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Saturday
Nov212009

Agnico-Eagle Mines Limited: Slow to Recover

AEM Chart 22 Nov 09.JPG

On the 4th November 2009 we were of the opinion that that Agnico-Eagle Mines Limited (AEM) had been oversold and wrote the following:

In conclusion we think that the punishment does not fit the crime and that the selling has been overdone. So we see it as a buying opportunity. This week we will seriously consider making another purchase of the Agnico’s stock and may also buy a few of the longer dated Call Options.

We then proceeded to purchase some Call Options which we still hold however Agnico's recovery is slower than we had hoped for and the trading volume has reduced of late. The stock price has moved from $52.00 to $60.00 so we are heading in the right direction so it may be just a question of being patient for now. We are of the opinion that Agnico should be trading much higher as it is a quality stock with a bright future, however the investment community may not be as confident as we are which would explain the slower than expected rise in the stock price.

Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.

Have a good one and stay calm.

Got a comment – then fire it in.

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Friday
Nov202009

A Tax Free Way To Play Gold

There are many different investment vehicles out there that one can use to play this gold market, each with their own advantages and disadvantages, however there is one vehicle that appears to be slipping under most investor's radar.

When one looks at the various choices of gold investment, top of the list is the physical bullion itself. This is very popular with many of the old school gold bugs and those who foresee some sort of economic armageddon as at the end of the day one will always have the physical metal should worst come to worst. For those who also wish to simply have exposure to the gold price, GLD, the physical bullion ETF has been extremely popular with investors able to buy and sell shares as if it were bullion itself, except with a great deal more fluency. Next up are the ETF/ETNs that offer leverage to the gold price on a daily basis by holding a combination of derivatives, popular for trader-investors looking for a bit more bang for their buck without the addition of due diligence required for gold mining stocks.

Gold stocks however have also got alot of air time, despite their performance not always living up to expectations. Whilst we would not recommend speculative junior resource stocks as a way to play this gold market, many of the larger producers tend to move in tandem with the gold price, although usually with more volatility. Then of course there are gold futures and options, plus options available on most of the instruments mentioned above for rather more speculative strategies.

However the vehicle that we believe many investors are not considering is financial spread betting. For those unfamiliar with the concept, it involves betting a certain amount per point on various financial instruments. So for example, one could go long and bet $10 per point on gold, and so for every dollar that gold goes up, the bettor's position increases in value by $10. The bettor also can set a stop and limits, at which their bet will be automatically closed.

Many would view financial spread betting as simply a trading vehicle, but it doesn't have to be limited to just that. What if you placed the stop at gold being $0.01 and placed enough capital in your account to cover that bet? One would effectively be getting a 1:1 ratio with gold, similar to returns offered by GLD and other 1:1 ETFs/ETNs.

Some may argue that in order to get that amount of coverage from the broker, a huge amount capital would have to be deposited to cover the potential loss. But this is not the case, the minimum bets at some brokers are as low as £1.00 per point. So with gold at around $1080, one would only need to deposit £1080 to cover the bet, and one is getting a 1:1 return on gold, for every $1 gold goes up, one gains £1, and the position will only be closed if gold falls to 1 cent.

The large tax advantage here is that spread betting is free from capital gains tax (18%) in the UK, so there is another great advantage for those available to take advantage of this situation. Obviously this may not apply to every individual situation so please check with your financial adviser or tax professional beforehand. However if one can take advantage of this, the benefits are huge. Considering investing $100,000 in gold and gold doubled. You would have made $100,000 but would have to pay $18,000 in capital gains tax leaving you with just $82,000 profit. With financial spread betting, there would be no tax and you would pocket the full $100,000, increasing your profits by 22%!

We know this may not apply to all investors, but for those who it does this opportunity is definitely worth looking into, and appears to be a much better option than holding an ETF simply for the above tax reasons. If you have any questions, feel free to post a comment on our website and we will do our best to answer them.

We also plan to cover spread betting in more depth in a future article, so stayed tuned to find out about more great opportunities that may have slipped under the mainstream radar.

You can find out more about spread betting at IGIndex.co.uk or igmarkets.com - or try one of the many other spread betting dealers.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Thursday
Nov192009

An Update On Our Premium Options Trading Service

Back in March we launched a premium options trading service, separate from our main websites on gold, silver and uranium, called OPTIONTRADER.


Now that the service has been running for a decent amount of time, we thought we would post an update regarding how the service is doing.

