Silver is the most flexible metal on earth. We’re not talking about its malleability. We’re talking about how it is used.

Let’s take the point of view of those expecting a quick, painless recovery. In that case, silver is a great investment. It has many industrial uses other precious metals don’t. As the global economy kicks back into gear, we’ll see more demand from electronics manufacturers, battery makers and solar cell producers — all of which use silver in their products.

There are thousands of uses for silver in industry. It is used in water purification, medical machinery and, of course, jewelry. All of these industries will begin to pump out products again, which will put a strain on our limited aboveground silver reserves.

Now take a look at the world through the eyes of those thinking we are going to see a second collapse. The best place to store wealth is in precious metals. Of course, gold is the most common place to store cash, but silver is no slouch.

From 2006 until now, the physical holdings of silver funds have jumped 11-fold. That’s because more people than ever are interested in holding silver — or at least a fund that holds silver.

Silver is both a way to safely store your wealth and to spend it. Over the past several centuries, silver has been used as currency. In fact, our own U.S. dollar was once backed by silver. For those expecting the worst, silver is a must-own. These ETF holdings don’t even take into account how many people are stocking up on personal physical holdings.

There’s no shortage of demand. Everything is in place for another massive run-up. Gold already broke the $1,000 per ounce threshold last month. And it busted through its 2006 highs this week. Even so, silver is still lagging around $16.50.

David Morgan from Silver-Investor.com notes that when gold breaks through $1,000 and stays there for a length of time, silver will shoot up. He even went as far as to say silver will break through last year’s $21 high and hit $25 per ounce sometime in 2010.

Are we suggesting you buy silver? Well, yes. But we have a much better way for you to make money off this rise…

Buying shares of a major primary silver miner like Silver Wheaton (NYSE: SLW) would do the trick. It’ll certainly leverage its massive reserves and production against silver’s rise and return larger profits to shareholders than simply buying silver will. But even these gains will be miniscule compared with what you could see with small-caps.

We have an opportunity to get option-sized gains on silver’s rally without the downside or expiration hassles of actually buying options. By buying shares in a junior silver miner, like Hecla Mining (NYSE: HL) or Mag Silver (AMEX: MVG), we can take advantage of huge price swings without worrying about it expiring worthless, as options often do.

In just the last week, Hecla is up 15%, and Mag is up another 5%. As I write, these stocks are continually pushing into new 2009 highs ever day. When the silver boom gets traction in the market, expect small players like these to rocket as a result.

Sincerely,
Jim Nelson

Source: Finding Option-Sized Gains from $25 Silver

If you can’t farm it, you have to mine it. It is a great message, no matter if you are an investor or an out-of-work cowboy.

Riding through the streets of Alaska’s ever-wet capital, you see all sorts of bumper stickers. There are three main categories – fishing, mining and Sarah Palin.

It is the miners getting all of the attention this week.

There are several reasons the world’s mining industry is opening a big ‘ole bottle of bubbly, but none more poignant than the fact that America is shelling out debt faster than a hot-rod blackjack dealer unloading his deck.

As Uncle Sam goes “all in,” the folks paying for Washington’s lavish lifestyle are getting nervous. For proof, I need just one set of numbers.

In July, foreign purchasers bought just $15.3 billion more debt than they sold. In June, that number was $90.7 billion. If the trend continues (and you know it will), we could be in serious trouble.

Here come the interest rates

With an all-out disdain for American debt, countries like China and Russia are finding other ways to convert their greenbacks into something more useful. The commodities market has been the first vehicle of choice.

The share price of just about every major mining company is all the proof we need.

Every day, I compile a list of the session’s big winners and losers. I study them, look for the cause of the volatility and determine how to profit from the action. Lately, my winners list has been filled with the folks pulling minerals from the ground.

One player getting plenty of attention from the bulls is Hecla Mining (NYSE:HL).

So far this month, the silver, gold, lead and zinc miner has watched its Street value increase by more than 60%. Shares are up by over 6% today as gold prices continue their exploration above the critical $1,000 level.

