Silver Bull Market

The silver bull market is underway, read on to find out why silver is way undervalued. When it comes to investing in precious metals, you have several different options to choose from.

You have the long time players like gold, silver, and platinum. You also have the other not so mainstream metals like palladium and rhodium.

All of these metals have one thing in common; they are priced for their rarity. Both palladium and rhodium are interesting metals in themselves.

At one point palladium was $60/ounce until a shortage from Russian producers drove the price to $1,000/ounce. The Ford Motor Company purchased huge amounts of palladium at its high fearing a shortage would disrupt their production of catalytic converters.  

Rhodium has a seemingly more dramatic story. Rhodium was once priced at around $300/ounce and the price briefly rose to $10,000/ounce in 2008. These sharp price rises in these metals is simple proof that it has happened before, and as I will explain will happen again. 

Gold has its place in the precious metals arena. Gold is considered by most to be the king of all precious metals. For thousands of years people have used gold as money because gold is rare, fungible, easily stored, and easily exchanged for goods.

Silver is the little brother to gold, but as you will find out silver is about to be gold’s BIG daddy. Both gold and silver have performed well since the most recent precious metals bull market began in 2000. Gold has gone from $250/ounce to highs of $1225/ounce recently.

Silver has made impressive moves as well. Silver was trading at about $3.50/ounce in 2000 and has recently gone to about $19/ounce. Increased demand has caused a lot of investor interests to take notice of both gold and silver.

But what makes the silver market so monumental? Why are so many people yelling to buy silver? Why has billionaire Robert Kiyosaki stated that silver is the number one investment today?

It’s simple, but it’s shocking how many investors have not even heard about silver much less think it’s a decent investment.

Now, I will be honest with you. I’m a huge silver bull, so that obviously is going to make me a little bias about telling others which metal I think is the best. I am not anti gold. I do own some gold, but the bulk of my investment is in silver bullion, silver coins, silver bars and American Silver Eagles.

I decided a while back that I was going to go 100% into silver after listening to precious metals expert Mike Maloney talk about the bullish factors for silver. When he stated that in the not so distant future you will be able to buy a house for 500 ounces of silver, I was sold on silver.

Industrial Demand

The factors for silver are many. Firstly, silver is an industrial metal. It’s used for all sorts of things including most electronic devices, solar panels, batteries, medical equipment, water filters, and antibacterial applications. The rise in electronics over the past 20 years has all but depleted above ground silver inventories.

In fact, each year industry consumes 50 million more ounces than is mined. The rest of the silver comes from scrap silver and recycled silver. Silver mines are consuming 1/10^th of the world’s silver each year. Silver is disappearing so quickly that the USGS stated it would be the first periodic element to go extinct.

This is a huge opportunity for silver investors because silver is dirt cheap right now. It is practically being given away. So, just like when rhodium and palladium exploded, so too will silver. It’s just a matter of time before it happens. The triggering event will be when industry finally experiences a shortage in silver.

At that point, all businesses relying on silver for their operations will go on a buying panic. It will be such a panic that these companies will be willing to pay whatever price for silver in order to remain in business.

Investor Demand

Since we talked about the industrial demand, now I would like to talk about investor demand. Investors have been buying silver like crazy. Even the U.S. mint had to put orders on hold and in 2008 most dealers were cleaned out of inventory and there were 4 month waits just to get some silver.

Investors have gone crazy over the metals, and the rush to silver is just in its infancy. The size of the silver market is just tiny. This makes it an awesome place to be when the big money does finally start to flow into the silver market.

I’m not positive, but it would take something on the scale of .001% of the investment money to go into silver to buy up the entire physical market. It would take just one billionaire to buy into silver to send the price to the moon.

Big manipulators in the market have suppressed the silver price by short selling silver contracts on the COMEX. This manipulation will be overwhelmed eventually by the physical demand we are seeing. That’s why it’s just a matter of time before we see the silver price really take off.

The ETF (exchange traded funds) offer paper silver. It is simply a derivative of silver since all you get is the price exposure of silver. Most experts agree that the silver ETFs do not have the physical bullion they claim to have. This is mostly because the SLV will not allow a third party audit of the supposed silver in their vaults.

Inflation is eating away at our dollars, and this is a major reason that investment demand has been so high. Gold and silver are a flight to quality when worthless paper currencies become even more worthless. Gold and silver are real money. Cash is trash. Fiat paper currencies are going to fall all over the world relative to silver and gold.

Whether you decide to buy gold or silver, I hope you check out my other posts to learn more about the gold and silver markets. Simply click a category in the sidebar.

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