Hi, this is Jennifer from Lone Star Silver Exchange writing you on a rainy fall afternoon. I hope everyone made it through Hurricane Wilma without too much damage.

In June, I discussed many of the health applications of silver (see http://www.discountsilverclub.com/news_6-7-05.html). This month, scientists at the University of Texas and Mexico University announced the results of their groundbreaking study of silver nanoparticles. The scientists found that silver particles attached to receptors on the HIV-1 virus, preventing it from bonding to host cells in vitro. When incubated at body temperature, all of the viruses died within 3 hours. While this is far from a treatment for AIDS, there are plans to begin human clinical trials with a preventive cream. In addition, silver nanoparticles show some effectiveness against drug-resistant staphylococcus aureus, also known as the "super bug."

Ibbotson Associates, a respected Chicago firm specializing in research and software products for the financial services industry, recently completed a study on portfolio diversification. (More information on this study can be found at www.bmsinc.ca). They found that prior to 1970, U.S. stocks and bonds were negatively correlated. In the past, investors could effectively hedge their equity risk with bonds, since bonds would appreciate when stocks fell. However, stocks and bonds have tended to track together more frequently in the past 3 decades. This means that most traditional portfolios are not truly diversified.

Ibbotson's researchers studied the effect on portfolios when equal weights of silver, platinum, and gold bullion were added. They didn't use precious metal stocks, as they found that equities didn't provide a true exposure to commodity prices. During the 33 year period from 1971 to 2004, Ibbotson found that gains in precious metals outpaced both cash and inflation.

For 11 years, from 1973 to 1984, the metals appreciated more than any other asset class, and remained the top asset longer than any other investment group. During these high inflation years, the precious metals yielded a 20.83% compounded annual return, 12.21% HIGHER than inflation!

During 6 years out of 33, traditional portfolios suffered losses of 3.5% on average. The precious metals gained 13.4% annually during that time. Silver, gold and platinum performed best during the 9 years that U.S. Large Cap equities experienced negative returns. The metals consistently appreciated when investors needed it the most.

Ibbotson discovered that metals are the only asset which is negatively correlated to other investments in a traditional portfolio. They found that portfolios which contained precious metals experienced greater gains with less downside risk than portfolios which lack precious metals. Therefore, the metals complex acted as a successful insurance policy against losses in other asset classes. They recommended that conservative investors should allocate 7.1% of their portfolios to metals, while aggressive investors should hedge their portfolios with a 15.7% metal content.