This excerpt from a newsletter put out yesterday by the National Inflation Association alludes to the recent pullback in silver prices, and gives us plenty of reasons to get excited about the potential for making $$$ with the silver that SFMI will be harvesting along with all that gold! Let's get the show on the road! Booyah!!!!!

It is dangerous not to own gold and silver. Although the U.S. dollar seems like a safe haven to most Americans because it has a number on it that always stays the same, the U.S. dollar is a fiat currency with no real value because it is no longer backed by gold. The only reason the U.S. dollar still has any purchasing power at all is due to the public's perception that it will always be accepted as money. Gold is the world's most stable asset and silver possesses all of the same monetary qualities as gold, but is a lot more volatile than gold.

We believe silver is a much better bargain than gold because the gold/silver ratio is currently 42 and during periods of high inflation it always declines to 16, which is where the Coinage Act of 1834 defined their values until silver was demonitized in 1873. Ever since silver was demonitized, America has been a fiat country gone insane with Americans being brainwashed into believing silver is only an industrial metal and paper dollars are money. Bernanke's devastating inflationary monetary policies will soon wake Americans up to the truth and we will see a decline in the ratio back to 16 or below permanently, which means we will see at least a 2.625 times increase in purchasing power for those who own silver vs. gold from their current levels. We are 100% confident the gold/silver ratio will at least decline to 16 this decade.

Because silver has been so undervalued for so long with a gold/silver ratio averaging north of 50 for the past century, most silver produced in recent decades has been consumed by industrial purposes and there are actually much larger inventories of gold available above ground today. Most likely we will probably see the gold/silver ratio overcorrect to the downside, possibly down to 10 or lower. Only 10 times more silver has been produced in world history than gold so a gold/silver ratio of 10 is actually a very realistic possibility. This means those who own silver will likely more than quadruple their purchasing power from current levels this decade, while Americans with savings in U.S. dollars lose all of their purchasing power.

COMEX registered physical silver inventories have declined 30% over the past six weeks down to 28.8 million ounces or just $1 billion worth of silver. A major shortage of physical silver is developing. A COMEX default is likely coming in the near-future as those holding futures contracts demand physical delivery and COMEX can't deliver. This could cause an explosion in silver prices, possibly to $100 per ounce overnight.

Silver prices rose too far too fast during the month of April. When we announced silver as the best investment for the next decade at $17 per ounce, we never thought silver would nearly reach $50 per ounce in early 2011. We were looking for silver to reach $50 per ounce in late 2011 with a decline in the gold/silver ratio this year to 38.

When silver reached a new all time nominal high of near $50 per ounce in April, the gold/silver ratio temporarily declined as low as 30.5, far below NIA's outlook for 2011 of 38. Silver prices were due for a natural pullback, but because COMEX raised margin requirements on multiple occasions right when silver began to dip, we saw a very rapid and steep pullback in silver prices due to forced liquidations, profit taking, and panic selling. The timing of COMEX's margin requirement increases can be described in no other way than manipulation.

COMEX has been manipulating down the price of silver in order to help their friends at JP Morgan, who have a huge silver naked short position. The manipulation has allowed JP Morgan to decrease its silver short position to just about its lowest level since it was acquired in 2008 from Bear Stearns with the backing of the Federal Reserve. Without this manipulation, it is possible that after a brief pullback, JP Morgan would be covering its silver short position today above $50 per ounce.

Although the pullback in silver was steep, this was not unexpected. It is something that NIA has warned about on countless occasions. We believe the pullback in silver is now over and most of the silver sold by speculators is now owned by stronger hands that are holding for the long-term. In our opinion, silver will make another move towards $50 per ounce and instead of pulling back, this time silver will break $50 per ounce and reach new all time nominal highs. We don't see much downsize risk for silver, because there are many investors who are waiting to buy as much silver as possible on any kind of dip from these levels.