PDF Summary:The Great Silver Bull, by Peter Krauth

Gold has historically been recognized as a safe haven for investors during economic turmoil, but The Great Silver Bull by Peter Krauth makes a compelling case for silver as a powerful store of value and investment opportunity.

In this guide, Krauth explores silver's long history as money and the industrial demand fueling its future. He examines the supply and demand dynamics that influence silver prices, like solar power and electric vehicles. The book also provides strategies for investing in physical silver, ETFs, and mining stocks as vehicles for amplified exposure to silver price movements.

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Practical Tips

• Explore the world of DIY electronics by creating a simple circuit using a silver conductive pen. Silver conductive pens are available online and can be used to draw functional circuits on various surfaces. By experimenting with these pens, you can gain a hands-on understanding of how silver is used in semiconductors and its role in conductivity.
• You can start by replacing any lead-based solder you currently use with silver solder for small home electronics projects. For instance, if you enjoy repairing or building circuit boards as a hobby, purchase silver solder from a local hardware store or online supplier. This switch not only reduces your personal exposure to lead but also contributes to lessening environmental lead contamination.
• Support startups or businesses that focus on silver recycling from electronic waste. With the growth of 5G and the consequent use of silver, recycling becomes crucial to meet demand and reduce environmental impact. You can do this by either investing in such companies through crowdfunding platforms or choosing to recycle your electronic devices through services that emphasize silver recovery.
• Consider starting a blog or YouTube channel focused on the impact of 5G on various industries, including the silver market. This can be a way to educate others while also deepening your own understanding of the market dynamics. You could interview experts, review market trends, and provide updates on the latest developments in 5G technology and its effects on silver demand.
• Consider investing in a portable induction cooktop with silver elements to observe silver's conductive capabilities in a different context. Cooking with an induction cooktop that uses silver can provide a practical demonstration of how silver contributes to efficient energy use and precise temperature control.
• Consider starting a neighborhood interest group to discuss the potential of communal induction charging stations. By gathering neighbors who own or are interested in EVs, you can explore shared interests, discuss the benefits of induction charging, and potentially collaborate on a community charging solution that benefits all participants.
• Opt for portable induction chargers to maintain device battery life on the go. Consider carrying a small, wireless charging bank in your bag or car, ensuring that you can power up your phone or other compatible devices whenever you're away from traditional power sources.

Silver Investment Dynamics: Physical Silver, ETFs, Mining Stocks

Silver Offers Direct Metal Exposure and Serves As a Reliable Store of Value and Inflation Hedge

Silver Coins, Bars, and "Junk" Silver Options For Investors

Krauth recommends silver in its physical form as a foundational component of any well-diversified portfolio. The author believes physical silver provides multiple benefits for investors seeking to protect their wealth and hedge against inflation. Physical silver, according to Krauth, represents "real money," providing a tangible asset with intrinsic value that's not dependent on counterparties or financial institutions. It offers a sense of security and control over one's financial holdings, acting as tangible insurance against financial turmoil.

He highlights multiple ways for investors to gain physical silver exposure, including:

• Silver bullion bars: These bars, typically available in various sizes, offer the most cost-effective way to acquire a significant quantity of silver. Krauth recommends purchasing bars from reputable refineries or mints to ensure quality and authenticity.

• Silver currency: Coins, often expertly made by government mints, provide greater divisibility and allow for incremental additions to one's holdings. They also often carry governmental assurances regarding mass, composition, and refinement, adding to their appeal and recognizability.

• "Junk" Silver: This term refers to pre-1965 U.S. quarters, dimes, and half-dollars that contain 90% silver. While these coins are no longer in circulation, they remain a favored option for investors seeking physical exposure to a finite supply of coins with recognizable silver content.