As the markets worry more and more about the notion of runaway inflation and a weakening greenback, gold miners like Hecla will continue to increase in value.

Shares are approaching the $5 mark today, but a $10 quote by spring is not out of the question.

Another double-digit commodity winner comes from Anadarko Petroleum (NYSE:APC). If you are a Hot Stock Confidential subscriber, you are familiar with this oil and gas producer’s winning ways.

Since I recommended buying shares of the company back in May, share price has jumped by over 30%.

The gains continue today as natural gas prices surge above the $3.50 level and as word spreads about the company’s latest deepwater discovery off of Africa’s western coast. The news makes Anadarko a major player in the region and the markets are rewarding the company in kind.

Progress in action

Finally, after spending a week in Juneau, I could not write a piece about the mining industry and not mention Coeur d’Alene Mines (NYSE:CDE), the owner of the ever-disputed Kensington Mine.

Over the past week, I had the opportunity to see the mine, talk with some of its employees and witness the hustle and bustle taking place as the site finally goes into action.

With metal prices on the rise, the mine could not have better timing. When the first minerals are pulled from the ground early next year, the company will get a hefty price for its product.

It is no wonder shares of the company are up by more than 100% in the last ninety days.

No matter your political slant or your views of the mining industry, there is absolutely no room to deny the fundamental value of tangible assets like commodities.

As the world’s wealth and power transfers from one continent to another, the rocks buried beneath the earth’s surface will be the only reliable asset.

If I were you, I would get my hands on some.

Source: Commodities Market: Dig Your Way to Riches

Gold’s been going up, knocking at the $1,000-an-ounce gate. Why exactly I can’t tell you… its principal bullish factor, inflation, being vortually non-existent in today’s deflationary market.

That leaves the fear of reckless U.S. Congress wrecking the dollar with huge new debt loads… and of an Administration that seems dead-set on crippling U.S. economic competitiveness for decades to come.

Valid fears, indeed, fueled by every redistributionist soundbyte slopping out of Washington.

Silver, too, has been gaining steadily. Our Hot Stock Confidential silver mining play Coeur d’Alene Mines Corp. (NYSE: CDE) is up 23%, Silver Wheaton (NYSE:SLW) is up 18%, and — after a horrendous 40%-drop ofer our May recommendation — Hecla Mining Company (NYSE:HL) has clawed back to a gain over 2%.

(HSC Members who used the dip to buy, as we kept recommending in our weekly updates, have almost doubled their money since May.)

We think there’s plenty more short-term potential. But despite my bullish long-term view on silver, the high volatility in the precious metals markets makes me inclined to take profits in the double-digit range, rather than hang on for the heftier triple-digit gains I foresee in the long term.

Source: Midas touch: Rising Gold Prices Guide Coeur d’Alene Mines, Silver Wheaton, Hecla Mining to Strong Gains

That’s why the greatest inflation fighter in the world is under stress. Of course, we’re talking about gold. Gold is– and always has been– the safest place to put your cash. It has been traded as currency, stockpiled to backup paper money (think Fort Knox), and hedge spend-happy governments. Today, its hedging attribute is important.

Over the past few months, it’s become more and more difficult to buy physical gold. Even if you do locate it, what you actually pay is quite a bit more than its spot price.

In many cases, these buyers were willing to spend up to 25% more for gold than its value. That’s like your broker taking a quarter for every $1 share you buy.

So, if gold is too expensive, where can investors turn? Well, there’s always gold’s little brother…

Silver is not commonly thought of as an inflationary hedging tool. That is, until times get tough. And I don’t think you can find too many times tougher than right now.

Silver is often referred to as “the poor man’s gold”. We call it opportunity. You see, during the 1978-1980 precious metals rally, silver showed up late. Almost all of the large gains in silver came in the last few months.

We see the same events unfolding this time around. As we pointed out in the past, gold has always traded for about 16 times as much as silver, until the past few decades. Currently, the ratio sits around 71. When this number falls, silver booms.

