I Told You So!

I posted the following to the misc.survivalism Usenet newsgroup on February 8, 2001, under the title: Rawles Calls Major Bottom in Silver Price:

“I have come to the conclusion that the long term bear trend in the price of silver has finally come to an end. Silver touched $4.55 earlier today. (Feb. 8, 2001.) If it closes in N.Y. at over $4.75 anytime in the next few weeks, that would be a strong bullish indicator. Look at the six month and ten year silver charts at www.kitco.com for the “big picture.” Once there is a strong bullish indication, don’t hesitate to buy a good chunk of silver, pronto. FWIW, I just made another silver purchase to take advantage of the recent dip. (I’d rather buy early than late.) For those of you living in these united States, I recommend buying silver in the form of pre-1965 mint date circulated U.S. silver coinage (dimes, quarters, and half dollars.) That is the best for barter purposes, and unlike bullion rounds/bars is less likely to be subject to government confiscation. See the free FAQs at my web site for details: www.rawles.to. For the market fundamentals on silver, see: http://www.silver-investor.com (Some interesting observations on the lack of silver to meet demand.) And for general information and analysis on precious metals, see: http://www.gold-eagle.com/ (Note: I am not affiliated in any way with either of these sites.)

[Some commentary on interest rates snipped, for brevity]

I may not have called the bottom perfectly, (silver may sag down to $4.25 before it rallies), but beyond that, IMHO the downside risk is minimal. And what about gold, you may ask? In my opinion, silver is much more likely to double than gold. This is much like buying penny stocks. (Which is more likely double–XYZ Corp. at 58 cents a share, or IBM at $108.00 a share?)”

For the record (as of August 4, 2005): IBM now sells at $83.12 a share. (A 24% loss, after four+ years. Charming.) And I wasn’t far from the mark when I cited $4.25 as the potential bottom. Silver actually bottomed just a few months later, at $4.19 per ounce. (I was off by less than 2% of calling the absolute bottom in a 10+ year bear market.) Silver has risen in fits and starts ever since. I am still convinced that silver is in the early stages of a multi-decade bull market and is headed to $60 per ounce (and possibly higher). Spot silver was at $7.21 an ounce at yesterday’s close, according to the folks at Kitco–a 58.1% gain, after four+ years.) But IMHO silver is still a bargain. In the long run the dollar is doomed. Are you worried that investing in silver won’t earn interest or dividends? Silver isn’t that sort of investment. Rather, think of it as fire insurance–for the dollar. Oh, and what about the fact that silver dropped from $7.21 to $7.11 on Friday (5 August)? The silver market is volatile. You should look beyond the daily fluctuations and instead concentrate on the long term trend. Gold is and silver are both in long term secular bull markets.