Is silver a good investment?

Silver is both a precious metal and it is used widely in industry. The experts tell us that there is a global shortage of this metal and it will only get worse as time goes on. The historic gold to silver ratio was set to approximately 1 to 16. That is one ounce of gold is worth 16 ounce of silver. This is not the case today, one ounce of gold is worth around 50 ounces of silver. Once again the experts say that the 1 to 16 ratio will return again as it has through history. When this happens, silver will be worth a great deal more than it is today.
Another point is the declining economy of the USA and other countries. When there is trouble with declining currency, the price of precious metals rise as people see this as a good store of value. People have already started to buy silver in the USA, mainly in the form of silver coins. It is very likely in my opinion to continue to the point where we will see a big increase in silver due to a shortage created by investor demand.


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However, one must also realize that millions of tons of silver are pulled from the earth every year, so silver is not a fixed supply either. So, true, we are printing money by the truckload, but they are pulling silver from the ground by the truckload as well. One mine in Australia mined 600 million tons of silver in 2007. One mine!

Addition/correction: There are some 6-7 hundred million ounces of Ag, (silver) mined annually however, the world's Annual Demand is 800,000,000 +++. What this means to people who are able to add and subtract is that even with the 600,000,000 ounces of Ag. mined annually, there is still at least a 100,000,000 oz. Deficit for the world's Demand of this precious metal. The above writer attempted to draw parallel lines for the amount of silver mined annually compared with the number of fiat dollars printed but how would anyone try to compare 600,000,000 ounces of silver that are Spoken for by Industry, and Investors the second they are delivered while the $600,000,000,000 (6 hundred billion ) Fiat Dollars thrown out into circulation will remain in circulation CHASING goods (translated, 6 hundred billion fiat dollars= DEBASEMENT of the already Debased $$$) as opposed to the 6 hundred million ounces of silver with a 100,000,000 oz. Deficit (translated, once delivered, the silver is Out of CIRCULATION and Used up by industry and NEVER to return and the investor's silver sitting in private vaults growing in value) Not much of a comparison. Was that above writer JAMIE DIMON?

Correction: The annual silver mining production of the world in y2008 was 680 million troy ounces, or about 21,000 tonnes.

Pros: concerns about the value of printed money, universal value as currency, the best conductor of electricity (but if it gets too expensive is easily replaced with copper).



Cons: tarnishes (limits industrial value), not a fixed quantity (either!)

Reply: Tarnish or no Tarnish Ag. (silver is still the BEST conductor of electricity. Who like drinking clean purified water? You have Silver to thank for that. How about that computer you're using this very moment, (silver again) I'm sorry, did you say solar energy? Ok, I thought you said solar energy = silver (you're right) How about that Anti-Biotic? No, not copper! Yes silver again.... When was tha last time you needed good batteries? Yesterday? Well thank God for silver again..... Is that you Jamie? Jamie, Jamie Dimon (Ceo of JP Ricco Act Morgan)

Opinion: I feel it is a good investment, but it is not a "no-brainer." Know the risks, especially when buying at all time high prices...


Reply to the "no brainer": Surely you are not warning of silver having reached it's all time high. Silver's all time high was reached in 1980 and that high was 50 bucks per oz. If we look at the current silver to gold ratio of 50 ounces to one oz. of gold and consider the historical ratio of 15-1 and go beyond that and realize that gold is no longer rare (above ground) compared with silver ( silver= 3 hundred million ounces, gold = 6 billion ounces. I'd say you have nothing to worry about regarding "RISKS" You might want to do some research before you give advise.

It would be a good idea to have some understanding of what drives supply/demand. In the short term, commercial and industrial demand influence the price. But in the long run, however, it is investment. Hoarding and dis-hoarding. When Warren Buffett bought silver about 12 years ago, a simple extrapolation of the supply and demand out 3-4 years indicated that we would be completely out of silver. The obvious to the contrary, the price collapsed after the Buffett purchase. Why? Because the dis-hoarding that had been going on for many years, continued. Investors, in the balance, remembered too well, the collapse of the price after the 1980 peak, and they were not ready to believe in a rebirth of the bull market. By the time investor sentiment was beginning to turn bullish, the supply crisis was a nonevent. But sentiment continued to improve and net investor hoarding began its upward pressure on price. Which explains the recent highs. All that said, it is impossible to know (IMHO) with any accuracy how much silver will be available to the market as the price changes.
The magic gold/silver ratio of about 16 does have some basis. That is about what scientists estimate the concentration ratio of the metals to be in the crust of the earth. The ratio will probably return someday, but investing with that hope is probably futile.
One other point: The price is determined (absent a physical shortage) by traders on the Comex Exchange betting on what the bettors in the future will be betting the price will be. A physical shortage of the metal, or a foolhardy attempt to deplete the commercial trader's stocks are the most likely events to eventually to break this pricing routine. Either could result in an explosive upward move.