Benz Coinz

WHY IT IS AND ALWAYS HAS BEEN A GREAT INVESTMENT...

• Because the value of Silver is not determined by a government or company and unlike stocks, bonds or other paper assets, it is a physical asset with intrinsic value.
• Because it is possible to loose all of your investment in the above assets but there will always be value in Silver, regardless of economic conditions.
• Because Silver is more liquid when you need to cash when compared to other physical assets such as real estate, artwork and others.

Gold and Silver are priced on large commodity exchanges such as the COMEX, or LME. Typically the spot, or cash price, is followed for bullion. This is a price 5000 ounces of silver or 100 ounces of gold. A mint or other commercial buyer that wants to buy directly from the exchange must pay associated fees, shipping, insurance, to get the metal from exchange. Then they must melt down and fabricate into smaller denominations for the retail market. This is a big reason for the premium “over spot” that consumers are used to seeing.

However, it is important to note that the COMEX division of the New York Mercantile Exchange is the most important paper contracts trading market for silver. The silver price or silver spot price is determined by the COMEX. While the buying and selling of physical silver affect the silver price, paper silver is by far the biggest market force driving the silver price higher or lower. It is estimated by economists and precious metals experts that the ratio of paper silver contracts to physical metals is between 100 and 200 to 1. Some experts go as far as to say that the ratio could be as high as 500 to 1.

Why is this significant?

A common misconception amongst investors is that when the silver and gold price falls there is a larger amount of physical metal on the market, but this simply isn’t true. It is extremely likely in the current environment to see the price of silver and gold fall and not be able to get a hold of physical silver. A great example of this was back in 2008. During this time silver fell to $9 an ounce and so many investors wanted to get in, but very few investors could buy the physical metal. Why? Because while paper silver was being sold investors holding physical metal were hording and were only buying more.

What silver investors need to realize is that the exchanges themselves are a manipulation of the silver prices. As a silver investor myself, I view this as a positive thing, because it allows me to purchase physical silver at prices I would never be able to access if the market was based solely on the physical supply. Having said this, silver investors must also realize that at some point there will be a run on the exchanges. Any investor holding a paper silver contract can request delivery. The problem is that currently on average only 1% of all paper contracts actually request physical delivery. The COMEX division does not have nearly enough metal to meet the demand that would arise if a run on the exchanges occurred. The inevitable result would be silver prices shooting through the roof as the available above ground stock of silver would be completely exhausted within a very short period of time.

The above-ground Supply is Shrinking…

The United States Government had a stockpile of over 4,000,000,000 ounces of Silver after World War II but in late 2000, announced that the last of the stockpile was being delivered to the United States Mint to produce Silver Eagles. The United States Government for the first time is now a buyer at market values. In the last ten years the demand for Silver has continued to rise and is extremely high now.

It is currently a Buyer’s Market…

It is hard to find physical Silver at this time and if you do it will be priced well above the Spot value. If Silver sees another drop you can expect buying physical Silver to get more difficult and expensive. At this point, there is no evidence that supply is easing up. Even or especially at lower Spot "Paper Silver" prices, it could become very difficult to get your hands on bullion and you'll pay even higher premiums on items with the tightest supply.