What’s the “$1 ‘Silver Shot’ Poised to Skyrocket 12,785%?”

By Travis Johnson, Stock Gumshoe, November 19, 2010

I originally wrote about “Silver Shots” as teased by Zachary Scheidt for his Velocity Trader about a year and a half ago, but much has changed over that time and an extremely similar ad is running right now, so I thought I should give it another look.

Here’s how the teaser sounds:

“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…”

Oh, wait — I mentioned that it was a year and a half ago that I wrote this one, and I just copied that over from the original article … it’s now that …

“… you must act by November 25, 2010, to ensure maximum gains.”

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 suspended production of 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” and not required by law. 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 the “uncirculated” fractional gold coins (1/2 ounce, 1/4 ounce, etc.) which haven’t been produced for a couple years. The Mint has recently announced, by the way, that they will be producing a limited number of proof American Eagle silver coins, and they do have proof gold Eagles available for sale now, so they are no longer completely at a halt — but they will not produce the less expensive “uncirculated” collector coins in either silver or gold in 2010, and won’t begin producing them again until they have access to enough gold and silver blanks to exceed the demand for bullion coins. The bullion coins aren’t sold directly by the mint, but they’re easy to buy through dealers or banks and readily available.

Since this (apparently successful) ad campaign started running, the name of the newsletter has changed — it used to be called Death Cross Trader and is now called Velocity Trader, still edited by Zachary Scheidt. He’d like you to subscribe to his newsletter for $495 (for two years, to be fair), 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.

And yes, though the

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 just a few months ago, 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. ”

That bit, by the way, is almost exactly the same as the first time the ad ran — though the copywriter had to update it slightly and revise that factoid from the Wall Street Journal to say “a few months ago” instead of naming the Month, since that story is getting close to two years old.

And the $31 price is still real and actually far more reasonable now than it was in the earlier silver mania of early 2008 — and the $1 face value of an American Eagle silver coin is still pretty much meaningless, they’re minted for investors and are not circulating currency. Premiums for silver coins, as a percentage, are usually huge compared to gold, so you’d probably actually pay close to that much for a decent American Eagle silver coin right now even from a reputable dealer, not just from ebay — and even a more generic one ounce silver round or bar would probably cost you about $1.50 per ounce over the spot price unless you buy in large volume (so, $2