Seeking Alpha

Ed Zimmer's  Instablog

Ed Zimmer
Send Message
Ed is a graduate of The School of the Ozarks (now known as College of the Ozarks) in Southwest Missouri. He spent 14 years in broadcast news in the Midwest covering, among other things, commodities. He is currently manager of a healthcare support facility doing over two million dollars a year in... More
  • Long Term Silver buying Opportunity 0 comments
    Aug 9, 2011 7:48 AM
        The past few days have seen a nice increase in the price of gold.   So nice in fact that many media outlets have been discussing the rising price of gold along with the calls that gold could hit $2000 to $2500 by the end of the year.

       For Long Term Investors, which I describe as anyone wanting to have wealth a few years down the road, Gold is answering the call of currency debasement and depreciation of the dollar, euro, etc.    But while the spotlight is on gold, the alternate monetary investment is langiushing.    Silver has actually dropped or held steady while Gold collects all the glory.    The XAU has risen from 40 to 45 over the past few days, presenting a nice opportunity for those folks who are looking for a return over the next few months.

      Right now, no one is talking Silver, it's all about Gold.   But the fact is that everyone and their brother is looking for Gold, including nearly 3 billion Asians who understand that the paper everyone else is spending is backed by broken promises and in at least the case of the US, the "full faith and credit" of the United States.     Didn't I read that the US was recently downgraded?

      There are two things that Silver has that Gold doesn't.    Limited Supply and Industrial demand.     Because of that demand, Silver is literally used up, it's not accumulating like Gold is.    Gold is rarer in nature, which accounts for it's position on top, however right now the XAU is indicating a 45 to 1 ratio between Gold and Silver,  nearly a 3x multiple from the natural occurance of 15/17 to 1.   With Gold over 1750 an ounce, Silver should be easily around $100 an ounce.    Either Gold is way, way overpriced (With Silver at $40, Silver/Gold ratio would put the price around $680) 

      As Gold rises, the pressures on silver also will rise and those who come in late to the Gold party will be forced by price pressure to consider the alternatives.    Platinum is not the answer, as the average man on the street cannot tell the difference between platinum and silver at a quick glance and won't be willing to pay what is essentially a Gold price for a Silver looking coin.

       The Silver market is also an industrial market.    While industry needs silver, the supply lines are currently stretched.     Much of the difference between rising demand and supply is based on scrap and there are bottlenecks at scrap refiners trying to keep up with demand.

       Day to day, Silver is a guess.    Long Term, Silver still offers the best potential for excellent wealth retention and growth.    Silver will follow gold and demand in the gold sector will spill over into Silver as more people realize this overlooked metal.     Chaos in the financial markets is good times in the metals.    That and the fundamentals in the fiancial markets are way overdue for a correction and this is a correction that is going to hurt those holding paper
Back To Ed Zimmer's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • Despite 25% Margin Increases, Silver still a buy. Paper is under $37 but completed auctions say $45-50 per ounce. Do the math
    May 5, 2011
  • Cross Contagion. Areas that are unexpected or little researched. Outcomes that are downplayed when they should have been emphasised
    Mar 17, 2011
  • Silver breached the $30 mark again today, expect margins to be raised in another lame attempt to stop the rise. Darn those specualtors! :)
    Feb 8, 2011
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.