Practical Tips

• Use a percentage of your annual bonus or tax refund to purchase silver bullion bars. Allocating a portion of unexpected or additional income to buy silver can be a strategic way to increase your investment without affecting your regular budget. For instance, if you receive a $1,000 tax refund, you might decide to invest 50% of it in silver, thereby taking a significant step towards accumulating a tangible asset over time.
• You can verify the authenticity of silver bars by using a smartphone app designed for precious metal verification. These apps often use sound velocity testing, where you place the silver bar on your phone, and the app sends an acoustic wave through it. The app then analyzes the sound to confirm the metal's purity and authenticity.
• Start a silver coin savings jar to incrementally increase your investment holdings. By setting aside a small amount of money each week to purchase silver coins, you create a tangible and divisible investment that can grow over time. For example, if you save $10 a week, you can buy a small silver coin every few weeks, gradually building a diverse collection.
• Create a visual comparison chart of coins you encounter in your daily life to become more aware of their characteristics. This could involve taking detailed photographs or making rubbings of coins, then noting their mass and composition alongside the images. This activity will help you recognize the subtle differences and standards that government-minted coins adhere to.
• Organize a "Silver Hunt" event with friends or family where you all spend a set amount of cash on small transactions to hunt for "junk" silver in your change. Make it a game or a challenge to see who can find the most pre-1965 coins over a weekend or month. This can be a fun activity that also educates participants about the value of these coins and encourages the habit of checking one's change regularly. Plus, it's a social way to potentially acquire more silver.
• You can start a silver coin exchange club to trade and learn about junk silver with others. By creating a local or online group focused on exchanging junk silver coins, you'll gain practical experience in assessing their value and condition, while also building a network of like-minded investors. This hands-on approach will help you better understand market dynamics and the nuances of trading physical silver assets.

Silver Premiums Fluctuate With Supply and Demand

When purchasing physical silver, Krauth cautions investors to be aware of premiums—the additional cost beyond the silver's spot price. The author states that additional charges represent the costs associated with manufacturing, distributing, and dealer markups. These premiums may fluctuate significantly depending on market conditions, availability, and investor demand. During periods of high demand and tight supply, premiums can rise substantially, making it more expensive to acquire physical silver. Krauth advises those investing to compare premiums from trustworthy sellers and consider waiting until premiums normalize before making significant purchases.

Context

• Investors might consider the total cost, including premiums, when evaluating the potential return on investment in physical silver.
• The spot price of silver is the current market price at which silver can be bought or sold for immediate delivery. It is determined by the global supply and demand dynamics and is typically quoted per ounce.
• For dealers, maintaining secure storage facilities to protect their inventory is crucial, and these costs can be reflected in the premiums charged to consumers.
• Supply chain disruptions, such as transportation strikes or global shipping delays, can limit the availability of physical silver, impacting premiums.
• Speculators in the commodities market can drive up demand artificially, impacting premiums temporarily.
• In volatile markets, premiums can vary widely between sellers, making it important for investors to shop around to find the best deals.
• The distinction between numismatic (collector) and bullion (investment) demand can affect premium levels differently.

Silver ETFs Provide Silver Access Without Physical Storage

Silver-Focused Investments Vary; Some Activities Compromise Integrity

Krauth recognizes that investing in ETFs that hold silver is a convenient method to gain access to silver without the hassles of storing and securing physical metal. He acknowledges that ETFs offer investors a hassle-free, cost-effective, and liquid way to participate in silver investing. However, the author emphasizes that "silver ETFs vary in quality," and investors must be discerning when selecting ETFs.

Krauth claims that certain ETFs engage in practices that compromise their integrity and introduce counterparty risk. These include leasing some of their silver holdings, potentially diluting their physical backing and exposing investors to the risk of default by the lessee. Krauth's top choice among silver ETFs backed by physical silver is the Sprott Physical Silver Trust, trading under the ticker symbols TSX:PSLV and NYSE:PSLV. This closed-end trust, overseen by Sprott Asset Management, has a strong reputation and exclusively invests in silver bars that are unencumbered, fully allocated, and meet London Good Delivery standards, stored by the Royal Canadian Mint.

