"Silver: $18/oz And Going To $50? Very Possible! The price of silver has
tripled in price since 2003 and rose 47% in 2007. Because of huge industrial
demand and silver ETFs, some analysts believe silver will surpass its all time
high of $50/oz. Find out more."
The above paragraph is one of many compelling advertisements and promotions
I've seen a lot of lately to motivate investors to buy silver. Gold bugs are
often not as enthusiastic about the "poor man's gold" as silver has often been
called.
That may be changing as new information about the many applications and
increasing demand for silver is creating a new mystique about this potential
wealth-preserving investment. Investors in developing nations like Brazil,
China, India and even Russia are trying to protect their purchasing power by
regularly putting some of their family's savings into silver.
Recently I read an informative, brief analysis of why silver has some
"catching up" to do with its big cousin, gold. Ian Davis, a writer with
Stansberry & Associates (www.StansberryResearch.com) makes some compelling points as to
why silver will most likely surprise a number of hard asset investors who think
gold is the best precious
metals investment .
Here's what Mr. Davis wrote on July 15, 2008, and for me it makes me glad I
own Silver Wheaton (NYSE:SLW), Pan American Silver (Nasdaq:PAAS), Silver
Standard Resources (Nasdaq:SSRI) and Hecla Mining (NYSE:HL).
"Would you be disappointed with a seven-year gain of 710%?
Well, what if you found out a similar investment would have returned
1,481%?
If you had bought gold in 1973, this is the exact situation you would
have faced in 1980. Between 1973 and 1980, the price of gold went up 710%. As
for the 1,481% gain... that came from silver.
You see, the late 1970s were a period of rampant inflation. The Consumer
Price Index (CPI), a common measure of inflation, rose an average 8.2% per year
over the seven-year period. Over the last 60 years, the normal rate of inflation
has been only 3.8% annually.
And right now, I think we've got a similar setup...
Inflation in the U.S. is soaring once again. So far this year, we're on
track for a 4.1% increase in the CPI... And it's going to continue to get worse.
High commodity prices are trickling down, forcing manufacturers to raise their
prices.
In the face of this rampant inflation, Americans will abandon the dollar
and turn to their old friends, gold and silver.
For almost as long as civilization has existed, gold and silver have
dominated the currency markets. In fact, before 1900, the U.S. dollar was pegged
to both gold and silver. Back then, one ounce of gold was worth $20.65, and an
ounce of silver was worth $1.29.
Today, almost all currencies are "fiat" currencies (meaning they are not
linked to any underlying asset).