So below are ALL closed trades from the last 3 months, as they were sent to OPTIONTRADER subscribers:


Trading Record

Bought USO $40 Oct-09 Puts @ $4.30 on the 6/8/09.
Sold for $4.80 on the 31/8/09.
11% profit in 25 days.

Bought KGC $20 Sep-09 Puts @ $1.10 on the 7/8/09.
Sold for $2.10 on the 18/8/09.
90% profit in 11 days.

Bought IAG $12.50 Sep-09 Puts @ $1.00 on the 14/8/09.
Sold for $1.50 on the 17/8/09.
50% profit in 3 days.

Bought GLD $100 Mar-10 Calls @ $7.60 on the 8/9/09.
Sold for $10.25 on the 4/11/09.
34.87% profit in 57 days.

Bought GLD $100 Mar-10 Calls @ $7.80 on the 6/10/09.
Sold for $10.25 on the 4/11/09.
31.41% profit in 29 days.

Bought GLD $90 Jan-11 Calls @ $16.10 on the 3/9/09
Sold for $22.35 on the 4/11/09
32.82% profit in 56 days.

So thats an average gain of 41.68% per trade in an average of 30 days per trade!

This is a comprehensive list of trades for the period, with nothing omitted. In addition to this, we still have 7 positions that are still open, all of which are showing a paper profit of at least 30%.

Our balanced trading portfolio, modeled on OPTIONTRADER trading signals, is up over 27% from August to present.

OPTIONTRADER prides itself on being versatile and adaptable to suit market conditions. We do not buy and hold and hope, we are prepared to go long or short on any entity if we believe the opportunity is there.

Also, one does not need a comprehensive understanding of options trading to use this service, all signals are clearly explained and easy to follow. Also although options trading does carry risks, by keeping a close watch on the markets and combining our expertise and experience together with ongoing research, we are able to limit the downside of any trade. Although we of course do incur losses from time to time, our winning trades far outweigh our losers and we place a large emphasis on limiting risks involved in any options trade. For example OPTIONTRADER did get off to a difficult beginning where we did take some losses, however by only allocating a small weighting of our options portfolio to each trade, and limiting the losses on each trade, the overall impact was greatly reduced.

We use a balanced portfolio and suggest weightings with each trade as to give a realistic representation of how subscribers would've performed with the recommendations.



All paid subscribers to OPTIONTRADER can email us questions or comments anytime, and we will respond as soon as possible, using within 24 hours.



All this is just $199 for 6 months, or $349 for one year!



Subscribe for 6 months - $499

 

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Tuesday
Nov172009

Randgold Resources Limited Call Options Up 44.07%

Randgold logo.JPG

On 8th October 2009 we purchased some Call Options on Randgold Resources Limited (GOLD) they are the December 2009 series with a strike price of $80.00 (GUDLP) and we paid an average of $4.70 per contract for them. Todays trading range closed between $6.80 and $7.00per contract.

Randgold Resources Limited
has performed reasonably well so far and managed to close at $83.82 today putting this trade nicely into the money. Every dollar Randgold gains from here should see a corresponding rise in the value of these options minus the cost of the deterioration of the time premium. The option expiry date is the 19th December 2009 so stay awake or place a sell order now at a price you are happy with.

Gold is currently holding at $1141.10 and we are of the belief that it can still go higher from here despite the detractors.

The dollar is trying hard to get a grip and stay above the '75' level so keep an eye on it. The Chinese may move to purchase the remaining 200 tonnes of IMF gold which would give gold another boost in the short term. Also keep an eye on the DOW which at 10,437 as a sell off lies ahead of us but not just yet. In the medium term a broader market sell off could hit the mining stocks so it is something to keep in mind.

Taking a quick peak at the chart at the time of making the purchase we noted that:

Randgold is trading at $74.00 and is close to its previous high of $76.08, if it can get above its previous high then it too is in unchartered waters and could move higher quickly. The other point of note is that the MACD is very close to making a golden crossover, where the black line crosses the red line in an upward motion, which is usually very positive for the stock.

On the downside we would prefer the technical indicators to be starting from a lower point on the chart to feel more comfortable with this trade, but it is difficult to find the perfect set up. We also need to be weary of the gap that has opened up between the stock price and the 200dma, again we would prefer this gap to be lot smaller.


Since then the MACD has experienced a golden crossover and it has been positive for the stock. However the stock price is leaving the 200dma well behind, should the stock price hit $90.00 then it will be 50% higher than this moving average suggesting that it is a little too far too fast.