Macroeconomics and ratios aside, there is one final reason we expect an enormous silver rally…

About 3 out of every 5 ounces of silver come from base metal mines. Roughly 28% of all silver comes from copper mines and another 32% comes from lead/zinc mines. Both of these sources are decreasing — and in some cases, completely shutting down — production due to the overall commodity market.

Only 10% of all silver comes from gold mines, which leaves just 30% of the total market to pure silver plays like Coeur d’Alene Mines Corp. (NYSE:CDE), Hecla Mining (NYSE:HL), and Pan American Silver (NASDAQ:PAAS). These serious cuts in production, gives us pure silver investors the inside track to cornering the silver market.

We are seeing a perfect storm brewing in the silver market. If you get in now, you might just beat the rush…

Sincerely,

Jim Nelson

Source: How You Can Win with Silver

Many in the mainstream press are calling an end to the “commodities bubble.” But oil and energy expert Byron King warns investors against betting against cheap oil and gold.

Byron says what we are seeing now is a short- to medium-term correction in the trends for energy and resources. Investors who buy beaten-up oil service stocks and gold miners now stand to make major profits…

Back when oil was in the $140s, I said – in both print and broadcast interviews – that oil prices were running up too far, too fast. I predicted that oil prices would decline to $100-110, based on the fundamentals. Well, we’ve seen the decline and we’re almost there.

High oil prices have caused big changes in patterns of consumption. Indeed, the U.S. Department of Energy just announced that U.S. oil demand fell by about 800,000 barrels per day during the first half of 2008, compared with the same period last year. This is the biggest volume decline in 26 years, since the recession of the early 1980s.

Sure, some headlines describe what’s going on as something like the “oil bubble” or “commodities bubble” popping. Some people are talking and acting as if we were going back in time to the last era of cheap energy, cheap gold and cheap commodities. But don’t believe it. Don’t bet on it. And don’t play the markets that way.

A Gold And Oil Correction Was Due

What’s going on? We are in the midst of a short- to medium-term correction in the trends for energy and resources. Keep this in mind: This is a CORRECTION, not a fundamental change in the long-term correlation of things.

The long-term trends are still upward, in terms of value and pricing. But for now, the money is leaving energy and resources for pastures that look greener.

What pastures are greener? Well — speaking of green — the U.S. dollar is strengthening. It turns out that the euro is not the powerhouse currency that a lot of people believed it was. So the dollar has been strengthening against the euro for the past couple of weeks.

The Euro Can Go Down

And it turns out that euroland has its own economic problems. In fact, the euro can go down against the dollar, as well as up. That’s exactly what has happened. Euro down, dollar up. So in consequence, we are seeing the dollar going up, and oil and gold going down.

There is more to the equation. The economists are describing a recession occurring in parts of the euroland economic space. Germany — with Europe’s largest economy — has been hard hit, so there’s been quite a bit of drag on the euroland economy.

And then there are indications that the long-awaited U.S. recession is finally just around the corner. Really, we are just in the middle innings of the banking meltdown and housing crash in the U.S. The recent stock market turnaround may just be the seventh- inning stretch. I expect to see more large banks and investment houses either fail or get bailed out before the end of 2008.

So with two of the world’s largest economies about to enter the doldrums, world markets are seeing demand for energy and commodities slacken.

Thus, we have monetary issues with the dollar. And there are demand issues with economic slowdown in two of the world’s largest economic blocks. Prices for benchmark items like gold and oil are falling.

Stocks to be looking at…

And this is taking the stuffing out of energy and gold stocks. The mining stocks are down. The oils and service companies are down. It’s painful to watch. But it’s not a reason to give up.

As I said, this is a correction. This is an August swoon. Share prices are down, so it’s time to look at your shopping list. You can pick up shares in 2008 and pay 2005 prices. You can build a portfolio for the next five years with some prudent stock picking in the next couple of months.

