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Last summer when stocks started to plunge, a lot of friends and relatives told me to buy silver (NYSEARCA:SLV). I watched the price go up and down, and decided to pass on it. And then this morning, there was an article in the Wall Street Journal about silver:

The silver market is rife with fervent bulls and bears. And the metal's recent plunge toward $26 has both sides even more steamed than usual.

That's the traditional baseline that bulls say will trigger a sharp rally higher. The bears, though, say silver is destined to fall further and plumb multi-year lows.

Silver has bounced between $26 and the mid-to-high forties for the past 18 months. Now that it is grazing the low end of that range-on Thursday, prices for July delivery dropped 2.6% to $26.247 a troy ounce-some investors are betting the pattern will repeat.

So I decided to look at the history of silver over the past year to see if I made the right decision:

Chart foriShares Silver Trust

This chart shows that silver has had a really tough year. And it is this low price that has the bulls and bears fighting over whether silver is at the bottom or if it will drop further.

Chart foriShares Silver Trust

At this time last year, I bought Apple (NASDAQ:AAPL), and several other companies. As you can see, from the chart above, silver did not perform as well as the rest of the market. And as we all know now, in hindsight, Apple was the superstar. However, the outcome is a little different when you look at the last five years:

Chart foriShares Silver Trust

Silver did outperform the market in general, but Apple still came out way ahead. The company is up almost 1000% in comparison. Gold (NYSEARCA:GLD) has performed about the same as silver since 2005, but Apple is still on top:

Chart forSPDR Gold Shares (<a href=

Today, with the good news in Europe, gold and silver are up:

On Friday, gold (NYSEARCA:GLD) futures for August delivery jumped $53.80 to settle at $1,604.20 per ounce, while silver (NYSEARCA:SLV) futures surged $1.32 to close at $27.61.

Both precious metals outperformed today as European leaders at a summit in Brussels agreed on plans to create a single supervisor to oversee the financial industry. They also decided on a deal to stabilize the region's debt markets by re-capitalizing its banks.

The deciding factor for metals is what the U.S. economy is going to do. If inflation is in the future, silver and gold add protection to your portfolio. A long time ago I read something that said "throughout history the exact same amount of gold will buy the same amount of bread, no matter the price". I have never researched that statement, but I don't doubt it.

On the other hand, if we have deflation, the price of metals will deflate along with everything else. This doesn't necessarily mean they are a bad investment, because the same gold will still buy the same bread, but you will just be playing the game, and not getting ahead of it.

But there is another element involved in the value of metals. Investors consider them safe regardless of the economy. Especially when people are worried about political economics. Will the current government help/hurt the economy, and the stock market. This is what happened last summer, in my opinion. There was very little discussion about inflation/deflation. People did not trust the government, and the value of the market reflected that.

Chart foriShares Silver Trust

I am torn whether to side with the silver bulls or bears on this one. The chart shows the two sides. First silver has gone up dramatically over the last five years. But the price, right now is not cheap.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.