As always go gently as options trading is highly speculative and dangerous to our financial health, but for now enjoy the ride and keep smiling.

Any thoughts or comments on how we could do better are always welcome so please let us know.

Have a sparkling day.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Saturday
Nov142009

How Will Niagara Falls Fit Through a Garden Hose?

by Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

“There’s no doubt in my mind that we’ll have a mania in gold. And because the gold and especially silver markets are so tiny, the rush into them will be like trying to push the contents of Hoover Dam through a garden hose. Our positions will go absolutely ballistic.” –Doug Casey, September 2009.

Dear Readers,

Elmer Sutton’s eyebrows shot up when he saw the ad proclaiming gold stocks might make you wealthy.

It sounded like the perfect solution for his stock portfolio, loaded with investments going nowhere. He vaguely recalled hearing a little about gold, but if what the ad said was true, he thought he could make a killing.

So he called the broker and made an appointment for the next day. The broker seemed very knowledgeable and took the time to explain why he felt gold stocks were one of the best investments right now. He said this was not a get-rich-quick scheme, but that if you stuck with it, you could see potentially enormous profits. It sounded good. Elmer wrote a check for $2,500, and the broker bought three gold stocks for him.

The very next day, gold took a big drop and his spankin’ new gold stocks sold off hard. Not only that, there were riots in South Africa, where one of the companies was located. Elmer was instantly disgusted. He was losing money yet again. This time, however, he’d play it smart and get out before he lost it all – something his wife made sure he understood – so he hastily called the broker and told him he wanted his money back.

“Elmer, you can’t do that,” the broker told him. “This isn’t Woolworth’s.”
“I’m not buying them!” he yelled to the broker and slammed the phone down. Elmer wanted out, and that was that. He wasn’t about to lose any more money in the stock market.
Three years later, long after he’d forgotten about that broker, newspaper headlines were screaming about gold. Everyone at the party Elmer attended the night before was talking about how well their gold stocks were doing. His co-workers bragged about the good deals they were getting buying gold and silver coins. Everyone was talking about precious metals.

Elmer panicked; he didn’t want to be left behind. He scrounged around the house until he found the original confirmations of the trade he'd broken with “that broker”: 1,500 shares of Grootvlei at 35¢, 500 Anglo American at $2.50, and 1,000 Leslie at 50¢. He grabbed his newspaper and saw that Anglo was up 500% since then, and the others were paying dividends – this year alone – totaling more than he would have paid for his shares in 1976.

As the newspaper went limp in his hands, he had a vague recollection of the broker he met with and quickly tracked down the phone number. “I want to buy some gold stocks,” he breathlessly panted to the secretary answering the phone. She said the broker wasn’t in, and that while they would be happy to buy a stock for him, they were actually recommending investors sell their gold stocks.

Elmer couldn’t believe it. How ludicrous! Everyone he knew was buying, and he was personally acquainted with many people who were getting rich. He pushed on. “Look, everyone’s into gold right now. It’s on the front page of the paper, for crying out loud. So I want to buy some gold stocks right away.”

“That’s fine, sir, but I think you should talk to the broker first,” the secretary replied. “We really don’t recommend you do that.”

“I don’t care!” Elmer screamed, which he didn’t mean to do, but panic was setting in. “What’s this clown’s name anyway?”

“Doug Casey,” she replied.

Please Don’t Crowd the Emergency Exit

This true story explains how Doug Casey bought gold stocks at the very bottom of the market, as he took on those abandoned shares from Elmer. But today’s lesson underscores what Doug Casey saw back in the late 1970s: there’s certain to be a rush into gold and silver, and buying before Main Street catches gold fever is the only way to play this trend.

Because when Midas fever hits, prices will explode to the upside, for both the metals and the stocks. How do we know that?

First, let’s look at gold. If we added up all the gold ever mined on the planet, its total value would equal no more than $5 trillion at today’s prices. Yet, look at how this compares to the debt and bailouts and other monetary mischief of current governments...



Gold is Dwarfed by Gov Interventions Casey 15 Nov 09.JPG

*MZM (Money of Zero Maturity) is a measure of the liquid money supply in the economy. It consists of coins and currency, checking accounts, savings deposits, and money market funds.
**Year to date figures.

Let’s make this chart very clear. Of the $5 trillion in gold ever mined...
The U.S. government has thrown over twice as much at the economy in the past 12 months.
The U.S. debt is more than double this amount so far this year.

