Welcome back to Stockhouse
Member Sign In

Email or Username:

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Enter your email address:
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

Get our best content in your email.

You are already a member! Please enter your password to sign in.

Is Silver Bullion a Better Investment Than Gold?

156 Reads | 1 Comment | Posted on October 28, 2011
4 stars

Have an absolutley fantastic TGIF & weekend folks, that is IF you choose to... ;0)~

Is Silver Bullion a Better Investment Than Gold?

Silver is outperforming ?t? pricey counterpart this year and l??t year ?s well.  In 2009, silver prices rose 48 percent ?nd have ?lre?dy risen m?r? th?n 38 percent th?s year, wh?l? gold prices ?r? u? around 30 percent.

The gold-to-silver ratio, wh??h tracks h?w man? ounces ?f silver ?r? needed t? buy on? ounce of gold, h?? gone fr?m 66:1 ?n January 2010 to about 56:1 in October 2010, ?nd th? spread ?? expected to k??? narrowing.

Historically, th? average ratio over th? past 30 years ha? b??n 35:1 At th?s moment gold ?s trading at $1,368.90 an oz. ?nd silver i? $24.32 ?n oz. The exact ratio ?? 56.28:1. The reason the ratio w?s a? high ?s 66:1 recently ?? b???use gold h?s b?en making major daily moves up wh?l? silver has only moved up slightly.

However, more recently silver ha? been th? metal ?n shining armor. No doubt the reason f?r silvers’ recent investor activity ?? due t? the fact that gold appears to be overpriced as compared to silver, and ?t s?m?what is. While gold ?s hitting news highs ?n a weekly basis, silver ?? ?t?ll about 116% away fr?m ?ts historical high of $52.50 ?n oz. Let m? repeat th?t again, 116% ?way from its historical high.

Every investor know? t? buy low ?nd sell high, right? Well, her? is th? perfect storm.

Do ??u buy th? high gold ?r do ?ou buy the low silver? Don’t g?t m? wrong, I believe that gold ?? ?till an excellent investment ?v?n ?t the?? historic highs. I believe th?t gold can g? as high as $2,000 ?n oz. ?n 2011. That would represent an increase ?f about 46%. Nobody I kn?w would turn d?wn 46% ?n ?ne year, would you?

On the contrary, I would turn d?wn a 46% profit ?n gold if I believed I c?uld make a higher profit, ?nd I can. That profit w?ll b? made ?n silver.

Here’s how. Looking ?t th? ratio ?nd how it ha? ?lr??dy gon? fr?m 66:1 to 56:1 th?? year ?nd compare th?t to normal ratio of 35:1 and y?u can s?e that the price movements ?f the metals ?s narrowing. As thi? narrowing continues, silver w?ll b? making bigger and bolder moves than gold and that means a higher percentage increase for profit.

Let’s lo?k at ??m? real numbers a? an example. If gold wer? to g? t? $2,000 ?n oz. (or ?hould I ??? when), where will the price ?f silver b? dur?ng th?t run? If we assume the present ratio stays th? same, th?t w?uld put silver ?t ar?und $36 an oz. wh?ch w?uld be th? sam? percentage increase of gold of ?round 46% ?nd ?till priced well bel?w it? historic high.

But, ?? th? ratio continues t? narrow t? th? historical 35:1 dur?ng thi? run up, then, silver would ??tu?ll? be trading ?t ?r?und $57 ?n oz. when gold ?? at $2,000 an oz. That would b? ?n increase ?f 134% fr?m it? present price.

Therefore, ?f ??u invested $10,000 in silver today ?nd if silver wer? t? g? t? $57 an oz. ?? I strongly bel??ve it will th?n y?u will have made ? profit ?f $13,400 ?? compared to a profit ?f $4,600 in gold dur?ng th?t ??me period ?f time.

I know, I know, som? ?f ?ou ?r? ??ying t? your??lf “yeah sure, gold will g? t? $2,000 and silver w?ll g? t? $57, yeah, right.” Well, you m?? well be th? ??m? on?s wh? said th? s?me thing on October 24, 2008 wh?n silver was trading at $8.88 p?r oz. “yeah sure, silver w?ll be trading at $24 an oz. in 2 years.” If that was/is you, ??u were wrong then ?nd you w?ll b? wrong ?g?in today. At that sam? time, gold wa? trading at an average price of $871.96 ?n oz. and th? ratio was…a whopping 98:1.

If ?ou are ?n investor ?n precious metals, ?r ?f ?ou are ??r??usly ?ons?der?ng an investment ?n precious metals (as ?ou should), then, “Don’t Buy Gold… Buy Silver.”

Rate this post
0 stars




  • Avatar
    2.5 stars
    December 3, 2011
  • Rate this comment
    0 stars