I believe that silver could go to $60 per ounce from today’s price
of just $30 by the end of 2014. That would be double from today’s
current prices in just a little over two years! I also believe silver
will be the best single investment of this decade. The following
article is focused on why I think that you should seriously consider
having a significant percentage of your investment portfolio in silver.
Many gold investors deride silver as the "poor man's gold" because
of its low relative price to gold. They also don't like the fact that
it because it is used primarily as an industrial metal it can be
negatively affected by a cyclical downturn in the economy. This is
opposite of gold which is viewed almost entirely as a precious metal.
Many years ago, the silver market was so oversupplied because there
were huge artificial inventories of silver. This was because the US
took currency (coins) out of circulation due to its physical silver
content. Because of this artificial situation, huge surpluses hung over
the market until these excess inventories were depleted. This led to
silver prices crashing as low as $2 and then traded around $5 for
years. Because silver had so decoupled from the price of gold during
this period, it began to be thought of as just another industrial metal
and not a precious metal.
There are still skeptics who think of silver as just another
industrial metal. However after a 600% rise in price from $5 to $30
since 2003, it has begun again to be viewed as a precious metal. I
think that silver has only completed about fifty percent of that
process. As this transformation continues there will be additional
significant moves higher in price. That will attract more investors to
silver again until it once again retains its true status as a precious
metal.
1) The amount of silver consumed annually and bought for investment
exceeds currently exceeds total annual mining output and has for years.
That gap has been filled by sellers willing to sell from existing
inventories and as prices rise. As time passes this will naturally push
prices significantly higher until this fundamental imbalance reaches a
true equilibrium price where supply is closer to demand.
2) Both industrial and investment demand for silver is growing in
excess of the annual increase in mining production growth. The
available inventory is low and will get even tighter over time. These
two factors will lead to a continued tighter supply-demand situation
going forward.
3) The lower price of silver at $32 appeals more broadly to small
investors relative to the more expensive gold at $1705, especially if
gold prices continue to rise.
4) Most silver is not found in mining sites in any significant
concentrated form. It is usually chemically bound to other metals; much
of it is actually the byproduct of mining for lead, copper, etc. In
the last few decades this made it less attractive from a profitability
standpoint to invest in pure silver mine. Now prices have finally
recovered enough to make new projects feasible again. So there is new
investment in the sector but it is a lengthy multi-year process to
bring on significant new production. .
5) The last time silver was found in huge concentrations or veins
that dramatically affected the amount available and therefore
significantly lowered prices was in the Comstock Lode in Nevada in the
late 1800's. The Comstock Lode produced tons of ore that was very pure
with concentrations of 25-50% silver. Silver mines today have much
lower concentrations, usually always less than two ounces per ton of
refined ore.
6) Silver is the most conductive metal on earth. Gold is also
conductive but is prohibitively
