silver to get the catalyst it needs

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aitakahashi

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silver to get the catalyst it needs

posted on Mar 13, 2009 10:11AM

this article by myra saefong covers all of the major points on silver vs. gold. the current price ratio stands at 70:1 when the two metals occur in the earth's crust at 15:1, weak industrial demand has hurt the price of silver, and ultimately monetary (investor) demand for silver will outweigh all of the other factors.

Patience, please

Silver may soon get the catalyst it needs.

After all, "since 80% of silver that is mined annually is as a by-product of base-metal mining, the potential supply for silver this year will be dramatically down," said Paul Mladjenovic, author of Precious Metals Investing for Dummies.

"Base-metals mining is being cancelled or curtailed due to the deteriorating world economy," he said. "With many mines closing down, that means that much less silver will come into the market [and] since investor demand for silver is still very strong, that bodes very well for silver."

Silver is 'both a safe haven and financial insurance, but also has potential for significant returns perhaps more than any commodity, currency or asset class in the world today.'

— Mark O'Byrne, Gold and Silver Investments Ltd.

And when the U.S. and world economy shows signs of "meaningful recovery, recovery sufficient to prompt a pick up in silver fabrication demand, that's when silver will outshine gold once again and the gold/silver ratio will trend down," said Nichols. Hopefully that recovery will happen in 2010 or 2011, he said.

"In short, I'm looking for gold to outperform in the short term and silver to outperform later on," he said.

Mladjenovic said silver has the "realistic potential" to achieve an intermediate high of about $25 by year-end and within the 2 to 3 years, "current fundamentals, from both industrial and investment demand, coupled with much lower supply, will drive the price of silver to $50." That's silver's nominal record level from 1980.

Karnani sees "an immediate-term target of $16 for silver -- $23 to $25 in the longer term, such as the end of 2009 or first quarter of 2010."

"Silver has the most sound fundamentals and will significantly outperform the precious metals and the base metals in the coming years," said O'Byrne. "It is both a safe haven and financial insurance, but also has potential for significant returns perhaps more than any commodity, currency or asset class in the world today."