The “Perfect Storm” Leads to Six Reasons to Buy Silver
There is a growing body of evidence, ominous economic indicators and expert opinions that support the notion that Silver is massively undervalued. If the storm forms on this foundation, we could see a silver and gold boom of unprecedented levels. It is clear that silver is undervalued right now and there are looming economic conditions that simply will not permit this to continue. It is only a matter of time before silver must climb to its true value, as it has done time and time again throughout history.
Robert Kiyosaki (author of Rich Dad, Poor Dad) predicts that Silver is likely to go as high as $6,000 per ounce. Other experts are not quite as
bullish, but are convinced we will see silver higher than $1,000 per ounce. It is currently trading under $35 per ounce. Are you positioned to take advantage of this boom and protect your assets? Here are just a few of the indicators that the price of silver is on the verge of an explosion:
Why Silver is the investment of the decade
- Demand is not only up, but still rising. In the months of January and February, the US Mint sold as many dollars of silver as they sold dollars of gold. The Chinese used to export 100 million ounces of silver – they now import 112 million ounces.
- Supply and Delivery Challenges for Physical Bullion. Our market trades roughly 400 million(paper) ounces a day. When Sprott Asset Management was preparing to open their physical silver trust they had difficulty acquiring 15 million real ounces. The US Mint recently advised potential investors that it can no longer coin the popular Silver American Eagle saying, “The United States Mint will resume production of American Eagle Silver Uncirculated Coins once sufficient inventories of silver bullion blanks can be acquired to meet market demand.”
- Technological demand for silver is increasing. In 2010 industrial production of silver was up 18% due to rising demand from the
technology sector. Among other things, silver is increasingly being used in computers, cell phones, and solar panels. Health care, alternative and traditional, is another market segment that will see silver demand increase because of silver’s antibiotic properties.
- Silver is closing the margin on the gold-to-silver ratio. Historically, though not in recent decades, silver has traded at an average ratio of about 16-to-1 norm. It is currently trading at about 50-to-1, and just recently was trading at nearly 70-to-1. If the historical ratio of gold to silver holds up and gold is priced at $1800 an ounce, silver would then be trading around $112. If gold were to trade at $3000 an ounce, a prediction made by several precious metals analysts, silver would trade at $180 if the gold-to-silver ratio returned to historical norms. None of these take into consideration supply vs. demand issues.
- More (Paper/Fiat) Money. As the US Federal Reserve and central banks around the world continue to deal with fiscal issues through
monetary means, more and more paper currency hits the global marketplace. As a result, more money is chasing fewer goods, with silver being one of those goods. For the reasons above, as well as the fact that there is more money available, the price of silver will continue to “inflate,” just like other hard assets. Over the last 100 years, since the Federal Reserve was established, the US dollar has lost 95% of its value. This is a long-term 100 year trend, indicating that the US dollar will continue to depreciate.
- Inflation/Hyperinflation. Inflation is often identified as the single biggest reason for why precious metals like gold and silver rise. During the 90′s the US experienced a period of boom with the evolution of the internet and positive economic outlook which led to a very bullish stock market. Stocks were the primary investment vehicle of choice during this technology boom. Gold and silver took a back seat as it was commonly considered to be too “safe of a bet”. As a society, we never gave much thought to hedging socio-economic crisis which, today, we may only be a butterfly’s breath away from.
After the Dot Com Bust of 2000, September 11th, the resulting Iraq War and other Middle East events, multiple natural disasters such as Hurricane Katrina, the Housing Crisis of 2008, the emerging Arab Spring, and growing discord in our own country such as Occupy Wall Street, sentiments are changing across the world. As boom times give way to recession, precious metals are rising. Throughout this first decade of the 21st century, circumstances have shifted our thought patterns. With the “perfect storm” of events, more and more investors are beginning to realize that crisis is upon us. The government, failing to mitigate the problem, and likely making it even worse, forced those of us in traditional investments into the historically safe haven assets of choice – precious metals.
While inflation may play a part in the rise of precious metals, the true driving force is the perception that government is unable to deal with crisis. As this economic crisis continues to deepen, civil unrest breaks out around the world, citizens are losing faith in their government’s ability to manage crisis, which leads to the prices of precious metals(the last vestige of monetary security) continuing to rise.
For these reasons, buying silver represents an amazing potential for capital gains. With the looming instability of the US dollar, silver also provides an excellent medium to protect against currency debasement (through inflation, hyperinflation, or crisis), while protecting your wealth.
Are you informed and ready to protect your hard-earned assets? If any of this information comes as a surprise to you, I urge you to get yourself educated as soon as possible and determine if an investment in silver is the right option for you.