How Investors Get Educated
(There's the Easy Way, or the Hard Way)
Silver Stock Report
by Jason Hommel, May 6, 2009
Ted Butler and I occasionally disagree. When we disagree with people we respect and have learned so much from (as I have read him weekly for years), it's usually a very enlightening experience for both people, as well as other observers.
Ted writes this week that there are no organizations educating investors about silver, as there are about gold, such as the World Gold Council.
Wrong on two counts, in my opinion. First of all, in my opinion, the World Gold Council is an anti-gold pro-banking establishment player that promoted gold in the last year or so as jewelry for ugly women as a way to "generate", or more accurately, "hurt" sales. The WGC also ignores gold as an investment. The WGC also ignores the reality of central bank gold sales which has been suppressing the gold price. www.GATA.org, a real pro-gold organization, is barely funded, hates the multi-million dollar funded WGC, and the clueless miners who fund them.
Second, there are many organizations who promote silver, starting with Ted's sponsor company, www.investmentrarities.com, a company that sells silver and gold, and his other regular publisher at www.silverseek.com.
Here are more organizations who promote silver:
www.silverstrategies.com (who also published Ted's Latest rant)
Now let's get to the www.silverinstitute.org. This is an interesting case. Yes, they are partly sponsored by silver users. But their job is not forcasting (and promoting silver as an investment), their job is accurate statistics for industry participants, both users and miners alike. Statistics are measurements of the past, not predictions of the future.
There is another group that is more interesting that also gathers statistics on silver, namely, cpmgroup.com. This company's president is Jeff Christian.
Most investment banks who publish statistics on silver, base their own studies, at least in part, on the statistical surveys sent out to the silver miners, refiners, and other silver industry groups, by the cpmgroup.
Even I use their stats regularly, to promote the general bullish case on silver. For example, the CPM group says about 550 million oz. of silver is mined each year, and the silverinstitute says it's about 650 million, so I just ballpark it and say 600, and cite those two as sources regularly.
The main stats are that total demand is about 900 million oz., with other supply sources being recycling of about 200 million oz., and government selling of about 50 million oz.
Investor selling, or buying makes up the difference between total demand and total supply.
Right now, investors are buying about 150 million oz/year, while most of silver is going into industry at about 400 million oz., and jewelry of about 200 million oz., and photography of about 150 million oz.
Thus, any significant investor increases must mean either a rising price, or a decline from the other categories.
But what the silver statistic reporting groups don't reveal, which I found recently from an astute reader, is that the BIS reported $190 billion of other precious metal derivatives, which must be mostly all fraud, since the entire silver industry is barely $11 billion per year, (900 million x $13) and is certainly not all hedged, and platinum and palladium are even smaller industries.
But here's where it starts to get real instersting for the silver market.
The CPM Group is run by Jeffrey M. Christian, who is a liar, as I documented here, late last year.
I don't think he's lying about the basic statistics. He admits in person that he's bullish on silver.
But Jeff also admits that he was a key player in helping to create silver futures contracts, and so he does not see anything inherently wrong with banks who short up to 130 million ounces of silver in a month that they do not have available to deliver especially not if nobody ever takes delivery.
It also appears as if Jeff works for many banks or silver dealers or institutions who are short of silver, or who have short positions in silver, and that he puts out "silver disinformation" at his clients requests.
So, it's like he's a Jedi Knight who is working for the Sith. But the Sith always did pay better.
There are other organizations who promote silver, based largely upon the numbers coming from the cpmgroup, and other groups like the silver institute.
There are plenty of independent newsletter writers who study and promote the bullish silver story.
Virtually no major news organizations do any investigative journalism anymore, which is why the newspaper industry is hurting so badly.
There are other groups who promote silver as an investment: Anyone with silver to sell including miners, refiners, mining show event sponsors, bullion dealers, and brokers.
