Will Silver Outperform Gold?
December 7th, 2009 by Chuck Kessler
We’ve all seen these cash for gold commercials on television recently, yet few stop to think why gold is suddenly in the spotlight. For gold followers, you’ve seen the price of gold increase from $260/oz in 2001 all the way up to $1,170/oz today. The gold rush is on, and smart investors have been buying gold to hedge against inflation.
There are not many people who are familiar with why their money should be invested in gold. As much as I would love to talk about gold, today I’m going to speak about a much better investment which is silver. Silver is a better investment than gold for many reasons, and the corresponding gains in gold will be nothing compared to silver.
If we look at the price for an ounce of silver we see it is at $18.60/oz today. Since 2001 the price of silver has risen over 400%, up from just $4.00/oz. But I still haven’t explained why silver is such a great investment. After all, we saw gold increase roughly the same 400%.
If we take a look at the above ground inventories of 1 billion ounces of silver, they are miniscule when compared to gold’s 5 billion ounces. About 95% of that gold is available for investment in one form or another, but only about 300 million ounces of the silver is available for investment. That leaves 700 million ounces to be consumed by industry.
Silver is mostly depleted as soon as it comes out of the ground. It is used for electronics, solar panels, medical purposes, and many more applications. Silver is consumed and thrown away in to land fills because the price of silver is not high enough to justify recycling it.
Most of the gold ever mined is still in existence and available today. Most of the silver that has been mined has been consumed and not recoverable. Industry consumes more silver than is mined each year so the levels have been dangerously depleted. Even the USGS said the silver would be fully depleted and extinct by 2020.
Silver really is rare than gold and many economists are planning for silver to reach prices comparable to gold and even higher. It only makes perfect sense that a silver explosion is on the horizon. Some silver experts have stated that owning just 500 ounces about 3 years ago could buy you a median priced home in the near future.
Some may make the mistake of saying that a metal like silver couldn’t or wouldn’t go that high, but look at the price of rhodium. Just a few years ago the price was at $300/oz and now it is nearly $10,000/oz. It can happen to silver, and there are many other factors that will push the price of silver up.
The COMEX short sellers, who include JPMorgan Chase and two others have been manipulating the price of silver down for many years now. These short sellers have been way over their contract limits in silver, illegally I might add, and at some point in the near future these banks will have to cover their short positions. This illegal action is being stopped, and when the banks are forced to limit their short positions we could see a price move in silver that will take the breath away of even the most bullish investors.
The factors for silver are much more bullish than gold, as is evident in my article. It is important that you be invested in silver bullion, silver coins, silver bars, and Silver Eagles to protect yourself from inflation. Most are not aware of silver’s fundamentals, but once this price explosion happens it will be the investment that CNN talks about every night.
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