Practical Tips

• Use a mobile investment app that supports fractional shares to invest in a silver ETF if you have limited capital. Many apps now allow you to buy fractional shares, meaning you can invest with as little as a few dollars. This way, you can start investing in silver without the need for a large upfront investment, and you can gradually increase your stake over time.
• You can create a checklist of non-financial factors to evaluate Silver ETFs, such as the reputation of the managing firm or the transparency of their holdings. While financial metrics are often highlighted, assessing these qualitative aspects can give you a more holistic view of an ETF's quality. For example, research the firm's history for any past regulatory issues or look for reviews from other investors regarding their experiences.
• You can diversify your investment portfolio by allocating a portion to silver ETFs. Start by researching the performance of various silver ETFs compared to other types of investments you hold. This will give you a clearer picture of how silver can fit into your overall investment strategy. For example, if you have a portfolio heavy in stocks, adding a silver ETF could provide a counterbalance during market volatility, as precious metals often move inversely to stock markets.

Investing in Silver Miners' Stocks Offers Leveraged Exposure to Silver Prices

Silver Companies: Risk and Reward From Major Producers to Junior Explorers

Krauth is adamant that during silver upswings, silver mining stocks provide top profit potential, significantly outperforming other asset classes. The author explains that silver shares create leverage against the silver price, multiplying gains (and losses) as silver prices rise (or fall). However, he emphasizes that while leverage can amplify returns, it also amplifies risk. He breaks down the silver mining stock universe into various categories, each offering different levels of leverage, risk, and reward:

• Royalty & Streaming Companies: These firms supply initial funding to miners in return for a royalty (percentage of revenue) or stream (percentage of metal production at a discounted price). They provide high exposure to silver price changes with reduced risk, as they're not part of mining operations.

• Large Producers: These are the leading, well-established silver mining companies with multiple producing mines, diverse geographic exposure, and relatively stable cash flows. They generally offer less leverage but with higher dividends and lower risk compared to smaller miners.

• Growing Producers & Developers: This category includes mid-tier companies with existing production and promising growth projects that are expanding output or advancing additional mines. They offer higher leverage and growth potential compared to large producers but with slightly higher risk.

• Junior Explorers: These are the smallest, riskiest, and most volatile stocks related to silver, engaged in exploring for new silver deposits or expanding existing ones. While they involve the most risk, they provide the highest leverage and potential returns during bull markets.

Practical Tips

• Create a personal risk assessment chart to evaluate your comfort level with different levels of leverage. On a scale from low to high, mark your current investments or financial decisions and assess how adding leverage would shift their position on the scale. This visual tool can help you make more informed decisions about when and how much leverage to use based on your individual risk tolerance.
• Create a virtual stock portfolio to simulate the experience of investing in large producers before committing real money. Use online stock simulators to practice buying shares of large-cap companies with stable cash flows and observe how they perform over time compared to more volatile investments. This hands-on experience can help you understand market dynamics and build confidence in making informed investment decisions.
• Create a personal blog or social media page dedicated to highlighting and reviewing products or services from small producers. By doing this, you're not only learning about the market dynamics of these producers but also helping them gain visibility. Your platform could become a go-to resource for others interested in discovering high-potential, lesser-known products, thereby fostering the growth of these producers.
• Join or create an investment club focused on junior explorers to pool knowledge and resources. By collaborating with others who are interested in this high-risk, high-reward sector, you can share research, discuss strategies, and potentially co-invest in junior explorers. This collective approach can help spread the risk and provide a support network for making informed decisions during bull markets. Make sure to establish clear rules and guidelines for the club to ensure that all members are on the same page regarding investment choices and risk tolerance.

Spreading Risk and Managing It Is Crucial in Silver Stocks

Given the inherent leverage and volatility of silver equities, Krauth stresses the importance of diversification and sound risk-management techniques. He advocates for investors to allocate their capital across a portfolio of silver companies with different risk profiles and development stages. By distributing their investments across various categories of silver stocks, investors can reduce the effect of any one company's poor performance and enhance the chances of profiting across the sector.

Practical Tips

• Create a silver stock watchlist by researching and selecting companies at different stages of development, such as exploration, pre-production, and production. By monitoring a diverse set of companies, you can identify trends and opportunities for investment that could balance your portfolio. For example, you might choose two exploration-stage companies, two near-production companies, and two established producers. Regularly review their performance, news, and market conditions to decide when to invest or adjust your holdings.

