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"We Are Running Out of Silver," Said Jerome Smith in 1980, the Number-One Silver Bull of the 1970s. He Was Wrong.

Jim Cook
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When I started Investment Rarities thirty-two years ago, silver analyst Jerome Smith was already a legend. In those years he made a series of price predictions for gold, silver and platinum that were phenomenally accurate. In 1967 he recommended his readers buy silver at $1.29 an ounce. In 1971 he recommended gold at $42.00 an ounce. In 1977 he recommended platinum at $147 an ounce immediately before it shot up to $1,000. In his 1982 book Jerome predicted that within our lifetimes silver could very well be worth more than gold. I recently revisited that prediction to determine the exact basis for which Smith had made this amazing claim.

In the 1970s Smith and silver were synonymous. Heres how he described his uncanny track record. "In 1972, when I wrote the results of a five-year study of silver in a book that has since been regarded as the bible on silver, I said that in the coming decade, 'silver would double in price and then double again.' Only a few of the many who read that in the early 1970s believed me. And I was wrong. Instead of doubling twice, it doubled three times over on an annual average price basis."

In 1980 silver climbed to $50 and fell back to under $8 the ensuing year. Then in 1982, Smith claimed, "I expect the price of silver to be in the $100-plus per ounce range by 1985." Smith based this bullish conclusion on five primary causes.

Industrial demand for silver was exploding.

Mining production of silver was less than consumption.

Silver production couldn't be greatly ramped up because 75% of new silver came as a byproduct to base metal mining.

Since silver was used in such small amounts in its many applications, a price rise in silver would not reduce the demand.

The government had sold off most of its two billion ounce hoard in a way that kept the price down. Now that it was gone, free market forces would re-establish the true price at much higher levels.

Smith went on to predict, "Fundamentally, the outlook for silver is more bullish from 1982 on than for any other commodity I know of -- including the much-ballyhooed strategic metals. Silver in 1982 is a cheap precious metal on the way to becoming a scarce and expensive strategic precious metal within this decade." . . .

[For the remainder of the article, which is bullish on silver, click here:http://www.investmentrarities.com/bestofjimcook09-14-04.html]

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