It’s not all about Gold… Silver is surging too

By: ispeculatornew
Date posted: 10.05.2010 (4:27 am) | Write a Comment  (4 Comments)

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In the middle of all the frenzy about gold and the daily headlines about its record rise, it’s easy to overlook that Silver might be the metal the bet on. The “white metal” has been gaining ground and there continues to be a lot of upside in Silver. Many think that it has as much upside as gold but more limited downside. In case you missed our short series about gold rising to $3000 from last week, we had discussed a few of the reasons behind the rise of gold. Many of those also apply to silver. In fact, silver is now trading at its 30 year high!!!

-Hedge against Inflation: Most would agree that metals are generally a very good hedge against inflation. Gold has been the one in the headlines because of its status and because it has been known as “the” metal for so long. But silver might be less “overbought” at this point and could be a great alternative.

-Hedge against apocalypse: If things really turned bad and the system was on the verge of collapse, gold would obviously gain a lot because it could be used in trade among other things. But silver is also seen as a good value in that case.

-New asset class: Slowly but surely, Silver is becoming a primary source of investment. The last report showed that Silver ETF’s now own over 440 million ounces of silver representing investments made by investors around the world . It was an increase of 5.4% from the previous month. Over 70% of that is owned by Ishares through its ETF with the ticker SLV, by far the biggest of any ETF. In fact, you might now have noticed but SLV is the 3rd largest commodity ETF, behind GLD and GDX, two gold related ETF’s. Yes, you read that right… SLV is now more popular amongf investors than any natural gas, agriculture or oil ETF’s!!!

-Industrial use: One major point that I like about silver is its importance in the world economy. Gold is used to some extent for jewelery and other things but there is no doubt that silver has a much more important role, especially for emerging economies. Like gold, sales of coins to investors and sovereign governments is gaining speed. Silver is used in photgraphy, plasma tv’s, in solar technology, etc.

Still hesitating between silver and gold?

Take a look at this chart that displays the price ratio of gold and silver. Since both metals are “hard” commodities, many expect the ratio to return to more historical levels closer to 60 and then 50..that would mean big things for silver investors.


There is also a fair amount of choice for investors in silver. To help you compare, SLV would be the equivalent of GLD, a play on silver itself, not though future but rather the physical itself. SIL on the other hand, is the equivalent of GDX, it includes silver miners that will also benefit if silver goes up obviously.

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Alternatives to ETF’s

Of course, many investors that prepare for worst case scenarios are very wary of metal ETF’s in general and how they would gain access to the actual silver if something happened. You can read a good example of the reasons why here . If you are not buying silver as an investment but rather as a worst case scenario, you can always consider buying actual coins too.

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  1. Comment by Stephen — October 5, 2010 @ 10:09 am

    I remember good old days when you could get silver coins for six or seven dollars. Now, you must do a post about platinum. Have you noticed that platinum had more dramatic up and downs than gold or silver the last few years? I wonder why.

  2. Comment by IS — October 5, 2010 @ 11:24 am

    @Stephen – yes for sure. I had planned on doing metals in general but there was so much material for silver that I focused on it!

  3. Pingback by Top ETF’s in 2010 « Intelligent Speculator — December 30, 2010 @ 5:01 am

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