Why Silver?

To thoroughly understand the importance of investing in silver, you must first understand the major differences between paper investments and investments in precious metals.

Paper investments generally entail taking on a certain amount of risk. It’s like gambling, in a way, as you are basically trying to predict the future of your chosen investment. If you predict wrong, and your investment fails, your investment dollars disappear right along with it. This strategy is like leaving your money to float around, unprotected, in cyber space with the hope that it will eventually multiply and come back to you. Sure, you’ve got a certificate in your hand to prove that some of that money floating around out there is yours, but if all the money were to suddenly disappear that certificate isn’t worth the paper it’s printed on.

Silver investments, on the other hand, offer something physical to show for your investment dollars. If you invest one hundred dollars in silver, you will hold one hundred dollars worth of silver in your hands. Unlike the paper investment certificate, your silver investment will still be there, in your possession, no matter what the market decides to do now or in the future. The prediction, of course, is that the value of that silver you hold will increase over time, and the probability of silver investments to increase both steadily and dramatically is significant and widely acknowledged among the experts of the investment community.

The importance of investing in silver also affords the investor a certain feeling of personal security. If the unthinkable happens, as it very well could, and our paper currencies are no longer worth a dime in the world market, the new standard of trading will encompass precious metals as the universally accepted currency. So then the question becomes, would you rather find yourself in this situation with a stack of worthless paper certificates or a sack full of silver coins? The answer is pretty obvious.

The importance of investing in silver becomes clear as you realize the very nature of the investment market; its utter instability, its uncertainty for the future, and its diminishing credibility in the world market. A well diversified portfolio is important for financial security now and in the future, and a portfolio that includes physical investments in precious metals – particularly silver – is a portfolio that will weather any storm in the broader investment market.

Answer to those two questions..

The lack of physical silver available. There just isn’t enough physical silver in the market. Watch is video..

Here is an article I found that brakes down the Gold to Silver Ratio in very good detail:

Gold:Silver Ratio

How both gold and silver perform, in and of themselves, does not tell the complete picture by a long shot, however. More important is the price relationship – the correlation – of one to the other over time, the gold:silver ratio. Based on silver’s historical correlation r-square with gold of approximately 90 – 95% silver’s daily trading action almost always mirrors, and usually amplifies, underlying moves in gold.

With significant increases in the price of gold expected over the next few years even greater increases are anticipated in silver’s price movement in the months and years to come because silver is currently seriously undervalued relative to gold as the following historical relationships attest.  

Let’s look at the gold:silver ratio from several different perspectives:

• In the last 25 years (since 1985) the mean gold:silver ratio has been 45.7:1 and is currently approx. 51.6:1
• During the build-up to the parabolic blow-off in 1979/80 the ratio dropped from 38:1 in January 1979 to 13.99:1 at the parabolic peak for  both metals in January, 1980.
• Were the % increases in gold and silver during the 1970s parabolic phase (289.3% and 732.5% respectively) applied to the 2010 year-end prices of gold and silver ( $1,420.70 per ozt. and $30.84 per ozt. respectively) the resultant prices for gold and silver of $5,530.79 per ozt. and $256.74 per ozt. respectively would equate to a 21.5:1silver to gold ratio.
• Were the same % increases applied to the mid-July 2011 closing prices of gold and silver of approx. $1,600 per ozt. and $40 per ozt. respectively, the resultant prices for gold and silver of $6,228.80 per ozt. and $333.33 per ozt. respectively would equate to a 18.7:1 silver to gold ratio.

Let’s now look at the various price levels for gold and the various gold:silver ratios mentioned above one by one and see what conclusions we can draw.

First let’s use the current ball-park price of $1,650 for gold and apply the various gold:silver ratios mentioned above in approximate terms and see what they do for the potential % increase in, and price of, silver.

Silver’s Potential Price Range With Gold At $1,650

Gold @ $1,650 using the year-end 47:1 gold:silver ratio puts silver at $35.10
Gold @ $1,650 using the above mentioned 21.5:1 gold:silver ratio puts silver at $76.74
Gold @ $1,650 using the above 13.99:1 gold:silver ratio puts silver at $117.94

Now let’s apply the projected potential parabolic peaks of $3,000, $5,000 and $10,000 to the various gold:silver ratios and see what they suggest is the parabolic top for silver.

Silver’s Potential Price Range With Gold At $3,000

a) Gold @ $3,000 using the gold:silver ratio of 47:1 puts silver at $63.83
b) Gold @ $3,000 using the gold:silver ratio of 22:1 puts silver at $136.36
c) Gold @ $3,000 using the gold:silver ratio of 14:1 puts silver at $ 214.29

The above analyses bears closer scrutiny. In paragraph seven above it was noted that “During the last parabolic phase for silver in 1979/80 it increased 732.5% in just over one year. Such a percentage increase from the Dec.31, 2010 price of $30.84 per ozt. would represent a future parabolic top price of $256.74 per ozt.” That price is only slightly higher than the $214.29 per ozt. that would result from a 14:1 gold:silver ratio with gold at $3,000 per ozt.

Furthermore, as can be seen below, the $227.27 that would result from a lesser 22:1 gold:silver ratio with gold at $5,000 per ozt., and the $212.77 that would result with gold at $10,000 per ozt., strongly suggest that a future price for silver at over $200 is well within the realm of possibility.

Silver’s Price Range With Gold at $5,000

a) Gold @ $5,000 using the gold:silver ratio of 47.1 puts silver at $106.38
b) Gold @ $5,000 using the gold:silver ratio of 22:1 puts silver at $227.27
c) Gold @ $5,000 using the gold:silver ratio of 14:1 puts silver at $357.14

Silver’s Price Range With Gold at $10,000

a) Gold @ $10,000 using the gold:silver ratio of 47:1 puts silver at $212.77
b) Gold @ $10,000 using the gold:silver ratio of 22:1 puts silver at $454.55
c) Gold @ $10,000 using the gold:silver ratio of 14:1 puts silver at $714.29

It would appear that, any way we look at it, physical silver is currently undervalued compared to gold bullion and is in position to generate substantially greater returns than investing in gold bullion.

source

One thing we know for sure. The dollar will continue to fall, and Gold and Silver will continue to always hold value. The World will continue to mine silver for computers, jewelry and investments and the amount of above ground silver will decrease. Start investing is silver while its still under $50 dollars an ounce! Don’t wake up one day and learn that Silver is now $2k per ounce.