SILVER: The Awakening Bull
"Argentum et aurum comparenda sunt" in Latin means Silver and Gold must be bought. In the past we have advocated both of these precious metals as a way to hedge against inflation, insure against global financial catastrophe, and a way for individuals to practice sound money management even if their governments are turning on the printing presses to fund deficit spending.
History is a great teacher. From as far back as the Roman empire, every fiat currency that has ever existed has ended up being devalued and eventually collapsed along with the underlying economies that housed the currency. A fiat currency by definition is a currency a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves and based solely on faith. The Denarius, Rome's currency, started off as pure silver. Around the time of Rome's collapse, the Denarius contained less then .02% silver and nobody accepted it in trade. This was a early example of true debasement of a currency. The U.S. Dollar is following the same path as the Denarius, since 1920 the dollar has loss 94% of its purchasing power. In contrast Gold and Silver have always retained their value through the centuries.
We have stated in past articles, that we think the current bull market in precious metals is about to ramp up. As the coming hyper-inflation scenario unfolds, Gold and Silver could see record highs.
The Silver to Gold ratio- Why Investing In Silver Right Now Makes Sense
History again has something to teach us, I n every secular precious metals bull market Silver has dramatically outpaced Gold. Last year Gold went from around 900 -1200+ high while silver almost doubled from 10-19 high. Silver was up 48.7 % from its Dec 31, 2008 Close of 10.79 and to close @ 16.87 while Gold increased 24.5% from its 2008 close of 880.30 to close @1,095.20.
For those who forget history are doomed to repeat it and in Silver's case that is a good thing. Historical data from the last secular precious metals bull market (1960-1980) is further evidence. Silver rose 2.3 times as fast gaining 5555% while Gold gained 2429% in the same period.
At the close of trading on 4.29.10 GOLD 1167.00+1.40SILVER 18.49 this represents approximately a 63 to 1 gold to silver ration, we feel is the biggest reasons right now silver is a better investment then gold. If history proves us right in times of severe inflation which we think is coming the ratio returns to the historical norm around 16-1.
The Historic ratio for silver to gold was 16-1, meaning it would take 16 ounces of silver to buy once of gold. Interestingly enough, the ratio to Silver to Gold found in the earths crust is right around 16-1 as well. Right now the current market ratio is around 63-1, this disparity in value between the 2 metals is creating a huge opportunity to invest in silver. As Gold continues to climb and the ratio heads closer to historic norms [I] of 16-1 the price of silver could well surpass $100 a oz.
Now, is the first time in history were silver is actually rarer then gold this is largely because in addition to silver's monetary demand there is also a huge industrial demand.
"Silver is the biggest opportunity I have ever seen, bigger then real estate, bigger then anything else. There is less then a 10 year supply worth of silver on planet earth. The difference between Gold and Silver is Gold is hoarded and Silver is consumed. Silver is an industrial precious metal. it is used in cellphones, computers, cameras, everywhere" Robert Kiyosak
" A 100 oz is an absolute a no-brainer " Mike Maloney
"2010- A Breakout Year For Silver" Greg McCoach
In conclusion, there is no question that silver is cheap compared to gold, we tend to agree with Robert Kiyosak, Mike Maloney, McCoach, and others who think 2010 will be a break-out year for silver.
Tags: gold, hyper-inflation, inflation, metals precious, precious metal prices, silver, silver bull market, silver to gold ratio