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Impressions From Silver Summit 2009

By Alec Nevalainen
September 28, 2009

The 7th annual Silver Summit was in Spokane, Washington from Sept. 23-25. Shauna Hillman and her staff did a wonderful job of organizing and running the conference. The Davenport Hotel in downtown Spokane was a great location for the event and I recommend it if you're ever visiting Spokane.

For those who have never attended the Silver Summit, it's a conference where silver-related companies can showcase their stories to investors. 90% of the companies are mining explorers or producers, but there were also a few coin dealers, a clothing maker, and other service companies related to silver. It's an opportunity to meet other like-minded attendees who may share views regarding the economy and the future of metal prices, specifically silver. Coinflation.com was a web sponsor for the event and you can learn more about this year's conference at their website TheSilverSummit.com.

I attended every session in the program with the exception of two 10-minute presentations from the mining companies (I later visited their booths and picked up their presentations). I didn't attend any of the sponsored meals or awards dinner; unfortunately I don't have any impressions about those.

Below are notes from each of the sessions I attended. I included a few opinions, but I really tried to keep that to a minimum:

John Embry from Sprott Asset Management said it's laughable when folks cite jewelry demand as an overall factor affecting the future gold price, especially since it's so small compared to investment demand. He expressed the importance of efforts made by Bill Murphy and others attempting to expose the manipulation in the gold market. To conclude, he told a story of his own experience writing about the management of the gold price and how others reacted unfavorably to his work.

Hugo Salinas Price (www.plata.com.mx) presented via video conference from Mexico. There were serious technical problems plaguing the presentation, but David Morgan from Silver-Investor.com (moderator) adapted successfully to keep the show running. To begin, Mr. Price speaks flawless English. I'm always impressed with someone whose first language is not English, yet speaks with little to no noticeable accent.

If you're not familiar with his efforts, Mr. Price is attempting to reintroduce silver into everyday transactions in the Mexican economy. An important point he emphasized is that "the quoted value of the silver currency must not be diminished". In other words, if the silver price explodes, those who hold the coinage would reap the benefits and yet still feel confident to spend this money on goods and services because the coins wouldn't have a fixed face value. If his proposal in Mexico were to be implemented, physical silver demand would be overwhelming. It's very likely that Peru would follow Mexico's example and implement something similar. He believes it would be "money around the world" and foreign investors would naturally be interested. Regardless of overwhelming popular approval of his plan, the Mexico central bank isn't exactly warm to the idea. Despite their objections, he believes there is a very good chance for success. To conclude, he stated that silver is for the masses and is the most popular medium of exchange. Silver will likely be a roller coaster ride because of interference in the market.

Despite the technical problems of the video conference software, he received the loudest applause of the conference. He comes across passionate about silver, yet extremely grounded and realistic.

Dr. Eric Rentz (Natural-Immunogenics) discussed his research on silver hydrosol. He compared hydrosol vs. typical colloidal silver products on the molecular level and discussed the dangers of both (or the specific lack of danger when ingesting a silver hydrosol). If you ingested over 18,000 teaspoons (5 liters) of silver hydrosol in a 24-hour period, only then would you notice your first side effect. But even when consuming this much hydrosol, you would still be far removed from your skin turning blue, a condition known as argyria. His research in Africa was very convincing when treating patients with bacterial infections and how quickly they recovered when being treated with a silver hydrosol.

I thought he gave one of the most informative talks in the conference. Sovereign Silver is the name of the silver hydrosol and it's widely distributed (it's available at my local Fred Meyer, I'm sure it's available elsewhere). You can also order it from their website.

Bill Murphy (GATA) handed out copies of the latest press release titled, "Federal Reserve Admits Hiding Gold Swap Arrangements, GATA says". He said we've been right for nine years about the advancement of the gold price and we're presently at a tipping point for a much higher price. The Chinese, Russians, India and multiple hedge funds are competing for physical gold while annual mine supply is declining. He easily sees gold in the $3000-$5000 range in the coming years.

Mike DiRienzo from the Silver Institute gave a very detailed presentation about new and emerging uses for silver. It was challenging to keep accurate notes because there was a lot of information. Silver used as an anti-bacterial agent seems to be the most active. Antibiotics have been over-prescribed and some bacteria have built up immunity. Below are some of the innovations:
  • Smart contact lens using silver will sense symptoms of glaucoma and help prevention.
  • Food processing plants are using silver on preparation tables in their assembly line to control bacteria.
  • The FDA has permitted bottled water manufacturers to use low percentage of silver to kill germs in the bottling process.
  • Medical implants and wound dressings; he cited band-aid manufacturers (like Curad) who sell silver-laced bandages.
  • Germ killing lockers; Dupont and Agion manufacture a silver-ion coating meant initially for the military but could spread to athletic complexes (I found this pdf on the Dupont website about the product).
  • Diesel filters; silver replacing functionality currently met by platinum. He said this use would be limited to certain machinery and not that widespread.
  • Humidifiers using silver used to reduce mold formation.
  • Cellphones are being coated with silver-ions to prevent bacteria formation.
  • Silver to protect silk; helps prevents fungi and mildew to form (he seemed very enthusiastic about this one).
  • Silver used to coat paper, specifically in hospitals. It also helps to prevent degradation for paper-based medical records.
  • Further advances in silver conductive inks, specifically RFID tags.
Overall, he said the silver nanotechnology arena could have over $25 billion in sales by the year 2011.

Jeff Christian from the CPM Group held two sessions. A question and answer period during Friday's lunch period and a formal presentation later in the afternoon. During the lunch period, he said we'll likely see a silver price in the $20-$25 price range in the next ten years (please note, I don't recall if he said this would be the average price or the likely price ceiling, please keep that in mind). He said the job of all central banks is to manage their currencies, not the price of gold. He stressed that based on his personal experience and observations, central banks do not manipulate the price of gold. When asked about a gold-backed currency, he stated that all gold-backed currencies have collapsed over time (for many different reasons) and that eventually, whatever you base your currency on, it will eventually collapse. Nothing is infallible.

