7 Reasons Silver is a Better Buy than Gold

7 Reasons Silver is a Better Buy than Gold

1.  The supply and demand fundamentals for silver are extraordinary. There has been an ongoing supply/demand deficit in silver for 12 years. More silver is consumed by industry than is produced by mining and recycling combined. Some say this deficit reaches back 60 years, and has consumed virtually all the known silver ever mined since the beginning of the world. The annual deficit has recently ranged from 100 million to 200 million ounces per year. Annual supply is about 650 million ounces, and annual demand is about 800 million ounces.

2. Considering refined and mined known silver reserves, there is far less silver in the world than gold.  Approximately 150 million ounces of silver vs. 4 billion ounces of gold.

3. Most silver, 70-80% brought to market, is mined as a by-product of copper mining, gold mining, or zinc and lead mining. There are very few primary silver mines in the world, since most are really copper or gold mines. Therefore, mild increases in the price of silver will not bring substantially more silver out of the ground. Much silver is consumed in photography; electronics, medicine and numerous other industries. There is so little silver used in any one application (cell phone, photograph, electric terminal), that price increases in silver will probably not reduce demand. With a relatively inelastic supply, and relatively inelastic demand, it will require a dramatic explosion in price to bring the supply and demand deficit back into balance.

4. Famous investors have bought silver in recent years. In 1997, Warren Buffet bought 130 million ounces of real silver, due to the favorable “supply and demand fundamentals”, He bought as much as they would let him legally buy, yet his purchase was with about 2% of the value of his portfolio. George Soros owns a large percentage of Apex Silver (SIL). Bill Gates owns a substantial position in Pan American Silver (PAAS).

5. In the gold market, there has been a large increase in paper futures contracts which are used to suppress the price. In silver, the relative amount of paper contracts is much larger. In other words, there are more paper shorts that will be caught in an impossible situation when the price of silver really begins to rise due to the fundamental supply demand gap. They will be forced to buy silver or go bankrupt. Either action will cause a dramatic rise in the silver price. If they default on the silver contracts, that will signal to the world the severe shortage of silver, and signal a great investment opportunity.

6. One of the cheapest ways to buy silver: You can buy U.S. coins dated 1964 or earlier, $1000 face value (4,000 quarters, or 2,000 half dollars, or 10,000 dimes), in a “bag” of “junk silver”, which contain 715-720 ounces of silver, depending on how worn the coins are. In the early 1980’s, when silver was $30-$50/oz., a bag of silver could be used to buy a house ! We could see that day again – soon!

7. But historically, a silver dime was a day’s wage , whether 100 years ago, or in Roman times when a denarius was a day’s wage.  This means that a dime of silver, worth $1.27 today, could be worth over $150 (which is a day’s wage in today’s money.) or more, now that silver is scarce.  Actually, in 1926, a silver dime could pay the rent at a 5 star hotel for a month!  That’s worth about $6,000 to $10,000!