I am a well-known "gold bug" because of my strongly voiced opinion that gold has been one of the best assets for protecting yourself from the US dollar's prolonged decline.
Lately, the precious metals have taken a beating, and I've been
called to defend gold's future prospects in the media countless
times. While I am confident that gold will rebound with a
vengeance before long, I think investors are potentially missing
an even greater opportunity in that other monetary metal: silver.
To address this oversight, I have compiled a special report
called The Powerful Case for Silver, which is available at
www.schiffsilver.com.
This 14-page report report contains in-depth analysis of what I
believe to be the strongest arguments for owning the white metal.
What follows is a general overview of the key arguments I make in
the report.
The People's Money
After a couple generations of purely fiat currency in the United
States, a lot of people have forgotten that money used to be
backed by something of value - gold and silver. It wasn't until
1965 that the US stopped making its dimes and quarters out of 90%
silver, and the dollar was backed by gold internationally until
1971.
In spite of fiat money's ubiquity, more and more people around
the world are waking up to the dangers of paper currency and
turning to gold and silver to protect their savings. Silver is
particularly useful to everyday citizens around the world because
of its smaller value-to-weight. A half-ounce of silver can buy
you dinner. A half-ounce of gold can buy dinner for you and 60 of
your closest friends. That's why for centuries, gold has been
considered the money of kings, while silver is known as the
people's money.
It's not hard to see the growing importance of a stable medium of
exchange worldwide - look to the Cypriot banking crisis or the
barter markets evolving spontaneously in economically devastated
countries like Argentina or Greece. Here are places where having
an stash of silver versus a roll of banknotes can mean the
difference between keeping your family well-fed and having to beg
for assistance.
Developed nations are also waking up to this reality, translating
into record silver sales at the US Mint and other major bullion
producers despite the recent correction in global spot prices.
This investment demand is providing a baseline of support to
silver's price and helping to re-establish silver as a
universally recognized form of money.
Growing Industrial Demand
Silver conducts heat and electricity better than any other metal
on Earth. It is also anti-bacterial. These amazing properties
make silver indispensable in a vast array of modern industrial
and technological applications.
This industrial demand has been shifting dramatically since the
turn of the century, as defunct applications for silver like
photographic film have been replaced by new technologies like
photovoltaic power. The evolution of silver's industrial
applications continues unabated, with new uses being developed
every year.
In spite of a recent dip in demand for industrial silver due to
global economic volatility, the fundamentals of the industries
consuming silver look promising. The Powerful Case for
Silver delves deeper into the latest silver technologies like
nanosilver and demonstrates why I believe industry will provide
growing demand for silver over time.
Undervalued Relative to Gold
For the majority of human history, the prices of silver and gold
have been closely tied to each other. There is estimated to be
about 19 times as much silver as gold in the earth, and only 11.2
times more silver than gold has ever been mined. Today, the
silver:gold price ratio on the markets is about 65:1. That is out
of sync with the relative scarcity of the metals and with the
long-standing historic bounds from 12:1 to 16:1.
To understand why silver is being undervalued by the market, it
is important to trace the histories of the two precious metals.
Over the last two centuries, as world markets were forcibly
detached from their monetary backing, clumsy attempts at setting
fixed exchange ratios at first cleared and then flooded Western
markets with silver. Then, with both metals taken out of
circulation, precious metals investment was confined to saving -
a role more suited to gold.
As the fiat currency system collapses around us, I expect the
precious metals to return to circulation, and silver to once
again be valued for its advantages in this role. Though I expect
both metals to appreciate significantly, silver may rise much
faster in order to realign with its historical price ratio to
gold.
Take The Time to Understand Your Investment
I've just brushed the surface of The Powerful Case for
Silver. Inside the report, you'll find more detail on all of
these points, accompanied by helpful charts and graphs
illustrating silver's future prospects.
The Powerful Case for Silver also provides advice on which
silver products are investment-grade and how to go about
purchasing them safely.
For those who have been on the fence during this bull market, the
recent correction is an excellent opportunity to learn about
silver and build a position.
Peter Schiff is Chairman of Euro Pacific Precious Metals, a gold and silver dealer
selling reputable, well-known bullion coins and bars at
competitive prices.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.