. Each time I frequent my favorite bullion dealer, his shelves are empty or near empty. I cannot buy physical silver anywhere near current spot. This latest round of manipulation will help drive prices higher, and faster. There are currently more buyers than sellers. Time to load up if you can find bullion at these low prices.

  23. if the SHTF scenario is highly likely then you'll need bottled water, canned food, guns and ammo. Gold and silver on its own will simply make you a target for thieves. Also gold and silver won't feed you whereas you go hunting with your guns and ammo.

  24. You're supposed to buy in gloom and sell in boom. An old saying is "when bellboys are discussing an investment the boom is over". Gold and silver bugs were supposed to buy up when no one was talking about it – hence when gold and silver fall under the radar and everything's gone quiet is the time to buy again.

  25. ncbill12 says:

    Silver also has significant industrial uses – but when a recession is feared, industrial demand drops like a stone.

  26. Eric, Good comments. Are copper pennies 100% copper?


  27. It all begs the question: we reelected a demonstably incompetent President. We deserve what we get!

  28. Pete0097 says:

    I like the way they advertise silver stating that 90% of the mined silver has already been consumed so that is the basis for increasing silver prices. The reality is that they are still mining it so the above statistics are worthless.

  29. Blair Franconia, NH says:

    Contrary to popular belief, silver and gold AREN'T hedges against inflation anymore.

  30. pre 1982 pennies are 95% copper 19821/2 – 2013 pennies are 5%copper 95% zinc. That's why I sort them. My small business is tanking as well because of the economy, but I believe all things still point to a Gold and Silver rebound in the near future. The dollar will lose it's status and the world will turn to the tried and true precious metal standards again. So, if You can, hold on to the stash you have!