Silver Still a Buy?

The short answer is yes and yes again!

The correction that has taken place in the last week or so is nothing more than a blip as precious metal prices have followed the general market see saw.

The problem is that the wall of worry about the US and other economies is growing higher week on week so it is hardly surprising that many nervous investors who have seen fat profits in their silver and gold positions have cashed in.

Of course this is true of other nervous investors in the wider stock market but the major difference is that the precious metal market and its producers are an unknown quantity to the vast majority.

The sector suffered from a twenty one year bear market, only emerging from the doldrums in the last four/five years, that translates into two generations of investors who took no interest in the gold and silver and mining side show, it was reserved, if you like, to a few dedicated specialists who have now become long in the tooth.

But this is due to change very soon

With the world still awash with dollars, euros and sterling and a host of other fiat currencies without solid asset backing, by this we mean principally gold, with worldwide inflation rearing its ugly head, and with stock markets looking increasingly vulnerable, the big dogs will be looking for alternative opportunities to keep their profits rolling in.

And what better opportunity than putting money into a market where demand exceeds supply and is likely to continue to do so for years ahead, has a growing use in the high tech field and in the medical industry, is continuing to show growth in the traditional jewelry market of the increasingly affluent societies of the East, and next to gold is considered as a store of value, not forgetting its historic use as money.

Compare this week’s price of below US$12.50 per oz. from the price seven years ago of just US5.00 per oz., an increase of just two and a half times, with the price of other hard commodities in the same period.

Uranium up thirteen fold, Zinc, Lead and Copper all up nearly five fold, Nickel seven fold, Selenium, Indium and others ten fold and more.

If you compare the price of silver at $50 per oz when the millionaire Bunker Hunt attempted to corner the market in 1980 and adjust for inflation you would be looking at circa $100 an oz. More realistically, when the price stabilized for a short period later in 1980 at around $16 an oz. the adjusted price today would be in the mid $40´s.

There are some gurus predicting a price of over $50.00 per oz. within twelve months and we believe that this target is not far fetched.

However severe the economic downturn may become in the West, and lets all hope that it will only turn out to no more than a mild short term blip, the economies of the East are becoming less and less dependent upon the rest of the world for their growing prosperity so it is probable that their demand for silver will be sustained.

The high tech, medical and other industries are not going to fade away whatever the circumstances so they will continue to need silver and lastly the plethora of hedge fund and mutual fund managers, Wall Street and London brokers, ETFs etc., will be turning to the remaining under exploited markets of which Silver has all the right credentials.

Please note and be aware that while we are extremely bullish in the medium to longer term and have begun to fill our boots at this weeks silver prices, it is only our own call and biased opinion.

Please do not take any action in the silver or allied markets (miners, recyclers) without doing your own research and making your own judgements. Lotsa luck!