We are of the opinion that both Silver and Gold provide an excellent investment opportunity in today’s economic climate where the world central bankers are expanding the world’s money supply with quantitative easing. (Printing money)
Politicians and Fed Chairman Bernanke can talk down the price of gold but with trillion dollar deficits projected for the next 10 years, we cannot see any way for the Americans not to continue printing money. They have pumped trillions of dollars into the global financial system to get the Dow back in record territory. If they stop QE now there will be a much worse recession than 2008. (They have not fixed any of the fundamental problems with the World economy.)
The global silver market is extremely small in comparison to the Gold Market and therefore much more volatile. It is important to note that the volatility in the silver market works both ways, which means that silver also has the possibility to explode to the up side. (In April 2007 moved up some 170 % in 7 months)
Not all players in the precious metal markets share the same negative sentiments with regard to Silver as a vehicle for investment. Evidence of this is seen in the divergence in price between physical silver and the price of silver in the paper markets. Bullion dealers are reporting record sales despite the sharp downturn in the paper silver market.
Extreme bearish sentiment is often one of the best contrarian investor buy signals. A reliable method to measure this extreme bearish sentiment is to monitor the net short silver positions on paper futures exchanges. The net silver short positions on many of these exchanges have recently reached their highest levels in 20 years.
Eric Sprott, a respected Canadian investment adviser, believes that the gold / silver ratio will trade at as low 16:1 during the course of the current precious bull market. The current Gold / Silver ratio is 61 : 1 (One ounce of gold will cost you 61 ounces of silver)
Eric Sprott:
“I think silver will be the investment of this decade whereas gold was the investment of the last decade. Silver will outperform gold. I believe silver will trade down 16:1 ratio to gold…Your return will be 300% more. If you have the patience and can stomach the volatility, I think silver will by far be the better investment going forward.”
We believe that the bull market in silver still has significant upside potential and current Silver Rand prices present an excellent buying opportunity.
