SILVER

That’s been my subject, many times over the last ten years, but it’s time we mentioned it again, because of the ratio situation.  Throughout history, the ratio between gold and silver has been 16 to 1. Put another way, gold has generally been 16 times more expensive than silver, in all nations, years, centuries, and in all currencies.  Not only that, but the first coin struck, thousands of years ago, was of silver, not gold.  Silver is indeed a precious metal.  It’s often been called, “The poor man’s gold.”  There are experts who insist that there is more gold above ground and in circulation, than silver.

If the ratio between silver and gold were to once again be 16 to 1, silver would be over $88 per ounce, rather than the $28 it is as I write this. Will the ratio ever return to 16 to 1 again?  I say a unabashed YES.  Review a bit of history.  Two years ago, the ratio was 77 to 1.  Gold was 77 times more expensive than silver, two years ago, and I remember writing that I considered silver to be a screaming bargain.  I still do.  This morning, the ratio between gold and silver is right at 50 to 1.  In two years, the ratio has decreased by 27.  Put another way, silver has gone up, like gold, but 34% further.  Allow me to emphasize.

In two years, silver has gone up 34% further than gold.

Will the escalation continue?  I believe it will, till the ratio gets a lot nearer to 16 to 1 than it is now.  Both gold and silver prices will go up as will all prices, be it lettuce, goldfish, tires, or gasoline.  What are the disadvantages of owning silver? There’s one big one, and that is its size.  A comparison I often use when speaking to clients, is that you could probably buy your home with a handful or two of gold, but to buy your home with silver, it may take a pickup truck load!  This means that owning silver, requires a lot more storage space than gold.  Silver isn’t easily stored in a safe deposit box at your local bank.  Nice to have a gun safe, or similar, to store it.

If you ever buy a safe, consider this.  Borrow someone else’s pickup and pay cash for it.  Then, no one will know who has it or where it went.  Unload it at night so neighbors won’t notice.  Store clerks could easily tell the wrong people who bought a safe, and where they live.  Be smart!

Silver, to me, is still a huge bargain.  The current special of 40 cents per ounce over spot for 100 ounce silver bars in lots of five, can’t last forever.  Forty cents above the spot price per ounce, for 100 ounces of silver, vs. $56.69 over the spot price of gold for a one ounce U.S. Gold Eagle.  I am not degrading gold.  Absolutely not!  Both silver and gold are historic, genuine, money.  Both are protection against the upcoming hyper inflation.  Currency collapse?  Hyper-inflation?  Chaos everywhere?  Gold and silver will protect you.  If you have space to store it, by all means, silver is your best bet, but either will ’go up’ as the dollar ’goes down.’