Some of the most beaten-up oil and oil service companies are Apache (APA: NYSE), Halliburton (HAL: NYSE), Baker Hughes (BHI: NYSE) and Superior Energy Services (SPN: NYSE).

Some of the most beaten-up miners are Kinross Gold Corp. (KGC: NYSE), Yamana (AUY: NYSE), Hecla Mining (HL: NYSE) and the development-stage NovaGold (NG: AMEX).

When oil and gold turn around – which they will – all of these companies should do very well.

Source: The Gold and Oil Correction

Suntech Power Holdings (STP: NYSE) has taken us on a wild ride since we added it in January 2007. Its stock price more than doubled toward the end of 2007. Then the stock dropped steeply with the market meltdown in early 2008. The stock is up about 15% overall in the past 16 months or so.Long term, I think that Suntech is a good investment with great potential. The world is building out its solar infrastructures, especially in Asia, where Suntech focuses its solar business.

It’s no secret that fossil fuels are scarce and expensive. This has been good for the likes of CONSOL Energy (CNX: NYSE) and Foundation Coal Holdings (FCL: NYSE).

But the environmental issues for coal and other hydrocarbons are profound. People are getting worried about carbon dioxide (CO2) buildup in the atmosphere. Just based on current emission trends, the earth’s atmosphere is reverting to a CO2 content not seen in over 35 million years, since late in Eocene time.

So in the space of a couple of generations, mankind is reversing tens of millions of years of atmospheric evolution. Is this a serious problem? Or is it nothing much to worry about? Well, no one knows or understands the consequences one way or the other. And don’t let anyone tell you that they do.

In the U.S., both major presidential candidates are talking favorably about a “cap and trade” system for CO2. So solar, as well as wind and geothermal [Kaydon Corp. (KDN: NYSE) and Ormat (ORA: NYSE)], are all positioned well for future advances.

I just added KHD Humboldt Wedag (KHD: NYSE) to the portfolio. It’s literally a “picks and shovels” play on the worldwide cement industry. KHD supplies the machinery and equipment that go into cement kilns.

There is just no way that the developing world can continue to develop without large amounts of cement. So KHD is another great stock for the future.

As for whether I would invest in Suntech or KHD? Well, I’d invest in both. But I think that your question is along the lines of where to invest if you only have limited funds and don’t want to spread them too thin. Fair enough.

KHD strikes me as a safer, long-term growth story. You probably will not see some big, fast run-up in KHD stock. The company is not all that sexy and has a limited following. Still, KHD should earn great profits over the next few years. People will have to buy into the story as the good news comes out. It’s like the old saying, “Slow and steady wins the race.”

On the other hand, Suntech is in the cross hairs of investors as a solar play. With the right news story in a large publication or an endorsement from a major brokerage house, Suntech could soar on short order. But a rapid rise might also be the precursor to a rapid fall. That’s the history with Suntech. A lot of people are “smash and grab” investors.

Long term, Suntech is certainly a good company. But if you’re skirting volatility, KHD wins. KHD is just a boring cement plant builder that traces its roots to the beginning of the Industrial Revolution in the dark forests of Germany.

Cement and Silver

While I am discussing the needs of developing countries, let me mention one other thing that people want besides cement: silver. We can’t stop using it, whether in the form of consumer electronics or as jewelry or as a store of value over time. In the developing world, silver is still the “poor man’s gold.”

Annually, the world uses about 40% more silver than it mines. The difference of “missing” silver comes from recycling, plus stockpiles. But the stockpiles are near the end. And new mine production is unable to meet demand.

So my screaming buy right now is Hecla Mining Co. (HL: NYSE). This great old silver miner’s stock is down from our entry price. But that’s OK, because you can use the opportunity to pick up more shares. Hecla holds great silver reserve and resource positions from Alaska to Central America. Hecla will be mining silver and minting money for many years to come.

That’s all for now. Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: Energy Q&A Part IV: Investing In Energy Stocks and More…