$320 silver is going to outperform $5,000 goldPosted on 23 September 2010 with 31 comments from readers
ArabianMoney editor and publisher Peter Cooper is also the author of the book ‘Dubai Sabbatical: The Road to $5,000 Gold’ still selling on Amazon.com. But the latest edition of the ArabianMoney investment newsletter hazards a prediction that if gold hits $5,000 an ounce then silver will be $320 or even $400 an ounce (click here to sign-up).
The newsletter points out that the centuries old average ratio of the silver to the gold price is 15. Today it is four times higher at 60. That leaves a lot of room for silver to outperform gold as precious metal prices really lift-off, and to close that gap as silver becomes treated like a currency again as it was in the past.
Catching up with gold
Silver also has to more than double in price just to equal its all-time high set 30 years ago. And that comes on top of silver keeping up with a rising gold price.
So if the price of gold quadruples to $5,000 as ArabianMoney expects within two to three years then silver has the potential to rise 16 times just to regain its historic relationship to the gold price or to $320 an ounce. If it overshoots the average, as markets almost always do then a 20-fold increase in the silver price to an all-time high of $400 is on the cards.
From what ArabianMoney understands the banks were quietly adjusting their silver future positions in August. That helps to explain why silver did not fall in August with stocks under pressure.
It should have been selling off as an industrial commodity used in electronics among many other manufacturing processes. But it did not. Silver is acting again as a precious metal and currency.
Silver investment expert David Morgan says that gold will preserve the value your money in inflationary times while silver is the precious metal that will actually make you rich. So does Rich Dad who owns silver mines these days rather than buy-to-let property.
But caveat emptor silver is also the most volatile of commodities and dropped more than 50 per cent in 2008, so unless you have a very strong stomach for volatility do not over commit your exposure to silver.
This month’s edition of ArabianMoney has some timely advice on the best ways to invest in silver and offers a monthly insight into the precious metals’ market for subscribers. But you might want to wait and see if there is another stock market crash first, and buy at lower levels, if it happens and if prices go lower.