There are about 150 futures contract brokers out there, maybe more. They all want your business. Some of them also sell bullion, and some of the bullion sellers will also offer to hold your silver for you or offer their own private "leverage programs" (and those who do are ones to avoid, of course).
There's a group who advertises all over TV who will let you "control $10,000 worth of gold for $3800", which is clearly a scam and is a much worse deal than standard futures contracts which are prone to default at any time now.
And, of course, there is this silver stock report, and my articles are published at up to 15-20 other websites, and at some sites more often than others.
And just as I often elaborate on the works of other writers, perhaps Ted is elaborating on the point I've been making for the last month, that the silver dealer industry is very small, and hardly has the funds for advertising or outreach to educate investors about silver, as silver sales are dominated by silver Eagles, and the US Mint only made about 20 million Silver Eagles in 2008, and at $1 each, that's barely $20 million for the entire silver industry, most of which is consumed by rent and salaries, and so very little of that can be spent on advertising.
I would suppose that since Ted Butler is a paid analyst for investment rarities, that Ted's payments are among the largest advertising expenses in the entire silver industry right now.
Many silver mining and exploration companies do try to promote silver, and may spend more on Investor Relations, but they generally try to say why their company stock is a better investment their own product, which, in my opinion, is shortsighted, and a very foolish strategy for long term success. And by looking at their own balance sheets, which mostly consist of cash, and not silver, they are promoting cash as a superior monetary asset over silver, by their own internal actions, which are very self-condemnatory and hypocritical.
But let's not ignore the best silver salesman of all time, Barack Obama. Silver investors, surprisingly, hate the man who has helped to generate more silver buying interest than ever by his continued policy of "politics as usual but on steroids" with every increasing bailouts for Wall Street.
Barack Obama has also been hailed as the gun salesman of the year, by another booming industry, as people realize that they cannot rely on the government to protect them, but that they must be responsible to protect themselves from the government.
I disagree that "very few" people will become educated about silver. As my readers often tell me, in person, they have been reading me for years. If so, they not only get an education about silver, but they tell me they are very enthusiastic about the many free market principles that I often discuss.
So, while I may disagree with Ted, a bit, the reality is that he is mostly correct. We in the silver industry have a difficult time reaching the public, and advertising about silver. I have only found success by advertising under the keywords "silver" and "gold" at google, and even then, only occasionally. These days, that strategy no longer works, as it seems my advertising reach has reached market saturation levels.
I've probably attained the success I have, to reach up to 80,000 readers, in part, because I was willing to spend up to $330,000 on advertising over the last few years at google.
For new investors to be educated about silver, other creative ways to advertise to larger audiences is needed. I've been thinking of trying to partner with other, larger influential people in the areas of religion, politics, or investment advice, as Mike Malony has partnered with Robert Kiyosaki of the "Rich Dad Poor Dad" books. God willing, doors will open.
Then again, the best form of advertising on earth is "word of mouth". Many of my readers tell me they heard about me from their own friends and family members, and so, for that, I thank you all who are like me, you like to spread what truth you know to those who you can reach.
I have little faith that any mainstream newspaper will ever "investigate" the silver market any time soon, yet marketwatch.com and financialtimes.com and bloomberg.com occasionally do a somewhat surprising job of publishing some of the statistics without too much false information and anti-silver bias creeping in.
Nevertheless, GATA.org, is getting some media coverage right now.
People are getting educated by free market processes that are alive and well. The market may be manipulated and and market participants might be deceived from time to time, but the market cannot be killed.
Somebody once said: They can fool some of the people all of the time, and all of the people some of the time, but they can't fool all of the people all of the time.
The reality is that once all of the people learn about the foolishness of paper money, gold and silver will return as money for at least a generation who will never make the same mistake twice in a lifetime.
So, in sum, my opinion is that most people will be educated about silver by hard experience and real free market lessons that they have not yet learned, but they will.
I urge you to learn the easy way from my expertise. Buy silver. Buy it now.