There are two metals of the same category (precious).
The only outward physical difference is color; one is white and one yellow. They felt and weighed the same. They had each been used for the same purposes for thousands of years, but in the last hundred years or so, the white one was discovered to have many unique properties, better than any other material, that made possible many of the modern devices and inventions that made life better.
Because of all the necessary uses on this white metal, all the accumulated amount produced over 5000 years was almost completely depleted because we couldn’t produce it as fast as we consumed it.
The yellow metal was basically used as it always had been and
all of it was still around in a form that could be retrieved.
Because the white one was used up so much, there was a lot less of it left in the world than the yellow one. And even though the world produced more of the white one than the yellow one, it used up even more.
This means the white metal is rarer than the yellow one.
Additionally, the governments of many countries in the world own a lot of the yellow metal, which they keep selling, while very little of the white metal is still owned by governments, meaning not much can be sold.
If the yellow one disappeared completely from the face of the earth overnight, it would have little or no impact on the life of the average world inhabitant. But if the white metal disappeared, modern life as we know it would be disrupted beyond belief.
Now, the children are told that one metal cost 60 times as much as the other, and are asked to guess which metal is the most expensive.
How do you think they would answer?
It’s that answer that permits me to be a gold agnostic.
I did not mention that most newly mined silver comes as a by-product to the mining of other metals, so I did not discuss the differences of cost of production between the yellow and white. Nor did I point out that the white metal had a much larger short position than the yellow one. And I did not raise the issue that if all investors in silver switched and put their entire proceeds in gold, it would hardly cause a ripple in the price of gold. While if 1% of the amount invested in gold were to migrate to silver, the silver price would immediately explode by many times the current price.
It is when you step back and try to keep things simple that the basic merits of silver clearly emerge, especially in a comparison with gold.
This is what creates the lifetime investment opportunity in silver.
It’s not intended as a knock on gold, but as a valid comparison, which just happens to reflect very favorably on silver. I’m amazed more gold investors (and there are many, many times the number of investors in gold than silver) haven’t made the silver connection yet. I think more will, if they study the merits objectively.
Perhaps the biggest merit emerging is that when you invest in the good news metal, you don’t have to root for bad things to happen, you just root for more world citizens to lead better lives...
" When I think of the modern day silver investor, I think of a nomad—a survivor in a cloudy (and now stormy) wilderness with early access to a tremendous opportunity. In fact, silver coins are an opportunity that will likely eclipse any other in the history of human civilization.Those of us unmoved by the mainstream (and without a lot of money) see a perfect storm gathering around this tiny, overshadowed, and forgotten market.
The new group of silver investors, the ones who get there first and take advantage of low silver prices and protect what they have now, will lead us out of our current crisis. They will hold what has always been money and a metal that has become essential for modern society.
Here is how we know this, and what you can do about it.
Historically Low PricesSilver prices are historically low, especially when compared to gold. The silver-gold price ratio may have topped recently, but history has it trading around 15:1.
However, price sentiment has severely distorted the true ratio. Most people simply assume that gold is rare when compared with silver based on price. Very few people understand the actual supply/demand character of silver.
Silver Supply vs. Gold SupplyThere was a time (40 years ago) when the amount of above-ground silver actually did significantly outnumber the amount of above-ground gold. However, this is no longer the case.
Above one billion ounces or 31,000 tons of silver exist above ground. There are approximately 120,000 tons of gold above ground, practically all that has ever been mined. This equates to a 4:1 ratio, or four times more GOLD than SILVER existing above ground !!!
Silver Supply and Demand: The Current Economic CrisisThe silver supply story, especially the swing during the 20th century that has led to the current shortage is fascinating.
With the absence of government and other significant stockpiles, silver demand is met mainly by mining and scrap. And silver is mined primarily as a by-product of other metals.
The current economic depression will have a significant impact on the mining sector - resulting in even less silver coming into the market.Silver supply will suffer as overall demand for all commodities declines in this current depression.
Silver demand, on the other hand, will continue to rise. Although it is not commonly known, silver is important as an industrial metal with new uses being discovered every year. In the coming months and years, industries like defense, health, and energy will likely place significant pressure on an already stretched supply situation.
For the first time ever, there is generally accepted, though seldom reported evidence of a retail supply shortage in silver, demonstrated by higher premiums everywhere and significant delays in delivery. For the silver investor, this represents a tremendous opportunity.
Silver Investing for EverymanPerhaps the biggest plus for the new silver investor is the role silver plays as “poor-man's gold.” As the banking system continues its collapse, it is likely that more and more demand for silver will come from the common man.
It is a sobering truth that every fiat currency throughout history has failed, and there is mounting evidence that the dollar will soon begin its final descent. As the dollar fails, there will be a great shift toward real money, coincident with the usual and disastrous inflation. Silver will be resurrected as currency once again as the dollar crashes and society needs a temporary system of barter.
Gold will likely go first, and it is already priced higher than most can afford. But silver is a different story. Silver is inexpensive not only in relation to gold, but with respect to any other investment that is comparable in terms of liquidity, long-term value, and fundamental supply and demand character.
With only 1 billion ounces of silver available and prices below $20 per ounce, whatever supply is left, surely will not last long and the issue of weight will be a long lost problem. Add to this the ease with which practically anyone can afford to build a silver coin portfolio, whether all at once, or over time with no counterpart liability. The silver investor realizes the importance of silver as a “lifeboat” or a hedge against (hyper)inflation. "
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