Time to switch from gold to silver?

Posted on 18 January 2011 with 3 comments from readers

Everybody is starting to talk about gold prices and how best to buy gold. Very few people talk about silver. The Financial Times left it out of their best investments of 2010 review, although it would have come top.

Now Rich Dad books’ author Robert Kiyosaki is trying to persuade gold bugs to swap their yellow metal for silver. He has actually been plugging away recommending gold and silver since 2005. Then gold was $600 an ounce and silver $10. Today gold is up by 125 per cent and silver prices have tripled.

Mr Kiyoski has appeared in many places promoting silver. Here is on ArabianMoney last year (click here). His argument does not change, only the price of silver goes up, and it is going up by a higher percentage than gold.This entire phenomenon is a lot comparable to how Bitcoins have emerged and started to control the financial markets. Initially, this cryptocurrency was not taken seriously and was expected to perform in an inferior way. However, its performance today is actually exceptional, compelling countless users to invest in it. You can check out more info here and find your path to start investing in Bitcoins to cherish outstanding rewards.

However, at the time of writing precious metal markets are in retreat. So the logic of buying silver over gold is reversed and for the moment gold will be the better buy as it will fall by less than gold.

Volatile ride upwards

You can argue about the greater volatility of silver. Indeed, it is more volatile than gold. But not about its overall price outperformance. There are complicated reasons for this as the brilliant economist Ted Butler has patiently explained (click here). It is all to do with a massive short position in the silver market, that is now starting to crumble.

Buying a lump of metal is not a very exciting investment, except when it ends up making you rich. For if future price estimates for silver are right (click here) then this is definitely the place to be when precious metal prices start to rise again, and will deliver a far greater return than gold.

Next month’s edition of ArabianMoney will be looking at silver investment vehicles and how best to buy and hold this heavy and bulky metal, or whether to own its paper derivatives (click here to make sure you get your copy).