by patience » Sat 25 Sep 2010, 07:12:57
Silver is a rather small market compared to gold, so intervention of whatever sort could have a bigger impact. I tend to think that isn't a big deal, however, since gold gets most of the attention by TPTB. Silver is presently undervalued, compared to its' past price ratio to gold. A few years ago, silver traded at around 54 to one with gold, and the current prices of $21.40 vs $1297 = 60.6 to one. Reverting to 54 to one would put silver at $24.01. Therefore, I think silver has a ways to go yet on that basis alone.
Some have said that if QE II becomes reality, that gold could hit $1500 as confidence in the dollar would erode further. If that happens and the silver ratio goes back to 54 to one, the result would be silver at $27.77, but don't hold your breath for that to happen. I'm just pointing out the possible upside within a year or so.
Accordingly, $21 would look pretty good in retrospect. What price to buy PM's is strictly a matter of what you believe the future holds for them. If we consider the prices of PM's, not counting manipulation, to be a fixed intrinsic value, then what we are seeing is the erosion of perceived value of fiat currencies. With the majority of the world impossibly indebted to bankers, it looks like a safe bet that devaluations of fiats will continue for a while. If that be so, then, absent any worries about govts. messing with PM dealings, the current rice of PM's shouldn't be a big consideration.
But, then, any investment in PM's is a bet that govts. and big banks will continue to trash the currencies, right? You pays yer nickle and takes yer chances.
My preference for the form of silver is US junk coins, with the attributes others have noted.
Local fix-it guy..