Silver actually has brighter prospects than Gold

Silver actually has brighter prospects than Gold
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Published September 23rd, 2010 - 09:22 GMT

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 Gold prices are hitting record highs at the moment with investors worried about future inflation and unsure about bonds and stocks.

But the first independent investment newsletter published in the region, ArabianMoney, argues that silver is likely to prove a better investment than gold over the next few years.

'I am old enough to remember silver breaking $50 an ounce in 1980' said editor and publisher Peter Cooper. 'Thirty years later and silver is still less than half that previous high. That makes silver easily the cheapest and most undervalued commodity, let alone precious metal.'

The newsletter points out that the centuries old average ratio of the silver to the gold price is 15. Today it is four times higher at 60. That leaves a lot of room for silver to outperform gold as precious metal prices really lift-off.

From what ArabianMoney understands the banks have been quietly adjusting their silver future positions in August. 'That helps to explain why silver has not been falling in August with stocks under pressure,' said Cooper.

'It should be selling off as an industrial commodity used in electronics among many other manufacturing processes. But it is not. Silver is acting again as a precious metal.'

Silver has to more than double in price just to equal its all-time high set 30 years ago. And it has to more than quadruple in price just to regain its historic ratio to the gold price. And that comes on top of silver keeping up with a rising gold price.

So if the price of gold quadruples to $5,000 as ArabianMoney expects within two to three years then silver has the potential to rise 16 times just to regain its historic relationship to the gold price or to $320 an ounce.

If it overshoots the average, as markets almost always do then a 20-fold increase in the silver price to an all-time high of $400 is on the cards.

Silver investment expert David Morgan says that gold will preserve the value your money in inflationary times while silver is the precious metal that will actually make you rich!

This month's edition of ArabianMoney has some timely advice on the best ways to invest in silver from a practical viewpoint and although silver always comes with a volatility warning and a 'buy-and-hold' label, this seems to be a very good time to be stocking up on this precious metal. 

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