Hi, this is Jennifer again from the Lone Star Silver Exchange. I would like to welcome our new subscribers who found us though my articles on www.financialsense.com.

COMEX Warehouse Update

The silver stored on the COMEX is the largest known inventory of this metal in the world. As recently as 1996, stockpiles totalled 280 million ounces. Now there are only 101.8 moz. left. Not all this silver is available to the market, only the metal in the registered category can be sold. Much of this inventory is simply stored by the owners, and is not for sale at these prices. The registered ounces have dwindled to only 40.4 million, near the 2 decade low of approximately 37 million reached in 2003. The supply of silver is very tight, and will continue to shrink, as industrializing countries like China and India increase their demand. Until this imbalance is corrected, there will be strong upward pressure on silver prices.

Referral Program Reminder

Help your friends and family while helping yourself. If you refer a new customer to the Discount Silver Club, and he or she makes a purchase, both you and your friend get $10! Be sure to tell me if you refer someone, so everyone gets credit. We've also decreased our membership fee to $9.99 for both new and renewing members.

Inflation Takes a Bigger Bite

Last week, the government released the Producer Price Index (PPI) statistics, which follow the cost of wholesale goods. January showed a 0.8% increase in core PPI, which excludes food and energy prices. This index has risen 2.7% in the past 12 months, which is the largest rise in nine years. If you include food and energy, the PPI has jumped 4.2% in the past year. The Consumer Price Index (CPI) is also expected to show a significant bounce when it's released tomorrow.

The core intermediate goods number was even more startling. Its annual increase of 8.5% was the largest in 23 years. Federal Reserve officials consider this number to be the most important in calculating the extent of inflationary pressures on the economy. We may see more aggressive rate hikes in the future in an attempt to curb inflation. Greenspan recently expressed his dismay that long-term bond yields haven't risen as he expected in response to monetary tightening.

Crude oil futures closed above $51 a barrel today, and natural gas, heating oil and gasoline also rose sharply. Higher energy costs will eventually be passed on to businesses and consumers alike. These concerns may have influenced stock market traders, as the Dow, Nasdaq, and S&P 500 all fell over 1% today.

In this inflationary environment, how can consumers protect their wealth? As I mentioned in the last newsletter, commodities will appreciate more than general stocks over the next decade. Silver is up over 14% in the past twelve months, and 84% since November 2001! Don't be too concerned by daily fluctuations, as the silver futures market can be very volatile. Just accumulate physical metal a little at a time during dips and sales. Buy and hold can work, if you hold the right asset.