Silver: The New Magic Bullet for Investors?
Source: Seeking Alpha, Peter Cooper (5/4/09)
". . .if you are looking for a magic bullet to boost your portfolio, silver should be your asset class of choice."
In this environment, gold will soar as a money of almost fixed supply. It takes only a tiny shift of cash from bonds to gold to begin an enormous price spike for gold.
Investors can be forgiven for being a little skeptical after the recent modest price performance of gold, although even the anti-gold bugs concede that gold has been a good store of value through the early stages of the global economic crisis.
Gold offers protection against devaluation and an oversupply of bonds, as no government can print gold. But if you want to leverage your precious metals, then there is a growing body of precious metal insiders that tip silver as the better option.
The world's stock of silver is one hundredth that of gold and the current price makes this metal arguably the most depressed commodity of all. It has never traded at even half its 1980 high, though it has recently come close to the average price for that year.
When the gold price lifts off then the silver price should take off by at least a factor of two, and the gold:silver ratio drop. This is also the historic pattern, with silver the better-performing metal in a boom, albeit with higher volatility than gold. So if you are looking for a magic bullet to boost your portfolio, silver should be your asset class of choice.