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Often, investors neglect silver in their flight to gold. Given, gold is historically the store of wealth across the planet, and as Americans we think of gold as an investor’s metal.

December 14, 2011 – Often, investors neglect silver in their flight to gold. Given, gold is historically the store of wealth across the planet, and as Americans we think of gold as an investor’s metal. While gold is a very good tangible commodity for storing wealth, it lacks some of the properties that are inherent in silver. Silver is often written off as a lesser metal and just an industrial component, but these require a little more appreciation than they’re normally afforded.

Because it is an industrial component, silver is poised to make advances we may not see in gold. Given central bank intervention and the current problems confronting world markets, it is far more preferable to own some precious metal, no matter which. But, when comparing precious metals, it is important to consider that silver is a vital component in cell phones, computers, and cars, among other things. Above ground stocks of silver was around 24 billion ounces in the 1970’s, but has declined to between 18 and 19 ounces today while industrial use of silver has continued to grow. There’s 50 cents worth of silver in every cell phone and none of that silver is coming back to market.

For the whole of the past generation, more silver has been consumed annually by industry than has been mined. Industrial output has increased, but many mines are now in a state of decay and fewer new mines are being opened. It takes ten years for a new mine to go from discovery to a mine producing a single ounce of silver.

According to a recent report from Future Money Trends, it is getting harder and harder to mine silver, and there are ten ounces of silver mined in the world for every one ounce of gold. However, there is a currently a trading ratio of 53 ounces of silver to one ounce of gold, indicating that silver is currently very undervalued. At just over $30 an ounce, silver is extremely undervalued right now.

Add on to that the fact that silver is traded on a fractional reserve basis, meaning there is a lot more silver existing on paper that is actually in existence, and you have a serious discrepancy in the actual value of the physical metal. Given these factors, silver is poised to perform very well in future markets, perhaps even better than gold, and is deserving of further consideration when you’re buying precious metals.

Shannon King

Senior Staff Writer – GoldSilver.org

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