Silver Now in Bulls' Favor

Source: Seeking Alpha, Tom Lydon  (8/3/10)

"Silver is selling at nearly 70% below its all-time high."


After outperforming the stock market over the past few years, is silver still worth buying? There are plenty of reasons to consider silver ETFs.

According to Minyanville's Kevin Grewal, although gold continues to grab more headlines, silver may be the more appealing investment. For one, silver has many more industrial uses than gold—currently, 55% of silver is used for such purposes.

On a historical basis, silver is selling at depressed prices compared to gold. The long-term gold/silver ratio is 16. Currently, gold is selling at a much higher ratio. In addition, silver is selling at nearly 70% below its all-time high.

Finally, silver is a diminishing resource. At current consumption rates, all of the silver in earth's crust will be depleted in the next 25 years.

Coin Update News' Patrick Heller thinks a buy signal can be found in investor sentiment. Back in 1980, silver was a topic of conversation in any and every circle. Looking back, Heller believes that such bullish sentiment was a sell indicator. But today, such sentiment has yet to emerge

Lastly, Luke Burgess of iStockAnalyst thinks a silver bull market in China could help propel worldwide silver prices up. The key is that China's silver market has become increasingly deregulated, which has led to booming global investment interest. China is now the third largest producer of silver.

Burgess also recommends buying silver based on the following:

  • Silver investment demand has skyrocketed 522% since 2007.
  • World governments are hoarding silver; official sales have plummeted 83% in past three years.
  • Aboveground silver supplies dropped 86% last year.
  • Silver industrial demand has increased in past 10 years, despite a 236% increase in prices.
  • Silver outperforms gold during bull markets.
You can find a list of all the silver ETFs by searching "silver" at ETF Analyzer.