Silver still a runaway winner from the coming economic mayhem

Tuesday, November 8, 2011
By Paul Martin

By: Peter Cooper

If you could only invest in one asset class to hold until the next big bubble is fully inflated then it has to be silver. Gold is already increasingly popular for the same reason.

It is a precious metal of fixed supply and proven monetary value in a world of electronic money creation. Just look at the staggering sums of money magicked out of thin air by the eurozone debt deal at the end of last month.

nflation problem

The problem with electronic money is that sooner or later it enters circulation and then you have too much money chasing the same number of goods and inflation results. As an investor you clearly want to be an owner of the fixed supply of goods and not the inflating amount of money.

However, both gold and silver are very volatile in price and that puts off savers who want a stable bank account, no matter that they are losing money from the day it is opened as inflation is presently well above interest rates.

Yet why prefer silver above gold? Yes it is more volatile in price swings but put simply the total return over time is going to be higher than gold. The available supply of silver is smaller (click here) and less easy to increase through mining activity and that boosts the responsiveness of the silver price to changes in investment demand.

Investment demand

The Rest…HERE

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