Too often, silver investors point to industrial demand for silver as their reason for buying silver. Likewise, critics of silver point to industrial demand when knocking silver.
It has long been my position that the industrial demand for silver is a bonus but not the primary reason for going with silver when entering the precious metals market.
As for the critics, they often say that silver is an “industrial metal,” for which demand will fall in a recessionary climate. They ignore the fact that silver have been money along with gold throughout the millenniums. Actually, more people have used silver as money than have used gold.
Silver is money, has been money for thousands of years, will be money for all time to come, and will ultimately produce greater percentage gains than gold because silver is the money of the masses. Every reader has heard that silver is “The poor man’s gold.” True.
When the masses come to the metals for protection against all the money creation going on around the world, they will opt for silver simply because they will get more physical metal for their money. It is to be remembered that in the aggregate the masses have much more money than the wealthy, which means much more money will be thrown at silver than at gold
Further, it should be evident to those watching that today’s money creators have no exit plan. I know there are discussions about what will happen when the Fed starts to “unwind their asset purchases.” Bernanke, in his recent appearance before Congress, talked of the Fed having many tools with which to “drain” excess liquidity from the markets. I just don’t see it happening any significant way as long as the world’s economy remains so vulnerable. Bernanke is a full-fledged Keynesian and believes money manipulation works.
The money creators believe that ultimately their Keynesian maneuvers will re-stimulate the world’s economies. They ignore the flaws that have been exposed since Keynes’ ideas went mainstream. (The “stagflation” of the 1973-74 recession alone should have driven a stake through the heart of Keynesianism.) The money creators’ exit plan seems to be one of printing until the people no longer will accept it, at which point the central planners will attempt to start over with a new fiat currency. History shows that is how paper hangers most often ended their printing binges.
At this point, there is no way of knowing if the introduction of a new currency will be successful. By the time the paper hangers have destroyed the dollar, the euro, the yen, etc., the people may have already moved to gold and silver as their monies.
Meanwhile, the industrial demand for silver continues to grow and to widen in applications. No longer does silver have to ride the back of photography. Its uses are spread far and wide, ranging from health and medicine to electronics, communications, solar power, batteries, superconductors, and computers, as well as jewelry and silverware. The smart phone explosion would not have come about without silver’s unique properties.
Actually, silver is a “. . . vital component of virtually every automobile, cell and smart phone, computer and laptop, appliance and electronic device we use. Further, silver’s antibacterial properties are finding new uses in textiles, medical instruments and hospital equipment, providing an effective tool in combating infection and bacteria,” as the Silver Institute points out in a recent release.
I fully recognize that silver’s bulk and weight make it unsuitable for many investors. But, those investors who can those challenges should make silver a significant part of their precious metals holdings.
Being a silver stacker for some time now, I have become used to the obvious price manipulations of all the P.Ms. Silver has been the most drastically manipulated of the four. The spot price (paper value) is now totally out of whack with the actual silver bullion value! When the laws of true supply and demand are allowed to return to normal, perhaps we may find the true value of silver (for the first time in over 40 years)! I appreciate your articles and the insight they supply! With regards, Budd.
Eventually, the market fundamentals will overwhelm the manipulators. And, I’m betting sooner than later.
It’s just amazing to me, that so many people to whom I have spoken about the counterfeiting of money by the Fed and the soundness of owning physical Silver and Gold as a method of wealth preservation, have only joked about my advice! I suppose their pantries are as empty as their reasoning ability!
I love the Fed’s philosophy. If something doesn’t work (and has been proven to not work throughout history), do MORE of it until it does work. Quantitative Easing has only shown slight temporary boosts to the economy, and each has less impact than the one before. IT’S NOT WORKING!