“Silver Hits Critical Levels – U.S. Mint Halts Production of Silver Coins
“New Gov’t-Regulated $1 “Silver Shots” Poised to Skyrocket 12,785%
“Forget about silver coins, ETFs and silver mining stocks. New $1 “silver shots” give you a very real opportunity to turn $10,000 into $1.3 million by year’s end.
“But you must act by June 15, 2009, to ensure maximum gains. Here’s why… “
OK, so first of all we need to start by dispelling one oft-cited myth — the U.S. Mint has not stopped production of silver coins. They are seeing huge demand for the silver American Eagle bullion coin, so they have stopped producing the collectible versions (the “uncirculated” and “proof” versions that the Mint sells from its own website) in order to make sure they can mint enough of the bullion coins to meet demand. That’s because the mint has a mandate from Congress to produce enough bullion coins (both silver and gold) to meet demand every year, but the collectible coins are “optional.” Both silver and gold Eagles in those collector versions (with the “W” stamp from West Point) are on hold now due to high bullion coin demand, as are fractional gold coins (1/2 ounce, 1/4 ounce, etc.). The bullion coins aren’t sold directly by the mint, but they’re easy to buy through dealers or banks.
While we’re talking about halting coin production, by the way, I’d vote for getting rid of the worthless penny first, then stop printing dollar bills so we could force usage of the more efficient dollar coins. Can you believe that the Mint still produces more than five billion pennies a year? That’s a lot of zinc that I’m sure we could find a better use for, and a lot of wasted effort.
But this isn’t about my anti-penny ranting (and what would all the eager collectors lined up for rolls of new Lincoln pennies do with their time?) — this is about investing in silver. And more specifically, it’s about pitching a subscription to Death Cross Trader by Zachary Scheidt. He’d like you to subscribe to his newsletter for $250 (a steep discount, naturally), and in return, he’ll tell you all about what “Silver Shots” are … or, of course, you could just read on and watch the Gumshoe in action as he tries to figure it out for himself.
That second option is free, by the way.
I don’t know much about Death Cross Trader, but the death cross in chart parlance is when the long-term moving average line crosses above the the short-term moving average — which apparently is generally a bad sign. It’s more complicated than that, with other options for interpretation, but that’s the basic shtick. I don’t think this newsletter is particularly focused on “against the market” picks on the short side, though Scheidt is profiled as an options trading expert which would mean he’s likely to use both puts and calls. Or perhaps it’s just a cool name.
So what else do we get in the ad? There’s plenty more about silver — about the CPM Group’s assessment that 97% of the silver ever mined has been consumed (by industrial uses — photography, mirrors, etc.), and plenty more about the huge investor demand.
“And The Wall Street Journal states that in March, sales of Silver Eagles surged more than 9-fold from the previous month… and that investors are clamoring for millions more.
“There simply isn’t enough silver on the planet to meet demand, and “silver hysteria” is sweeping the globe.
“In fact, silver coins with a $1 face value are selling for $31 and higher on eBay.
“And silver collectors are running full-page ads in major newspapers like The Washington Post… offering top dollar to folks willing to part with their family silver. ”
So this dance will probably continue — Silver has moved up and down dramatically in recent years, and as it moves up folks tend to sell their coins and scrap silver, which drives the prices back down a bit. Right now the shiny metal is certainly on a tear, along with gold, and it offers a cheap entry point into investing in precious metals since it’s sort of like the “poor man’s gold” in that a one-ounce coin is very cheap.
And the $31 price is real, though the $1 face value of an American Eagle silver coin is pretty much meaningless, they’re minted for investors and are not circulating currency. Premiums for silver coins, as a percentage, are currently huge compared to gold, though the $31 price is the outlier, for uninformed investors buying on ebay or the Home Shopping Network.
I don’t know if a lot of folks are getting $31 for bullion silver coins right now, but certainly some fools are paying that price. Dealers have plenty of 2009 Silver Eagles available and are selling them for about $2 over spot per coin — doesn’t sound so bad, but that’s still about a 15% premium over the $14 melt value of an ounce of silver (the “spot price” is the value of the actual commodity, an ounce of silver traded in London or New York on the commodities exchanges, and what it’s generally considered that the coin would be worth if melted down).
Gold American Eagles, though obviously far more expensive, often are sold by big dealers for a more reasonable premium these days of just three or four percent. So though you can’t buy the uncirculated or proof coins direct from the mint right now, you can still buy plenty of 2009 or earlier silver Eagles through a dealer — and the supply seems to be met, or close to it, otherwise I imagine the prices would be sailing even higher.
But we’re more excited about the crazy returns teased in this letter, right? So what is this special new way of investing in silver that they call “Silver Shots?”
“If silver crawls back to $150 per ounce-its historical average-then $1 “silver shots” will move to $130 per shot… turning $10,000 into $1.3 million.”
So that’s not bad, right? This is clearly a heavily leveraged play on silver of some kind — after all, even buying silver at $14 and selling it at $150 would provide a huge return, but only a bit over $100,000 from a $10,000 investment, far less than $1.3 million. That extra 10X return (plus!) comes from the leverage of “silver shots.”
And another scenario is provided, which would have Silver at stupendous 20-year highs but is here called the “worst case” scenario …
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