During his afternoon presentation, he said that metal manipulation allegations can cause distractions and ultimately cost you money. His strategy regarding the silver market during the past few years is to purchase option hedges after the price breaches the $15 level. He defended his gold price target of $914 in the next ten years. He emphasized that this would be the average price of gold over the next ten years, not what the price spike could be. The average cash cost for silver miners is rising, from $4 an ounce to $7. Investment demand for silver in 2009 will be 176 million ounces, this will be the primary driver for the silver price looking ahead.

Al Korelin from The Korelin Economics Report moderated two panel sessions during the conference. The first one on Thursday dealt with honesty and whom to trust with investment advice. John Embry, Bill Murphy, and Duke Moscrip (private investor who owns Duke Chowderhouse restaurants in the Seattle, WA area) served on the panel. Most of the session focused on a newsletter writer who has apparently fled the country. They had nothing but praise about his ability as a writer and his market analysis, but allegedly he has defrauded investors out of millions of dollars when they decide to send money to him. I found a full writeup of Duke's story at this website, which highlights much of what was said at the session.

The second panel discussion on Friday afternoon was going to cover how to properly evaluate a silver mining company but instead was changed to a gold price manipulation talk. The moderator Al Korelin asked the audience if that was ok and there was a polite smattering of applause. David Morgan, Jeff Christian, Bill Murphy, and a fourth panelist whose name I didn't write down participated. I stopped taking notes when it devolved into something you might read in an internet chatroom. The three very quick questions at the end all related to silver in some fashion, but the session ran out of time before more questions could be asked.

Later, I was speaking to another attendee about all of the attention on the price of gold and how it dominated some of the discussions. He said he noticed that as well, but was actually encouraged by it. When I asked why, he replied with a wry smile, "silver is still under the radar, even at its own conference!" It was the funniest comment I heard all week.

Dr. Earl Bennett is a retired geologist from Coeur D'Alene mining district. The area has produced over 1.2 billion ounces, greatest recorded silver production in the world. There are 90 mines in the area and he showed an aerial map of the fault line and where the mines are located. It was the first presentation Friday morning and the speakers hall was only 25% full, which was a real shame. A few of his comments I'm going to save for part two, but he was a very interesting speaker and a great ambassador for the area.

Alex Macdougall presented, "Hyperinflation in Germany, 1910 to 1925; Parallels with the United States Today?" He presented a lot of information and hopefully my notes are correct. If they are not, I will update this section at a later date with notations. The German Mark was made inconvertible to gold in 1910. Germany went to war in 1914 (WW1), and was still considered the most powerful nation in Europe at that time. After losing the war, reparation payments put a drain on the country's treasury. They attempted to settle their debts honorably, even cut spruce trees and sent them to France. Germany's social welfare system was overloaded, had no choice but to print money. There was slight deflation in 1921. Soon thereafter, currency denominations started to multiply almost every month. By July 25 1923, million note denominations start appearing. They saved ink by not printing on the backside of the 50 million mark note. They also started to reduce the size to save paper. Wheels started to fall off rapidly. They took old pieces of currency and stamped new denominations.

Business owners protected themselves from hyperinflation by exchanging into other currencies, purchasing gold & silver coins, and keeping excess inventory on hand for bartering. Social welfare program guarantees in the United States will contribute to the next hyperinflation. California "IOU's" is a good example of government printing their own money, at least in this early stage of the cycle.

Roger Wiegand from Trader Tracks gave a short talk about his newsletter. He believes an opportunity is approaching soon to enter into the market at a low, possibly as soon as November of this year. Nov 2009 - May 2010 will be phenomenal for all junior and major metal companies. We're only 20% into the commodities rally, 80% of the upside is in the future. Investors need to be prepared for wider price swings in gold/silver, volatility will be jarring. We still have 9 years to go in this commodities cycle.

Norm Franz from Ascension Ministries talked for a half hour about the new economic world order resulting from globalism. He talked in length about the evils of fractional reserve banking and peppered many of his slides with quotes from the bible. One slide that stuck out was how the world is being split into ten different economic regions and that perhaps it "equaled the ten horns (kings) of the beast before the end of days". While I disagreed with much of what Mr. Franz said, I nevertheless listened intently with interest and an open mind. He was a dynamic speaker and seemed passionate about his convictions.

Andy Schectman from Miles Franklin discussed why investors are flocking to physical bullion. Before the presentation started his staff handed out folders with company information. Since I already visited his booth in the exhibition hall and picked up materials, I declined another folder. Of course, included in this folder was a free silver mercury dime. The lesson: when the president of a coin company is giving a presentation at a silver conference, always take the folder. I'm an idiot. Moving on.

David Morgan from Silver-Investor.com concluded the conference. He sees a currency crisis arriving and called it a "200-300 year event". The United States is in a place we've never been before; it's difficult to draw comparisons to past events. But he did compare the German Weimar Republic to the U.S. and thought Alex Macdougall's presentation was important. The year 2000 was the lowest silver price in the history of mankind (when adjusted into real dollars). He believes there will be moment during the upcoming crisis where you will want to sell all of your paper assets (mining shares included) and hold onto your physical metal.

About The Author: Alec Nevalainen is retired after spending years in the information technology industry. In 2003, he authored the E-Business Dictionary: EDI, Supply Chain, and E-Procurement Terminology. He updates several free websites to help investors price coins and bullion products including Coinflation.com, GoldGramBars.com, and SilverGramBars.com. He can be contacted at [email protected].

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