Strategies for Silver Investing, Stock Analysis, and Risk Management

Analyzing Gold/Silver, Dow/Silver, and Silver/Real Estate Ratios For Silver's Value Insights

Indicators for Silver Market Peaks and Troughs

Krauth highlights several analytical resources and signals that can assist investors in assessing silver's relative value, identifying potential purchase and sale opportunities, and recognizing potential market peaks or corrections. The author frequently uses various indicators to guide his silver investing strategies, including:

• Gold/Silver Ratio: This ratio, found by dividing gold's price by that of silver, helps gauge silver's relative value to gold. Historically, this ratio has fluctuated significantly, offering valuable insights into both metals' price movement. Krauth points out that when silver is significantly undervalued to gold, as suggested by a high ratio, it often signals a favorable buying opportunity. Conversely, when the proportion drops to historically low levels, it may indicate that silver is overvalued and a potential correction could be on the horizon.

• Dow/Silver Ratio: This ratio compares the Dow to silver's price. Similar to the Gold-to-Silver ratio, the Dow to silver comparison helps assess silver's relative value to the broader stock market. When silver is outperforming the Dow, as indicated by a falling ratio, it often points to silver's relative strength and a favorable silver investing climate. Conversely, a rising ratio indicates silver's underperformance against the stock market and suggests that a potential decline in its prices could follow.

• Silver/Real Estate Ratio: This ratio contrasts silver's cost with the typical price of homes in America. By examining this ratio, investors can get insights into silver's relative value to real estate, a major asset class. When the metal is undervalued compared to real estate, as suggested by a high ratio, it often presents a compelling buying opportunity for investors. Conversely, if the ratio drops to historically low levels, it may signal that silver is overvalued compared to real estate, prompting investors to consider reducing their exposure to silver.

Other Perspectives

• High Gold/Silver Ratios might not necessarily signal a buying opportunity if both gold and silver are overvalued by other metrics or if there are broader economic issues at play.
• The Dow Jones Industrial Average represents only a small, select group of companies, which may not provide a comprehensive view of the broader stock market's performance relative to silver.
• The ratio assumes that historical patterns will repeat, which may not always be the case, especially in unprecedented economic environments or during structural market shifts.

Mitigating Silver Risks: Portfolio Allocation, Tranches, Trailing Stops

Rebalance Your Precious Metal Assets and Play With Profits to Improve Silver Investing Success

Krauth acknowledges that, as a small and volatile market, silver presents unique risks to investors. However, he emphasizes that with prudent risk-management strategies, investors can navigate these challenges and maximize the potential rewards. He urges readers to adopt the following tactics to achieve these goals:

• Position Sizing: Krauth advocates for limiting individual position sizes in a silver portfolio to mitigate the impact of any single company's underperformance. By spreading investments across carefully chosen silver-related equities and diversifying among different types of companies, investors can reduce their overall risk.

• Purchasing in Stages: This technique, also known as layering in, involves dividing intended capital into smaller portions and acquiring shares gradually over time. This strategy lessens the likelihood of overpaying, particularly during volatile market conditions or when uncertainty surrounding a company's prospects is high.

• "Free-Rolling": Krauth recommends selling a portion of an investment once it has achieved significant gains, particularly with volatile, high-risk stocks like junior miners. This strategy allows investors to recoup their initial investment, reducing their total exposure while allowing the remainder of the investment to potentially continue appreciating.

• Trailing Stops: These are stop-loss orders that are automatically triggered when a stock falls back from a prior high by a predetermined percentage. This strategy helps protect profits and minimizes losses during market corrections or downturns, preventing emotional decision-making during volatile times.

• Rebalancing: Rebalancing a portfolio involves periodically adjusting allocations of assets to maintain the desired asset mix and risk level. By selling winning positions and reinvesting proceeds into underperforming assets or new opportunities, investors can ensure that their holdings remain aligned with their investment objectives and risk tolerance.

