Investing in Silver
Is silver a good investment? Are you kidding me?
Now is not the time to invest in silver because it’s in an even bigger bubble than gold is.
(Read this: Is gold in a bubble?)
No one really knows what the future holds but it seems to me that investing in the silver bubble would be a massive misstep. It’s almost admitting that the world is coming to an end. And if the world is coming to an end then silver won’t help you much anyway. It’s a hard asset like gold and can’t be printed. When all the people start panicking like little babies, the prices of both gold and silver skyrocket, for a while. Don’t forget, these supposed “safe haven investments” have been known to crash hard and it can take decades to get your money back.
Take a look at this silver chart from Wikipedia:
||Silver price (yearly cum. avg.)
|Gold price (yearly cum. avg.)
|2011 (cum. thru 19 Aug)
The thing I’m most interested in is the far right column of the ratio of gold to silver. We all know that gold has shot up and gets a lot more media coverage than silver, but silver has actually gone up more than gold on a percentage basis. Gold is always more valuable per ounce than silver but the gap isn’t always the same. Silver has gone crazy. From under 15 bucks in 2009 to over 40 bucks now. As with all bubbles, they have the capacity to keep growing and the bubble might grow bigger for a while depending on a variety of mostly meaningless reports coming out of the US.
You need to be careful when you are investing in commodities that are pumped up in price from speculation rather than from real demand. This is exactly what is going on in the silver market. It’s happening with gold too but to an even larger extent in the silver market. I was surprised myself when I decided to do some research on this metal and that’s why I’m writing about it. I would highly advise anyone to stay far away from silver no matter what ridiculous “investment advice” you come across.
Remember, buying high and watching an investment plummet is neither good advice nor fun to experience.