Wednesday, February 6, 2008

Investing In Silver: Is Now A Good Time?

Is this a good time to be investing in silver? This is a question many people are asking themselves right now, and for good reason. With the prices of gold and platinum going crazy and garnering all the attention, silver all of a sudden appears forgotten. Investors who look a little deeper could see that silver might have the best underlying price fundamentals of any of the precious metals.

Silver prices have a tendency to lag gold prices in the first half of gold bull market runs, according to Franklin Sanders from The Money Changer. He expects the price of gold to continue to rise, but also expects silver to play catch up as the bull run in gold progresses. He estimates that silver will eventually end up at a gold to silver price ratio of 16 to 1. With his target gold price of $1,250 per ounce, that would put silver at a target price of $78.13 per ounce. Silver is trading at a little more than $16 per ounce, so that would be an incredible return.

Sanders appears a little more bullish on silver than most, but it is hard to ignore the facts that support silver. In addition to its monetary value, silver has many industrial uses and has demand far in excess of available supply. To find out more about silver’s various attributes, read our article about investing in silver.

I don’t personally see silver hitting the target Sanders set, but I do think investing in silver is a smart investment right now. More so than gold or platinum, this is the precious metal that I think has the most room to increase in value. One interesting way to invest in silver is through a silver CD. With a silver CD, you are able to participate in the positive price movement without risking your principal. There are, of course, some drawbacks to this strategy, but it offers an overall safe route for investing in silver. For more info about this investment strategy, read our article about investing in silver and gold CDs.


Anonymous said...

Hi Eric,

I tend to agree that Sanders' silver target may be abit high. Probably $30 perhaps? Silver is definitely a cheaper precious metal to invest in as compared to gold and I believe quite a large group of investors gree with me on this as well.

I'm looking at an 80/20 view on a gold/silver portfolio though.

What do you think?

Eric Ames said...

I think anywhere in the 70/30 or 80/20 range makes sense to me. I would want to keep a little exposure to gold (I always try to), however, when I compare the two metals right now silver just overall looks to be a better investment.