Practical Tips

• Develop a habit of conducting "What-If" analyses before making any investment. For each potential investment, write down a list of possible scenarios, both positive and negative, and how they could impact the investment. This exercise forces you to consider a range of outcomes and can help you prepare contingency plans, thereby improving your risk management.
• Engage in paper trading to practice position sizing without risk. Use an online simulator or paper trading account to practice managing a hypothetical silver portfolio. Allocate virtual funds to different silver positions, applying the position sizing rules you wish to adhere to. This exercise allows you to get comfortable with the process and see the potential outcomes of your strategy without putting actual capital at risk.
• Create a simple spreadsheet to track market trends and identify optimal buying times within your purchasing stages. Input data like stock prices, market news, and personal investment goals to inform your staged purchasing decisions. For instance, if you notice a stock you're interested in typically dips at the end of the quarter, plan one of your purchasing stages around that time.
• You can set up automatic sell orders to lock in profits on volatile stocks. By using a brokerage platform that allows for advanced order types, input a sell order at a predetermined profit target for a portion of your shares. This ensures that you automatically sell a part of your investment when it reaches a certain gain, without the need to constantly monitor stock prices.
• Practice setting trailing stops with a stock market simulator app. Many apps offer virtual trading with real-time market data, allowing you to experiment with trailing stops in a risk-free environment. This hands-on approach will help you understand the mechanics and effects of trailing stops on investment outcomes without risking actual capital.
• Create a visual map of your investment goals and corresponding asset allocations using a free online mind mapping tool. This can help you clearly see how each investment contributes to your overall strategy and make it easier to identify when an asset class is out of balance with your goals. For instance, if you aim for a mix of 60% stocks and 40% bonds, a visual representation can quickly show deviations from this target.
• Start a peer investment review group with friends or family. Meet quarterly to discuss each other's portfolios and provide insights on which assets are performing well and which are not. This collective brainstorming can help identify when it might be beneficial to sell certain assets and reinvest in others, leveraging the diverse perspectives of the group members.

The Silver Industry Is Small and Illiquid, Prone to Price Swings From Attitudes and Speculation

Understanding Silver Price Drivers Like FOMO to Time Entries and Exits

Krauth reminds readers that, unlike gold, the silver trading market is relatively small and less liquid, making it more susceptible to sharp price movements driven by sentiment and speculation. Smaller market size means relatively smaller amounts of buying or selling can have an outsized impact on silver's value. The author points out that while this heightened volatility presents risks for uninformed investors, it also creates opportunities for savvy investors who understand silver's unique market dynamics. According to Krauth, understanding and correctly reading the current sentiment is crucial for generating significant returns from silver investing.

He points to events like the "Silver Squeeze 2.0" that occurred in the beginning of 2021, driven by online communities like WallStreetBets, as examples of how investor sentiment, amplified by social media, can dramatically impact silver prices. During this event, a coordinated effort to squeeze short sellers in silver futures led to a rapid price surge. This price action, driven by "FOMO," highlighted silver's susceptibility to sentiment-driven moves and the importance of understanding these dynamics for both risk management and profit generation. Krauth emphasizes the importance of recognizing these price drivers, like FOMO, and using appropriate indicators to time entry and exit points effectively, ensuring that one participates in the upside while limiting downside risk.

Context

• Smaller markets may have less regulatory oversight compared to larger ones, potentially allowing for more speculative and sentiment-driven trading activities.
• Uninformed investors may not have access to or understand the necessary market data and indicators that can help in making informed decisions, leading to increased exposure to risk.
• Savvy investors often employ technical analysis to identify patterns and trends in silver's price movements, allowing them to make informed decisions about when to buy or sell.
• Regulatory bodies like the SEC monitor these activities to ensure market stability and protect investors, sometimes intervening when market manipulation is suspected.
• A short squeeze occurs when investors who have bet against a stock or commodity (short sellers) are forced to buy back their positions as prices rise, further driving up the price.
• Social media can rapidly spread information and mobilize large groups of retail investors, leading to coordinated buying or selling that can disrupt traditional market dynamics.
• Understanding FOMO is crucial for investors to manage risk effectively, as it can lead to overvaluation and subsequent sharp corrections when the initial excitement fades.
• Investors often use technical indicators, such as moving averages and relative strength index (RSI), to gauge market sentiment and identify potential entry and exit points.
• Tools such as the Commitment of Traders (COT) report can provide insights into the positions of large traders and help gauge market sentiment.