Silver Shines

The Silver Exchange Traded Fund (ETF) is out. So will be 97 million ounces of silver. Mind you the silver sill sit in a vault somewhere not being used for any production, just sitting there so traders can create products based on it's existence. Now that will create jobs, jobs with no productive usefulness whatsoever, that will nonetheless make some rich. Ah, the world of unbridled capitalism.

Be forewarned. As Silver becomes hoarded by ETF's and other investors while the price rises, the time comes when the storage of Silver will no longer be a profitable venture and it will get sold. Silver & Gold are worthless metals. They may have value in some industrial applications and people may like to buy them as a store of wealth, especially in the fast growing, corrupt, inefficient 2nd tier nations, but remember this: Intellectual property and information are worth much more and over time hoarding gold and silver will return to being what it is, a novelty collectable that is pretty but virtually worthless in developed societies.

Yep, go ahead and buy $100,000 of silver or gold. Now try to spend it. Try to move it from financial institution to financial institution on line. Now try to turn it into a currency so you can spend it. Well? If you are a doomsayer perhaps you think the entire global banking system is going to collapse and the only way you will be able to conserve your wealth is by owning some kind of precious metal. Fine for you. For the rest of us, don’t get sucked into the hype. This is a game played by people who make a living creating ways to soak up “real money” from anywhere on the planet they can and take as much of it as possible in the mean time and believe you me, these people are NOT hoarding silver, they are hoarding your money!

Notes on the affect the silver ETF’s will potentially have on the artificial demand for the metal:

By John Spence, MarketWatchLast Update: 5:02 PM ET Apr 28, 2006

The silver ETF has taken several twists and turns before it was finally approved by regulators.

The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, had led the opposition to the silver ETF. The group alleged the trust would take a large amount of silver off the market and push up prices, which would hurt firms that use the metal for business or industrial purposes and result in layoffs.

However, after a public comment period, the SEC said the silver ETF would increase the efficiency and transparency of the silver market, and that it would not spark liquidity problems.
Some traders are expecting the ETF may usher in a new bull market for silver if it attracts money from individuals, advisers, institutions and hedge funds looking for a convenient way to get exposure to the precious metal.

If the silver ETF experiences demand similar to the gold ETFs, it may end up accumulating roughly 97 million ounces, which represents more than 15% of known silver inventories, making a tight market even tighter, the newsletter added.