ximmy
27th July 2011, 12:17 AM
For more than 25 years, I have closely studied the silver market from a supply/demand and market structure perspective. For almost 15 years before that, I traded silver, along with other commodities, as a commodity and stock broker. In all those 40 years, I have tried to avoid analyzing silver in the context of it being an asset of last resort in a world financial crisis. Not because silver is not an asset of last resort but because that attribute has always been widely accepted and written about. I have always strived to uncover new and unique aspects to silver; there was no real value added in me writing about what was already known.
Today, however, I would like to share some thoughts that have come to concern me recently about general world financial conditions and silver. Before I do that I wish to assure you that I still hold an optimistic outlook that many of today’s financial problems in the US and the world will be resolved in a fairly reasonable manner. But I don’t think resolution will come easily or without some type of a real scare. Nor do I think a worst case outcome is impossible. Importantly, I don’t want to paint a picture that silver should be held only because the world is headed to hell in a hand basket. Based upon all the facts, silver should do fine almost no matter what world financial circumstances are eventually witnessed......
Gold and silver are, of course, assets that are no one else’s liability. As such, they are the perfect antidote to a world increasingly worried about everyone else’s liabilities. The great thing about precious metals is that they are so different from conventional paper financial assets as to be completely distinct and unique in substance....
There is less silver bullion inventory in the world than there is gold bullion inventory; around one billion ounces of silver versus three billion ounces of gold. Common sense would suggest that an item more rare than another similar item would reflect that relative rarity in price. While silver has vastly outperformed gold over any reasonable time period over the past ten years, the rarity of silver is vastly underappreciated. I would guess that maybe one out of every million of the world’s inhabitants knows of this fact. Even among those exposed to the rarity of silver compared to gold, few accept it. Inevitably, as more come to learn and appreciate this startling fact, more will choose to invest in silver.
While much more silver is mined and produced each year than gold, when one considers the fact that silver is an important industrial commodity compared to gold, a different picture emerges. After subtracting the industrial and other fabrication usage of silver and gold, the amount of each “left over” and available for investment the attraction of silver becomes clear. Who cares if more silver is produced if most of it is spoken for by industrial and other fabrication consumption. Very few people consider silver in this perspective. As time progresses, more will.
The most important factor to consider in deciding between silver and gold is the price of each. Because gold is so much more expensive than silver, the dollar valuations of each are distorted. At current prices and the amount of gold and silver bullion inventories in the world, there is more than 120 times more gold in the world than silver in dollar terms. What this means, among other things, is that it takes a lot more money to move the gold market than it does to move the price of silver. That’s probably the biggest reason for why silver has been outperforming gold. There is nothing on the horizon to suggest that will change anytime soon....
The trick, as always, is to beat the crowd.
Full article:
http://news.silverseek.com/SilverSeek/1311611199.php
Today, however, I would like to share some thoughts that have come to concern me recently about general world financial conditions and silver. Before I do that I wish to assure you that I still hold an optimistic outlook that many of today’s financial problems in the US and the world will be resolved in a fairly reasonable manner. But I don’t think resolution will come easily or without some type of a real scare. Nor do I think a worst case outcome is impossible. Importantly, I don’t want to paint a picture that silver should be held only because the world is headed to hell in a hand basket. Based upon all the facts, silver should do fine almost no matter what world financial circumstances are eventually witnessed......
Gold and silver are, of course, assets that are no one else’s liability. As such, they are the perfect antidote to a world increasingly worried about everyone else’s liabilities. The great thing about precious metals is that they are so different from conventional paper financial assets as to be completely distinct and unique in substance....
There is less silver bullion inventory in the world than there is gold bullion inventory; around one billion ounces of silver versus three billion ounces of gold. Common sense would suggest that an item more rare than another similar item would reflect that relative rarity in price. While silver has vastly outperformed gold over any reasonable time period over the past ten years, the rarity of silver is vastly underappreciated. I would guess that maybe one out of every million of the world’s inhabitants knows of this fact. Even among those exposed to the rarity of silver compared to gold, few accept it. Inevitably, as more come to learn and appreciate this startling fact, more will choose to invest in silver.
While much more silver is mined and produced each year than gold, when one considers the fact that silver is an important industrial commodity compared to gold, a different picture emerges. After subtracting the industrial and other fabrication usage of silver and gold, the amount of each “left over” and available for investment the attraction of silver becomes clear. Who cares if more silver is produced if most of it is spoken for by industrial and other fabrication consumption. Very few people consider silver in this perspective. As time progresses, more will.
The most important factor to consider in deciding between silver and gold is the price of each. Because gold is so much more expensive than silver, the dollar valuations of each are distorted. At current prices and the amount of gold and silver bullion inventories in the world, there is more than 120 times more gold in the world than silver in dollar terms. What this means, among other things, is that it takes a lot more money to move the gold market than it does to move the price of silver. That’s probably the biggest reason for why silver has been outperforming gold. There is nothing on the horizon to suggest that will change anytime soon....
The trick, as always, is to beat the crowd.
Full article:
http://news.silverseek.com/SilverSeek/1311611199.php