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View Full Version : Why silver may shine brighter than gold. - Investment U



Ardent Listener
29th April 2007, 17:17
Dear Investment U Reader,

It’s been a wild ride in the equities markets lately. After selling off in February, the Dow has rallied above 13,000 for the first time ever.

But the ride in the commodities markets has been just as wild, especially for gold and silver…

Widespread selling here has been indiscriminant and almost reckless, followed by impressive rallies that seem to indicate gold will be at $2,000 overnight.

When the dust settles, many of the commodities that were performing so well before the extreme volatility may be even more attractive at their new levels. And here’s one of the commodities I like most…

Why Silver May Shine Brighter Than Gold

Silver has always stood in the shadow of the gold market. Clearly, from a dollar standpoint, it will most likely never be more precious than gold.

But here’s the thing: Silver is as much an industrial metal as it is a precious metal. Most people are unaware that it has many unique properties that make it ideal for use in the photography, technology, defense, and electronic industries.

Frighteningly, there are only about 200 million ounces in above-ground silver available. This is primarily due to current supply/demand trends, but the situation is getting worse.

In fact, industrial demand has been outstripping mining supply for the past 15 years, driving above-ground supply to historically low levels. And many experts believe the above-ground silver supply is projected to shrink to a critically low level in 2010, and at a very rapid pace.

This has been a major factor for the rising prices of silver to date. At $13.38 an ounce, the metal is up more than 225% since 2002.

I expect this trend to continue.

Even more disconcerting is the fact that when investors seek to hedge against rising inflation and currency devaluations, investment demand for silver rises rapidly. We are already seeing it…

In only the past few years, investors have poured into silver Exchange-Traded Funds, like the first one that launched, the iShares Silver Trust (AMEX: SLV). And there are many more in the works for the next couple of years.

As we move into 2008, the rising global investment demand for silver and worldwide industrial demand will become the key factors driving silver to new highs… wiping the tarnish off of a commodity that was once basically written off by investors as having almost no value.

The times for investors are changing, and savvy ones will at least take a look at silver. It could be well worth it.