Total global government bailouts are almost four times larger (and this is a conservative figure; one estimate puts it at $24 trillion).

I intended to include annual gold production as one of the comparisons, but the chart isn’t big enough and neither is your monitor: 2008’s global gold production equaled about $73 billion, and to make that figure discernable on the chart would require the Global Bailouts bar to hit the ceiling above your head. That’s how small the gold market is.

The implications are undeniable: when the greater public rushes into gold – whether in response to inflation, dollar woes, war, whatever – the price will be forced up by an order of magnitude.
[For an elegant and profitable way to own bullion gold, check out this website.]

A Picture Is Worth a Thousand Dollars

While physical gold will protect our wealth, it’s the gold stocks that can potentially make us wealthy.

Once again, to get a sense of the Lilliputian size of the gold industry, I compared it to several other leading industries and stocks.



The Market Cap of the Entire Gold Industry is Tiny Casey  15 Nov 09.JPG

The value, as measured by market capitalization, of all gold producers around the world is less than Walmart’s. Every gold stock would need to nearly double just for the industry to match ExxonMobil. The oil and gas industry is about 12 times bigger.

When your neighbors and relatives and co-workers and friends all start clamoring to buy gold stocks, the pressure on prices will be enormous, rocketing our positions upwards.
Meanwhile – and admitting we’re first and foremost gold bugs – the picture for silver is even more dramatic. The potential for silver stocks is jaw-dropping.


If the gold industry is tiny, then silver’s $9 billion market cap makes it a nano industry. The entire silver industry is over 21 times smaller than gold’s! If gold explodes, silver will go supernova.

Consider these macro-facts about a micro-market and what they reveal about silver’s enormous potential:

There are over 200 companies in the S&P 500 with a market cap larger than the entire market of silver producers

There are five times more gold stocks than silver.

Total silver production in 2008 was valued around $10.3 billion (at today’s prices). That represents just 1.5% of the $700 billion bailout last year, and 0.006% of the current U.S. monetary base.

Of the 20 largest silver producers, only five actually call themselves a “silver” company, due to the fact that about 73% of all silver mined is a byproduct of other metals mining.

Any flood into the silver market would overwhelm it. In other words, the rise will be stunning. While it’s not going to happen tomorrow, I strongly suggest you get on board before that rocket ship takes off.

Just putting these charts together stirred my feelings of restlessness, making me anxious for the mania in precious metals to arrive. But the timing is not up to us. Be patient, because if you’re invested in gold and silver and the respective, high-quality stocks, you’re on the right side of this trend.

Had you bought gold, say, four years ago, when it was around $450/oz, you’d be sitting on a nearly 130% gain. But you could have made up to three times as much with even the most conservative precious metals investments – large- and medium-cap gold and silver producers. It’s not too late to jump on the bandwagon. Click here to find out more.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Thursday
Nov122009

USD Decline To Take Breather Before Breaching 75

USD Decline To Take Breather Before Breaching 75

Technical signals from the RSI, STO and MACD indicators suggest that the greenback’s decline will take a breather, for the next few trading sessions at least, before falling further to break a critical support at 75.

This temporary strength in the USD provides a good opportunity to get short on the greenback or get long on gold at a small discount. Taking such a position should return gains in the short and intermediate term, as well as over the long haul.

The USD has key support at 75, which it will break soon causing a sharp drop which will send gold towards $1200. Note on the chart below how sharply the USD broke down through 75 before in early 2008.

US Dollar Chart 75 Key Support

So if you haven’t got long on gold yet, an optimum time to get long will be over the next few trading sessions. Once you have a long position, hold on tight because its going to be a fast, knee jerking ride and $1200 will be upon us in no time!

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Wednesday
Nov112009

Gold: Load Up On Any Weakness

Gold: Load Up On Any Weakness

Gold has been on a terrific run of late, breaking above $1100/ounce in what many gold bugs would say is a move that is well overdue.

For those of us who are long gold, the last few weeks have done wonders for our portfolios and gold positions. However there are those who may still be on the sidelines, who have been eagerly awaiting an optimum buying opportunity, or those who have only recently been made aware of the gold story and now wonder if perhaps it is too late to jump aboard this gold bull market.

