|
 Investors kicking themselves for missing out on the recent gold market rally might want to give silver a second look, as a handful of market insiders say this "ugly duckling" of the precious metals market may be next in line to benefit from the broader shift in funds from paper to hard assets.
"If you look under the hood at what makes the market tick, you will see that silver is much more compelling than gold. But you have to do your homework," said Ted Butler, an independent commodities analyst based in Florida.
Butler pointed out that most people don't realize despite the huge price discrepancies, silver is actually rarer than gold.
Silver was quoted at $4.66 a troy ounce late Friday in Asia, while gold was trading at $344.25/oz. Thursday, the price of gold jumped over $354/oz, its highest level in almost six years.
"At this moment there is actually more gold above ground than silver," said Butler, explaining that while almost all of the gold ever mined is still in circulation, silver supplies tend to be exhausted as most silver applications are such that the metal cannot be easily retrieved.
Tony Locantro, a Perth-based investment adviser and author of a book on speculative investing, also believes silver is a widely misunderstood commodity.
"The problem with silver is that people don't know if it should be seen as an industrial metal or as a precious metal," said Locantro. "Recently it has been thrown into the industrial bin and so has been sold on concerns about poor economic conditions."
Both Butler and Locantro said the fact silver demand continues to outpace supply is one of the most compelling reasons for buying silver.
"Platinum prices have been soaring because there has been a deficit for four straight years, but the silver market has been seeing a deficit for 12 years," said Locantro. Butler added that when there is a deficit with any commodity, you are "almost guaranteed" a price increase.
These two analyst also noted a further rise in the price of gold could make bullion too expensive for some investors, which could let silver shine as a cheaper alternative.
"Silver is already at the bottom of the precious metals chain," said Butler. "Look at the jewelry market. When platinum becomes too expensive, there is a drop down to gold. When gold becomes too expensive there is a drop to silver. But you can't go below silver and still have a precious metal."
Looking ahead, Locantro sees a scenario where silver could ride on the coattails of any further rise in gold, and then move higher on its own if the U.S. economy turns the corner, resulting in an uptick in industrial demand.
Complete article by Jim Hawe, Dow Jones Newswires; 813-5255-2950; jim.hawedowjones.com
Original Source.
|
Sections
