As a new investor I have enjoyed watching my Gold and Silver purchases made late last year gaining in value. My stack is as an insurance policy so there is no intention to cash out any time soon. I don't own a tin-foil hat and agree with the advice of keeping 10-15% of your investment portfolio in Precious Metals. I have however re-evaluated the purpose of silver in my portfolio (5% of value and 95% of the Ounces). Originally I considered silver as a cheaper option to gold as a hedge against an economic collapse but now see it more as a speculative investment. Gold is held by central bank, is turned to when there is flight to safety and has much more "status" than silver. Silver on the other hand is mainly used by industry, which I see would decrease/cease in an an economic collapse. The main argument I see in this forum to hold silver is for a long awaited correction in the GSR which is a pure speculative play. I will still continue to buy silver but more treated the same as I would with investing in penny stocks. I am open to the forum to show me the erros of my ways
It's not even close to being a speculative investment in that comparison. Penny stock can go up (or down) 10 fold in a matter of weeks/months, and this happens with monotonous regularity on the share market. Silver has no history of ever going up by that amount in the last 30 years. You might double to triple your money on silver in a year if you are lucky, and there is some history of that. But not the 10 or even 100 times you regularly see in "penny shares".
Silver was also used for the development of the atomic bomb ... 14,700 tons of it .... "On 3 August 1942, Nichols met with Under Secretary of the Treasury Daniel W. Bell and asked for the transfer of 6,000 tons of silver bullion from the West Point Depository. "Young man," Bell told him, "you may think of silver in tons but the Treasury will always think of silver in troy ounces!"[131] Eventually, 14,700 tons were used." read more at http://en.wikipedia.org/wiki/Manhattan_Project "The program was fundamental to finding a means to safely and quickly produce the tens of kilograms of uranium necessary for a weapon of mass destruction." "If that wasn't enough, billions of dollars were gambled in the construction of enormous secret facilities to produce materials for a devastating weapon that might not work. All this played out against a background of worldwide conflict and the profound threat that Nazi Germany might achieve the world's most powerful weapon first." read more at http://www.americanscientist.org/issues/pub/from-treasury-vault-to-the-manhattan-project/1
Silver and gold are both stores of wealth. Silver is more erratic but it has industrial demand and a high recycling cost because of how it is used. Gold has more status and most of it sits in vaults. My play on silver is to hold it until supply starts to dry up. It will happen eventually even if my kids are the ones that benefit. It's a small portion of the portfolio and it's more fun to look at than a stock statement I also sell some bullion on spikes to purchase numismatic coins. I would say it's safer than penny stocks because it is extremely unlikely that anything mined from the earth will drop in value to 0.
*errors - Apologies for the spelling mistake. I note that there is no edit option for posts. True. Even if prices get back to a historic AUD 38 mark it would only double my investment. What I meant was that the money invested in Silver will be that which I can afford to lose. I will not be betting the house on it. You can never say never, but I do agree. Most probable worse case is that a much cheaper alternative to silver like properties can be used relegating silver to only jewelry as "Sterling Silver" and "Silver Plate" still mean quality as a gift. Another worst case is the doomsday scenario in which companies that use silver no longer exist and demand stops. You must admit that silver priced like copper would be almost as bad as zero dollar silver to most people on this forum. Which brings me to the "To The Moon" bulls. I see a cap on silver's price being a straight supply and demand issue. Put simply, if the price of silver doubles/triple/etc. and stays there then companies will dig more of it up, recycling of silver like that that is happening with gold (computer, phone, electrical sub-station gold scavenging) will happen, and cheaper alternatives will be used. This will bring the price down like any other commodity (Oil, coal, anyone?). I cannot see any drivers for silver to get to $100 as we may just be in a new paradigm in which silver is decoupled from gold.
Even then it's still not the same, because silver with virtually all certainty will never go down to zero, unlike speculative shares where that happens all the time Oil is a commodity I like at today's low prices, as if there is anything our modern society relies upon to a fault, it's oil. Like silver, not a big downside from current levels I think. Sure they could half, that's possible, but not much more downside than that. Oil is much harder and more expensive to extract, and gets more so every year, and the majority of it is used, not stored. As a speculative thing, oil has more potential than silver IMO, all it needs is another panic and/or war or some such.
You'll be able to edit your posts later (not sure if it's after a certain number of posts or a time period). "Silver on the other hand is mainly used by industry, which I see would decrease/cease in an an economic collapse." It depends on how severe of an economic collapse you're thinking of. An event where there is NO established currency whatsoever for people to use would probably not last for too long. But if it did, I think most here would agree PMs would rule king in that situation when the people look for another means of currency for commerce. Either way, silver is on your side. Just as much, no more no less, as gold. It's just that silver is your five dollar bill while gold is your hundred. Although right now silver is closer to a $1 to a $100, which is great for now (cheap silver) but, and I don't think I'm alone here, I believe that will change in the future.
