Silver -- Is It Yours?

By: David Morgan | Fri, May 30, 2008
Print Email

In 2001 I was asked to write the "Ten Rules of Silver Investing" for the investing rules book published in Great Britain in 2001. The complete title of this book is The Global-Investor Book of Investing Rules -- Invaluable Advice from 150 Master Investors. My portion is available for free to anyone on the Internet willing to sign up here. In this week's article, let us examine Silver Investing Rule Number Six.

What's yours is yours - so keep it that way.

While it is wise to keep some of your silver where you can get to it easily, it is also important to keep the bulk of your metal in a safe place -- especially as your holdings increase. However, if you establish an account with a brokerage warehouse or other public storage facility, you should make sure your holdings are kept segregated and that you can inspect them when you wish.

Anyone who has studied the Web site knows there is far more paper silver than real silver in the world. In last week's article, we discussed the fact that there is 100 times as much paper silver as there is actual metal. Certainly, I am not the only silver commentator pounding the table on this point, and we will look at a few more in this article.

In fact, my primary premise is that the real sustained move up in silver will not occur until the market recognizes this fact. You certainly can participate in alternative precious metals investments such as pool accounts or options, but remember, you are dealing in the paper world and should expect settlement in paper not in metal. I wish to be crystal clear: fully paid COMEX warehouse certificates held by you in your name do comprise real silver.

Many commentators have questioned various certificate programs from locations far and wide.

Ted Butler has described how there are maybe "billions of ounces of silver represented in bank certificate form that have no real metal backing." Ted goes on to state that bad things may happen to the owners and issuers of those unbacked silver certificates when the price of silver explodes. Butler mentions that banks all over the world, and in particular Swiss banks, have issued many of these silver certificates. Butler's conclusion is that you should, if you own silver in any questionable paper form, switch to an unquestioned form.

Jason Hommel has begun a dialogue with the Perth Mint on their certificate program and recently wrote to various agencies of the government of Western Australia. Hommel states in his open letter to these various government agencies, "You (Western Australian Government) may have a growing precious metals liability of over 880 million Australian dollars at the Perth Mint, which is backed by you, the government of Western Australia."

Hommel states he has received about 30-50 complaints about the Perth Mint over the last few months from investors who have tried to purchase silver bullion coins, kilo bars, 100-ounce bars, and 1,000-ounce bars and have had their orders refused or delayed. The way to de-leverage the whole system is to take real metal into your possession.

Be real, but get real to begin with. In other words, we have always advocated beginning a precious metals portfolio with the real metal first; once that is accomplished, if you wish to speculate further you can then branch out into other areas such as mining equities or other speculative situations.



David Morgan

Author: David Morgan

David Morgan

David Morgan

David Morgan ( is a widely recognized analyst in the precious metals industry; he consults for hedge funds, high net-worth investors, mining companies, depositories and bullion dealers. He is the publisher of The Morgan Report on precious metals, the author of Get the Skinny on Silver Investing, and a featured speaker at investment conferences in North America, Europe and Asia. You can receive a free 30 day trial subscription here

Mr. Morgan has been published in The Herald Tribune, Futures magazine, The Gold Newsletter, Resource Consultants, Resource World, Investment Rarities, The Idaho Observer, Barron's, and The Wall Street Journal. Mr. Morgan does weekly Money, Metals and Mining Review for Kitco. He is hosted monthly on Financial Sense with Jim Puplava. Mr. Morgan was published in the Global Investor regarding Ten Rules of Silver Investing, which you can receive for free. His book Get the Skinny on Silver Investing is available on Amazon or the link provided.

Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Because individual investment objectives vary, this Summary should not be construed as advice to meet the particular needs of the reader. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice. Any action taken as a result of reading this independent market research is solely the responsibility of the reader. Stone Investment Group is not and does not profess to be a professional investment advisor, and strongly encourages all readers to consult with their own personal financial advisors, attorneys, and accountants before making any investment decision. Stone Investment Group and/or independent consultants or members of their families may have a position in the securities mentioned. Investing and speculation are inherently risky and should not be taken without professional advice. By your act of reading this independent market research letter, you fully and explicitly agree that Stone Investment Group will not be held liable or responsible for any decisions you make regarding any information discussed herein.

Copyright © Silver Investor 2006-2016 All rights are reserved.

All Images, XHTML Renderings, and Source Code Copyright ©