Silver is Blowing Up

The price of silver is exploding more than it already has. I remember when silver was less than $5 an ounce. I couldn't convince people to think about it, much less actually buy some of it. I was buying it, but looking back, I should have mortgaged everything I had to buy it. I made at least 6-10 times my money I invested in silver. We will never see prices for silver that low in our lifetimes. NEVER! I guess that made it the investment of a lifetime back then.

Jump to 2011, and now the price of silver is close to $50 an ounce. The really scary part of this is that when you look at the fundamentals, along with the instability in the world economies today, the price of silver may still be low. The fact of the matter is that the banks that have been dealing with silver have been committing fraud. They have been 'selling short' silver that they not only did not own, but have actually been selling silver that did not exist. This enabled them to make money on non-existent silver, and to also suppress the price of silver as well. Selling naked shorts in silver amounts to a de facto flooding the market with 'paper' silver.

The problem now is that the banks are now caught up in a 'short squeeze'. This is when a seller of a commodity doesn't have it, and now much purchase it at the market price, no matter how high it may be. It would depend upon what price they sold it at that would determine the loss. The bigger the difference between the market price and the price they sold it for, the larger the loss. It looks like they may be in for multi-million dollar losses because the silver price is now approaching its historic high that was set back in the 1970's when the Hunt brothers were trying to corner the silver market.

I'm not sure how many people are open minded enough to invest in silver, but it has worked out great for me, and for plenty of other people who had enough guts to think for themselves instead of following the talking heads on MSNBC and other media investment pundits. One thing that they won't tell you is about systemic risk. You may think that your investment portfolio is well diversified because you're investing in a lot of different stocks, bonds, ETF's, indexes, etc., but I have some news for you. You're only diversified in paper assets. What happens if all paper assets take a hit? Is your portfolio equipped to handle that eventuality? That's where investment in non-paper assets comes in. Do your research.