Investing In Silver: It’s Time To Buy This Precious Metal
by Kevin Kerr, Special to Investment U
Monday, April 30, 2007: Issue #668
Editor’s Note: Kevin Kerr is one of the country’s leading experts on commodities. He’s a colleague of ours we often call on when we have questions about gold, silver, oil, natural gas just about anything you can trade on the commodities market.
In light of his new book, A Maniac Commodity Trader’s Guide To Making A Fortune, we’ve been talking even more.
Yesterday, I asked him to shed some light on the recent volatility in the commodities market, and to offer up his favorite play right now. Here’s what he had to say
~A. Williams
Managing Editor, Investment U
But the ride in the commodities markets has been just as wild, especially for gold and silver…Frighteningly, there are only about 200 million ounces in above-ground silver available. This is primarily due to current supply/demand trends, but the situation is getting worse.
Widespread selling here has been indiscriminant and almost reckless, followed by impressive rallies that seem to indicate gold will be at $2,000 overnight.
When the dust settles, many of the commodities that were performing so well before the extreme volatility may be even more attractive at their new levels. One of the commodities I like most is silver, so lets examine why investing in silver can be an attractive idea in the current market.
Why Investing In Silver May Shine Brighter Than Gold
Silver has always stood in the shadow of the gold market. Clearly, from a dollar standpoint, it will most likely never be more precious than gold.
But here’s the thing: Silver is as much an industrial metal as it is a precious metal. Most people are unaware that it has many unique properties that make it ideal for use in the photography, technology, defense, and electronic industries.
In fact, industrial demand has been outstripping mining supply for the past 15 years, driving above-ground supply to historically low levels. And many experts believe the above-ground silver supply is projected to shrink to a critically low level in 2010, and at a very rapid pace.
This has been a major factor for the rising prices of silver to date. At $13.38 an ounce, the metal is up more than 225% since 2002.
I expect this trend to continue.
Even more disconcerting is the fact that when investors seek to hedge against rising inflation and currency devaluations, investment demand for silver rises rapidly. We are already seeing it
How to Invest in Silver and What to Expect in the Future.
In only the past few years, investors have poured into silver Exchange-Traded Funds, like the first one that launched, the iShares Silver Trust (AMEX: SLV). And there are many more in the works for the next couple of years.
As we move into 2008, the rising global investment demand for silver and worldwide industrial demand will become the key factors driving silver to new highs wiping the tarnish off of a commodity that was once basically written off by investors as having almost no value.
The times for investors are changing, and savvy ones will at least take a look at silver. It could be well worth it.
Good Investing,
Kevin
Editors Note: Kevin’s new book, A Maniac Commodity Trader’s Guide To Making A Fortune: A Not-So-Crazy Roadmap to Riches, is a must-read for individual investors who want to make money in the commodities market. You can get it at a discount here on Amazon.
Today’s Investment U Crib Sheet
Silver prices are up nearly 8% in the last month and a half. What’s the best way to invest? The iShares Silver Trust (AMEX: SLV) is one of several ways to get exposure. Launched almost exactly one year ago (4-21-06), the fund’s assets top $1.8 billion – backed by 134.8 million ounces of silver. It’s important to note, however, that its Net Asset Value (NAV) factors in the trust’s expenses and liabilities.
A more direct way to purchase bullion is through EverBank. Here, you can invest in silver coins, bars, pooled accounts and even have the metals shipped to you. We should point out that the publisher of Investment U has a marketing relationship with EverBank, but that’s because its products are best in show. To learn more about their Metals Select program, follow this link. It will take you directly to their website. Or call 866.326.6241 for more information.
The Oxford Club Performance Tracker: 5-Year Return*
Oxford Club: 111.2%
Wilshire 5000: 45.2%
Ranked 3rd out of 181 newsletters nationwide for 5-year, risk-adjusted return.
- The Hulbert Financial Digest
* As of 11-30-2006
Learn more about the Club
- Silver Wheaton Corp (NYSE: SLW): Stock of the Day
- Seven Reasons A Boom in Silver is Beginning
- The Price of Gold… 3 Reasons Why This Precious Metal Should Be In Every Portfolio
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