Rethinking the case for investing in silver
Posted on 06 July 2010 with 3 comments from readers
The July edition of the ArabianMoney subscription newsletter contains a full analysis of the case for investing in silver rather than gold, or at the very least hoarding silver as well as gold (click here to subscribe). This is a debate that is not going to go away.
Indeed, this is going to be one of those situations where investors look back and say ‘oh that was so obvious, I thought about it, why did I not do it?’.
Opportunity knocks
This writer can recall saying in 2003 that anybody in Dubai who did not buy property would one day regret it like early residents of Hong Kong and Singapore who failed to buy real estate. Admittedly that call took a big setback in the crash last year but those who bought early in Dubai property still have a 300 per cent gain, even after a 50 per cent house price fall.
Silver will be the same story but the path to greater prices may be just as volatile. Those with strong stomachs have already outperformed gold in the past decade by buying silver which is up six-fold against gold’s quadrupling. Now it is true that since the financial crisis gold has done better than silver but arguably that makes the rebound potential for silver higher.
Silver is still cheaper than it was 30 years ago, unlike any other commodity. It is both a precious metal and an industrial commodity. Supplies are used up in industrial processes so stocks are less than one hundredth the size of gold reserves.
Supply shortage
When investment demand surges, as it is starting to do now, the supply of silver is just not there to meet this demand. Not since the 1970s have we seen global debt levels so high, and for all the talk of austerity, the political reality is that inflation is a less painful way of dealing with debt.
Precious metals will gain as a hedge against inflation, and get their final boost when the bond markets drop as interest rates rise to counter inflation and keep bond investors happy. But to find out how to best invest in precious metals you should subscribe to the ArabianMoney newsletter and consider the options. Don’t miss this opportunity of the decade!
3 Comments posted by readers:
If you read Paul B. Farrell’s (a former US Marine Corps Korean War volunteer, no liberal bomb throwing revolutionary trouble maker) latest commentary on the MarketWatch.com.us website, silver and gold sounds like a good intermediate and long term investment. Some cash too.
Here is an interesting statistic. The USA has 900 vehicles for every 1,000 adults. China has 40. You think the price of oil will go up? And the Saudi king just said that he was going to save some of his oil for his own people, instead of expanding production as much as possible for future export. He is the first of many. I don’t want to brag (lie) bit I predicted that, and a lot more of what will happen in the oil industry, on the US ASPO website about a year ago. I won’t go into it now, because it is too depressing, and frightening.
If you want to see someplace far away, and aren’t wealthy, don’t wait too long. Within 10 years, you will be living in a vastly different world. And it won’t be better.
We all had better hope that the traveling wave reactor can be made to work. With cheap, abundant electricity, we can make liquid fuels. It won’t be cheap, but it will sure beat nothing.
Good commentary.
As I’ve mentioned before in your gold/silver commentaries, silver is not only a precious metal and an industrial commodity, but it is also an extremely important strategic commodity, from a military perspective.
P.S. On 2 July 2010, Obama signed into law new sanctions against Iran. This reminds me of the sanctions that FDR imposed on Japan in 1941. Though Iran has significant oil reserves (heavy oil), Iran must import a large part of its refined oil because they lack the capability to refine their own oil for consumption. This will cripple Iran. For more info, go here:
http://www.globalresearch.ca/index.php?context=va&aid=20008
Good article, and I think Silver is even more prime for buying right now than Gold.
As a metal it does indeed have more strings to it bow, with half of its demand coming from investment drivers.
THere will be even more silver drivers going forward as demand from a whole range of new sources picks up. It’s got all sorts of microbial uses, medical uses, and uses in water purification. All things needed as the planet becomes more crowded.
Not sure I want to subscribe to another newsletter to find out more about how to invest in this though. Think I have heard most of the silver investment products out there. Although I don’t buy coins, I have some family heirlooms flying around. Outside of this I think the market places like mycommodity and goldmonoy are the best, although I only buy using the former now as keeps my costs even lower going forward.
There’s real value in these here metals!
Ed Note: Diversify and survive, you will learn about a lot more than silver in the newsletter.