Gold's in the Limelight, but Silver's Backstage…

January 27, 2006

I read an article last month in the Chicago Tribune entitled "Gold's Back, in all its Flighty Glory", and I've been meaning to pen a short piece on it.

Featured on the front page of the "Your Money" section, complete with a pot-o- gold suspended above a very bullish 30-year chart of gold's price performance, it seemed as if the yellow metal really was back in all its glory. But what about silver?

I read through the first page, which was about 1,500 words long, and there was no mention of silver whatsoever. Instead of throwing a fit, I turned anxiously to the continuation of the article on page 8, thinking there must surely be one stray comment on silver somewhere. How could it be ignored, I thought?

But you might have guessed it, not a single word. I think what we have here is a failure to communicate. Many thousands read through this article, and I'm willing to bet a good number of them would have liked to read about silver as a potential investment, especially considering it trades at a 98% discount to gold. But instead of presenting this incredible investment opportunity, silver is totally ignored, and gold is even referred to as "theprecious metal", and "the investment of choice".

Now please don't misunderstand me, I believe gold is an excellent investment, it's just that I believe silver has 5, 10, 20 or more times its potential, and it bugs me when that kind of potential is totally ignored. I want people to know the whole truth, not just bits and pieces. Though millionaires and billionaires have a hard time buying and storing large amounts of it, for the middle and lower class of the world, I would venture to say that there remains no single greater investment in terms of risk and reward. It's pretty, it's liquid, it's easy, it's silver.

People who struggle to make payments on their bills are not likely to 'splurge' on a $550 one ounce gold piece, as it appears much too expensive for what you get. But $550 worth of silver weighs several pounds, so what do you think those with little to invest will choose?

Platinum, the Other White Metal?

In reading further through the "Gold's Back" article from the Chicago Tribune, I found this very interesting aside-Have a little fun and try filling in the blanks:

"Rather than investing in gold, Yu [a Barclay's Capital gold analyst] said she would be more inclined to buy _________. Unlike gold, which is used primarily for jewelry, _________ is used in industrial production too---meaning it is likely to be in demand as China's economy continues to grow at an 8 percent annual clip and India at about 7 percent.

And supplies of _________ are limited. "There's very little above ground," Yu said."

I suppose I would have filled in the blanks with silver, but what do I know, right? According to Yu, platinum is what I should be investing in.

But come on, let's be realistic. I really don't think I could convince any friends, family members, or acquaintances to invest a sizable amount into platinum as it currently trades at over $1,000/ounce, but I know for a fact that I can easily convince many to buy silver because they already have. Silver is so incredibly cheap, and the fundamentals get better every day. That's what people want, a bargain, with the potential for incredible returns.

Let me ask you this:

What do you think is more likely, for platinum to reach $2,000/ounce or for silver to reach $18/ounce. I think one would be hard stretched to offer any plausible arguments in favor of platinum doubling in price first.

To sum it all up, one day I believe the journalists penning articles like "Gold's Back" for the Chicago Tribune will wise up and start filling in those blanks with the word silver on their own, and then myself and others won't have to do it for them.

--David Zurbuchen

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Most silver is produced as a byproduct of copper, gold, lead and zinc refining.