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speedybure (< 20)

The Silver Lining: Why This Metal Should Outperform Gold



April 06, 2009 – Comments (1) | RELATED TICKERS: SLW , SSRI , SLV

Though My four favorite commoditites include : Gold, Silver, Oil and Wheat, Silvers fundamentals are hard to overlook.

1) Ths global Slowdown has caused decreased base metal mining,of which silver is a bi-product. When inflation kicks in, ans believe we are in for a hard kick in the ass, silver supply will be insufficient to meet investment demand. 

2) This provides an opportunity as the gold to silver ratio is well above the historical 55:1 average. Yes people flock to gold first as an inflation hedge, which I must say am guilty of as well, but it has gotten out of hand currently sitting at 71.5:1

3) The BRIC countries will demand silver for monetary value as well as its vast industrial use.  

 4) I think investing in silver, wheather physical or miners presents a long term arbitrage play versus gold. Though they should be core holdings in everyones assets, Silver has become very attractive. 

1 Comments – Post Your Own

#1) On April 07, 2009 at 5:31 PM, mustbepatient (< 20) wrote:

Hi speedy,

Historically, gold outperforms silver when stock markets are falling, and silver outperforms gold when stock markets are rising.  This relationship is pretty well established over time.

I do think silver is attractive and maintain exposure to it.  Since the market is considerably smaller than the gold market, incremental demand *could* end up pushing silver higher than gold.

I agree that gold has gotten high relative to silver, but it has gotten high relative to almost everything else as well.  I will probably do a CAPS post about this situation soon.

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