Silver vs Gold–Part II

Industrial demand for silver is increasing in many areas of industry. This is not so for gold; it does not have the same number of industrial uses and the same industrial demand as silver has. This increase in demand for silver will drive the price higher during the coming years. As the demand for electronics continues to escalate in India and China and other developing countries the demand for silver will escalate along with it.

Silver is the poor man????????s gold. More people can afford an ounce of silver than an ounce of gold. These small investors will pile into the silver market as they learn what inflation really is, the debasement and dilution of currency. In fact, they already are piling in.

The historical ratio between silver and gold, about 15:1, still suggests that silver is cheap compared to gold. Some gold owners are realizing that if they sell gold and buy silver they have a larger percentage upside gain possible. ????Just look at what silver has done relative to gold over the last 18 months. The value of the gold market is many times the size of the value of the silver market today. If 1 or 2% of the gold market were liquidated so its owners can buy silver we????????ll see a massive increase in silver????????s price. Some precious metals investors have already begun to transfer gold funds into silver investments.

Silver is both a precious metal and an industrial metal. Gold is, for the most part, just a precious metal. One major force drives gold; two major forces drive silver.

Above ground silver supplies are smaller than above ground gold supplies. The general public hasn????????t figured this out yet. As the scarcity of silver becomes more apparent the price of silver is likely to climb more rapidly than gold.

Nearly all the gold that was ever mined is stored somewhere that people can easily put their hands on it. Not so with silver. A lot of silver gets used up in very small quantities in manufacturing and is then not recovered when the item that was produced is tossed. The silver , in essence, disappears. The amounts used in many products do not justify a back end recovery cost.

Silver is primarily a byproduct of the mining of other metals. This creates a somewhat inelastic supply. When demand heats up the production end can not respond quickly so prices skyrocket. There are not many primary silver mines.

Institutional investors are just beginning to discover silver. When real money starts pouring into silver, this tiny market will explode.
Silver, like gold, is real money, not fiat currency. As major currencies are debased through monetary inflation the demand for both metals as a store of wealth will explode. The silver ETF SLV has already driven demand and price up since its recent creation.

Central banks and other banks hold huge reserves of gold. For the most part this is not the case with silver. Governments tend to hold gold, not silver (not always the case, but it is the case today). As silver supplies become scarce there are few remaining stockpiles to exploit (a few ETFs perhaps). ????Gold stock piles are huge in
comparison to silver stock piles. ????As the price of silver keeps moving up we????????ll likely see a massive spike in silver prices as manufacturers jump in to build stock piles trying to lock in lower prices now. What price will be the trigger for this move? It may be scarcity rather than price that triggers this move towards stockpiling and hoarding. ????Already investors are loath to part with the silver they????????ve purchased in the face of ongoing currency devaluation. ????Although gold prices are still moving up we will not see a spike driven by industrial users in gold. Unlike silver, there aren????????t many of them.

Silver is a great store of wealth (unlike the dollar). An ounce of silver will buy dinner out for two. An ounce of gold will buy a suit or two of clothes. Silver is convenient for smaller trades. People will want to own a lot of it to use for smaller, day-to-day trades. It????????s a natural day-to-day exchange item (money). It has been for thousands of years.

I probably forgot a few points. Gold is great, but silver has been climbing in value faster than gold over the last ten years. It will continue to do so for some time. Those who have focused more heavily on silver than on gold over the last few years are glad for it. There may come a point ????where silver is overvalued relative to gold. We????????re a long ways from hitting that point. To become involved in the precious metals market view: christew.myamericangoldreserve.com Disclaimer: Investing in stocks and precious metals is risky and could result in losing money. I am offering ideas for your consideration and education. I am not offering financial advice. Please do your own due diligence. I am not an investment adviser. Precious metals are not for everyone. I sell precious metals through American Gold Reserve. You should do your own due diligence when making investment decisions of any kind. You should consult your own financial advisers before making any investment decision. I make no guarantees that by following any advice or suggestion I might make that you will realize any return. Beware, all commodity markets and other markets carry risk of loss.


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