Sluggard Silver 2 comments
Hard Assets Investor
From HAI:
-
Font Size:
-
Print
- TweetThis
By Brad Zigler
Silver took a hit this morning while gold moved higher. We're seeing this disparate performance more and more, it seems. Not that gold is faring all that well. Since July, gold's sunk $237 an ounce, or 25%. It's just that silver's done worse, slumping $8.38 an ounce, or 50%. All this has pushed gold/silver ratio readings from the low 50s to upper 70s and mid 80s.
We've heard an ever-mounting chorus of calls for a rally in silver to overcome the white metal's perceived undervaluation, mostly based upon historic ratios. A rather novel approach, based upon market capitalization, has been advanced (see "What's Better: Gold Or Silver?").
Gold/Silver Ratio
What's become apparent, however, is silver's sensitivity to growing concerns about recession. Silver, after all, isn't just "the poor man's gold." It's also an industrial metal. And, as gold gets cheaper, it becomes more affordable, even for poorer men.
Keep that in mind when you're considering a silver investment.
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largest
increase in followers
in the last 7 days-
1
David Fry
-
2
Philip Davis
-
3
Bill Gross
-
4
Tyler Durden
-
5
TraderMark
Fastest Climbers » -
1
-
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 2 comments:
With respect to silver production, approximately 60% comes from other metal mines as a byproduct.
When commodity values drop below the cost of production, these mines will simply shut down.
In a normaly recessionary environment, the existing surplus warehouse stockpiles will be drawn down unitl the price rises above the cost of production and the mines then reopen.
However, In our bizzare recessionary environment, the existing stockpiles of silver (and all metals by the way) are by all historical standards...LOW. It is estimated that there are now approximately only 1 billion oz available to investors compared to 20 billion oz in the 1970s. This is the result of decades of skewed trading to the short side making silver almost not worth the effort to mine and produce.
Watch this market closely to see if Adam Smith eventually triumphs.