Tuesday, March 24, 2015

The Lies That Are Being Told About Buying Silver

If you watch cable TV -- especially cable news and business -- you are bound to see an advertisement hyping silver (or gold) as a great investment.   Now, I don't know how many people are influenced by these ads without doing their homework, but apparently many are or, a lot of gold and silver houses wouldn't be wasting their money running costly commercials. 

Sadly, most of these commercials are dishonest in one way or another.  But, one company is a leader in deception and, that is Lear Capital.  In their most recent advertisement they present you with this chart:

While showing the chart, the narrator claims that for the first time in 11 years silver is selling below its cost to mine it.  However, while making that statement, they only show you the price of silver from roughly May 2012 to sometime in 2014, only 2 years out of the 11.  The reason for not showing the full 11 years is this:

Blue and Green Lines 100 and 200-day Moving averages

Here we see that -- except for the period from October 2010 through April of 2013 -- a little over 3 years  -- silver has been selling below that supposed $24.05 per ounce cost. So, this begs the question; if it costs more to mine than what it is worth, why are any silver miners still in business?  The reason is simple.  It costs less than $10 an ounce to mine silver.  God only knows where Lear got that $24.05 price tag.

Lastly, the Lear commercial ends by telling us that silver is already up 9% since the beginning of the year.  Thus implying that you shouldn't wait to buy because it appears to be ready to skyrocket.  But, here's the truth.  Silver was up from the beginning of 2015.  However, that rise was short lived:

Silver did jump up from January 1st to around $18 but, by the 19th of that month it retreated.  The reason for this is simple.  In investing, it's called overhead resistance.  When silver dropped from a 2011 high of  $49 an ounce, it left a lot of people holding the bag who wrongly assumed it would rebound and continue its rise above $49.  Now, 4 years later, people still holding silver are ready to cut their losses anytime they see it rise in price.  And, this kind of selling activity is likely to continue for years; if not decades.

So, simply, don't buy the hype (lies) from companies like Lear Capital.  Also, note the fine print.  Lear Capital does not guarantee that they will buy back any of the silver they sell you.  Try finding a buyer on your own when silver is falling like a rock.


Video:  Lear Capital Silver TV Spot, 'An Investment': http://www.ispot.tv/ad/7a3D/lear-capital-silver-an-investment

Kitco Silver Charts: http://www.kitco.com/charts/techcharts_silver.html

CNBC Silver Chart: http://data.cnbc.com/quotes/%40SI.1

The Truth About Buying Gold and Silver: http://cuttingthroughthefog.blogspot.com/2014/04/the-truth-about-buying-gold-and-silver.html

CPM Group announced that the average cash cost to mine silver in 2013 fell to $9.68 an ounce from $10.01 in 2012. GFMS in their 2014 World Silver Survey stated the primary silver miner's cash cost increased from $9.16 in 2012 to $9.27 in 2013.: https://www.google.com/search?q=cost+to+mine+silver&ie=utf-8&oe=utf-8

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