The simply answer is – No! It is most definitely not too late to get long on gold and make some serious profits. The fact that the DOW is putting on a couple of hundred points is all over the front page of mainstream financial websites, and gold being at an all time high barely makes the top five stories of the day, tells us that the herd has yet to even recognise this gold bull market, which means there is still plenty of upside still to come.

As to when to purchase your gold positions, we would say that buying on any weakness is a good idea. Currently gold is overbought with the Relative Strength Index over 70, but buying when the RSI is 50 or close to 50 appears to be a good strategy for those looking to build long positions on gold.

Whilst ideally we like to buy with the RSI below 30, since gold is in a major rally right now buying at those levels is somewhat unrealistic for the short term, since gold’s RSI rarely drifts below 50 during these rallies.

So to those still looking to buy a position or to add to their holdings, we think the best idea is the to be patient, watch the RSI like a hawk and pick up positions when the RSI drifts near 50. But the most important thing is to make sure you have a long position in gold, as the most impressive gains are yet to come.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Monday
Nov092009

Gold Up in Hong Kong

Gold Chart 09 Nov 09.JPG

A good start to the week as gold rose slightly in Australia and carried on moving higher in Hong Kong. Hopefully this move can gain some traction and follow through to London and then blow the pants off the shorters in New York City.

If the precious metals can maintain some momentum here then both the core holdings and the Options plays should show signs of good improvements. We are still gunning for two months of tremendous progress despite the detractors, the worriers and those who still recommend keeping a miserly 5% of your portfolio in gold and silver. We have some cash in the trading account but not much as we are just about all in and this is the only arena worth investing in, in our very humble opinion.

Yes we are confident to the pint of being cavalier as we have often written so you know our position.

As we wrote recently “Prepare for fireworks in the precious metals arena as the sparklers have been lit and the rockets are approaching the launch pad.”

Have a good one and stay calm.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Friday
Nov062009

Sri Lanka Boosting Gold Reserves

Sri Lanka Flag.JPG

Hot on the heels of the Indians the Sri Lankans have wasted no time in turning to gold in order to boost their own gold reserves in favour of the once all mighty US dollar.

We draw your attention to this snippet taken from Yahoo News:





The price of gold hit a record high above 1,100 dollars an ounce in trading here on Friday following a report that Sri Lanka had joined India in purchasing the precious metal in favour of the US currency.

"The Central Bank of Sri Lanka has announced that it is buying gold to diversify its reserves," industry body the World Gold Council (WGC) said in a statement issued before gold struck a record high of 1,101.42 dollars.

It later pulled back to stand at 1,092.65 dollars an ounce in late London trading.
Gold had struck a series of highs already this week after the IMF said it had carried out a massive sale of the precious metal to India.

"Over the past year central banks, which have been net sellers of gold are now a new and increasingly important source of demand," WGC chief executive Aram Shishmanian said in the council's statement.

"This latest announcement demonstrates that many central banks are reassessing their reserve asset management policies."

To read the article in full please click on this link.

We can just imagine the meeting rooms stuffed full of suited central bankers conducting policy reviews on their reserves, the heat is being turned up as the penny slowly drops that they are actually on the wrong horse. Their faith in paper that is paying little or nothing as an investment and buys less and less as the days go by is the stuff that stomach ulcers are made of. The big players are moving towards the exit and as each one passes through the door the momentum will gather with the others moving faster and in greater numbers to re-position themselves.

Some will move into gold not because it is the right thing to do but because they have seen others do it and presume that the 'others' must something that they don't and so they follow. The 'safety in numbers' theory could work to our advantage as the herd tries to enter what is a fairly small investment space.

Prepare for fireworks in the precious metals arena as the sparklers have been lit and the rockets are approaching the launch pad.

Have a good one and stay calm.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

Thursday
Nov052009

High River Gold (HRG) Undervalued?

HRG Logo 31 July 2009.JPG


In this mornings mail bag we have this update from Chris Charlwood regarding the valuation of High River Gold (HRG) as follows:

Alfa Banks states that the attached 8 pg. report may have inaccuracies. For instance, to me, the debt looks high and share count low. However, the important part is that Alfa says HRG is trading at 1/3 of what it should be and, therefore, valued at $865M or $1.17/share (based on their share count). They use a 7 times multiple. This share value is much lower than our peer average comparison of $2.95/share (19.3 multiple), but at least it shows a significant improvement to current price. Also, it shows that HRG makes up 55-60% of Severstal's overall gold production.

To read the article in full please click here.

Have a good one and stay calm.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are new to this site and are interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.