Silver has been a blockbuster for more than a year now. It has doubled in comparison to its more illustrious cousin, Gold.
My personal feeling that Silver will continue to outperform Gold and I have my reasons for the same.
11 important Reasons why Silver trade will out perform Gold
1) Shift in Monetary reserve policy to Gold & silver from Dollars
2) Commodities are in a secular long term bull market, More so Gold, Silver
Individuals, Central banks & governments across the globe are shifting their reserves in to tangible assets like Gold & Silver
3) Silver production deficit for straight 15 years now!
From last 15 years silver usage in Electronic & Electrical industry has hot up many fold & still the supplies are no where near demand
4) Gold demand almost near to its supply – Silver down from 2 billion ounces to 367 million ounces / annum
2 billion ounces in 1990 & still the same in 2010 – Silver 2 billion ounces in 1990 & 367 million ounces in 2010 in-spite of silver being mined 8 times more than gold !
5) Silver is severely under valued
Historically silver is greatly undervalued compared to gold, silver prices have not kept rising to their historic high’s of 52$/oZ even when adjusted against inflation for several decades now
6) Gold silver ratio is unrealistic & is set to rise
Current Gold silver ratio is @ 1/45 which experts like UBS, Berkshire Hathway, and David Morgan Etc believe in the next decade the ratio will come down to between 1/16-1/10 of the gold prices
7) Silvers real value is far more than what it really is today
Purchasing power of dollar through 1913-2010 has almost gone down 95% as a result dollar denominated ratio for gold & silver has disproportionately grown hence the rise in Gold & silver prices, but silver is far too behind even @ of $ 29/oZ
8) Silver yet to reach its peak price: Silver’s historic high was $ 52 / oZ during 1980, if this price were to be adjusted against inflation over these 30 years; silver price should be $ 153/ oZ ! @ $ 29 current market price, prices of silver has a long way to go!!
9) 51 country heads across Europe & South American counties have agreed to
Make silver as their Money: Economic crisis across Europe & USA has made several
Country heads Opt for time tested real money reserves in the form of Gold & Silver
10) Ratio of silver recycling is far too less compared to Gold: Digital technology is
Creating unprecedented demand for silver which cannot be recycled, almost all digital
Technology products use silver as one of the main component.
11) China factor: China is discreetly converting its several 100 billions of dollars
In to Gold & Silver & nearly 50% of silver is consumed by its industries
While there are very few opportunities to invest in Silver through mutual funds.
For Gold you have gold ETFs and also Funds like Reliance Gold Savings Fund, etc, but for silver there is virtually no option.
Birla Precious Metal Fund is one option where you can get a Silver Exposure.
More options are sure to come, especially in the wake of the sizzling rise in Silver price.
Regards,
Srikanth Matrubai
Also visit http://equityadvise.blogspot.com
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