Why Silver Will Always Beat Gold

Why Silver will Always Beat Gold

Special Report

Why Silver will Always Beat Gold

Why Silver over Gold?
Actually, there’re a few reasons why right now — more than ever before — silver is not just the superior hedge against inflation… But a serious profit vehicle in its own right.
And today I'm going to tell you why.
Gold is the most common method of storing and transferring wealth.
But there’s a reason why men like George Soros, Warren Buffett, and Bill Gates are heavily invested in its slightly less glamorous cousin…
I'm talking about silver, of course.
The Magic Ratio
If you average out the price ratio between gold and silver throughout history, you land on a single magical proportion: 16 to 1. This chart is a little outdated, but gets the point across nicely.

And even experts who do not subscribe to fixed pricing relationships generally agree that a price ratio of around 20 to 1 should be considered normal. What is not normal is the current ratio of — wait for it — 40 to 1!
We've been screaming about silver for a while (since $6 levels). Just last year, when silver was around $18, we noted that we could see a major squeeze. Today, with silver trading above $30, we're happy with the call.
To investors, this should mean two things:
1.) That silver is undervalued historically; and

3.) When combined with mad Federal Reserve printing, prices can go much higher, as we highlight in Silver Going to $100?
Any way you look at it, silver’s price cannot be predicted to drop in any of these scenarios.
And since these same experts are continuing to predict gold’s rise towards $2,000, a realistic target price for silver could be between $100-$175/ ounce range.
Silver’s Two Faces
Silver isn’t just a precious metal and (unofficial) currency; it is also one of our main industrial metals. One of the most conductive substances known to man, it’s used in everything from photography, to compact discs, to semi-conductors, to medical equipment. Basically, if something is high-tech, it contains silver.
Here's a breakdown of silver usage by sector:

The metal’s so heavily used, in fact, that for the last several decades, the world’s total silver supply has barely been able to keep up with demand — even though the 20^th century saw historic production increases.
Demand ramped up in the last quarter of the 20^th century to the point where, for almost two decades (between 1998 and 2007), silver was in a fully-fledged global deficit.
It wasn’t until the worst economic disaster in three generations that supply finally dropped to below production levels.
However, with photography alone consuming 128 million ounces of silver annually as of 2007 (that’s more than 3 times the US’s total Silver reserve), and other industrial processes accounting for another 312 million ounces, the world’s total available silver (both produced and hypothetical) is steadily — and irretrievably — decreasing.
So while gold is constantly being transferred based on price fluctuations and demand alone... silver, as an element, is actually vanishing.
The Broadest Options
With China and India buying up silver at unheard-of rates (Chinese silver demand tripled between 2004 and 2007), the industry has had no choice but to create new ways to own the metal.
There’s never been so much variety in the way you can own silver as there is today.
For those looking for that wealth-saving hedge, there are a number of silver bullion producers that are minting high-quality, high-purity coins for minimal premiums. A perfect example of this is the 1 ounce Mexican Libertad.

Physical coins can be purchased at a number of dealers online, though we have found the cheapest prices through www.apmex.com (no, we don't get paid for this link, it's just the best source we've found).
However, for those interested in riding silver’s imminent rise will look for something less tangible, like silver ETFs, or, the most aggressive option: silver mining stocks.
And it’s that last option that I wanted to talk to you the most about.
Because with so many people piling into gold exploration companies for all of the reasons mentioned above, the case for silver is just that much stronger.
With the magic ratio currently at such a disparity — 40 to 1 vs. 16 to 1 — those moving into silver exploration today stand to make about three times what their counterparts can expect to cash in investing similarly in gold.
Sounds nice, I know... And the fact is that investing in silver mining right now may not just be the most profitable angle to take with this most consumed of precious metals — but also the easiest.
Stay tuned to Wealth Wire for daily updates on precious metals, oil, stocks, and bonds.
Good investing,
Luke Burgess
Contributor, Wealth Wire
Editor, Underground Profits


You can download the PDF version here: Why Silver will Always Beat Gold

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