My friend Louie called me today and asked, "what's up with silver?" What I really wanted was because it's late so far Golden silver? Three months ago, as gold breached the level of $ 1500, silver was trading as high as 48 dollars per ounce. At one point the ratio had dropped down to 32 ounces of silver equivalent to 1 ounce of gold. Currently the ratio sits at 1: 45.
At the time, rise of the silver to stardom has been attributed to its growing demand in the sector. Question and demand growth were higher than supply so launching a buying frenzy to sister gold metal. Since then, silver prices have cooled but still show considerable 12 month earnings close to 100%.
Now rerun the price of gold and silver seem to be late. But, as we reflect back to the last major move of silver, advance wary of silver makes a lot of sense. In fact, gold has firmly taken its seat in world markets as currency. Central banks printing money, knowing that they are devaluing the currency that you print. To offset that lost value buying gold. History makes gold the first metal of choice as a store of wealth and a safe haven investment. Silver has a minor role behind gold as money.
If not you could print money, you want to buy before-gold or silver?
Now, consider the role of silver as an industrial metal. Without going into detail now about its many uses, suffice it to say it has many industrial uses than gold.
So, here we sit at the center of a debate for the debt. If you decide to limit debt, we make the decision to limit the industry. If we restrict industry we limit the need for industrial metals.
When comparing the two metals in these conditions is easy to see how gold is a win win situation. If we decide to limit the industry by limiting the supply of money printed, we head towards some form of default. Default destroys the dollar and higher gold prices as a tip of the big and small investors to own an asset that retains its value. If you print more money, we effectively default on the purchasing power of the dollar, pushing investors in gold for the protection and preservation of wealth.
Win win situation is this that makes gold a first choice for investors in times of uncertainty. Here, not to say that it's time to give up on silver. The fundamentals of supply and demand are still intact. Is just flat out used faster than you can get off the ground.
Silver would try to play a little catch up. Once investors over a point of focusing on the recent debate, debt downgrade later will be back to business as usual. I suspect that a little bit of non-buyer's remorse when many investors wake up and understand silver may be the real deal.
Source: http://community.nasdaq.com
Tags: Analysis, future prices of gold, gold futures, gold investments in gold, Gold news, the price of gold, gold price, gold prices, silver price, silver prices
Posted by CBN on August 14, 2011. Filed under precious metals. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this post
No comments:
Post a Comment