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Saturday, March 19, 2011

Where is The Silver Correction?

Many experts tell us to wait for a correction, Dave Morgan and Larry Edelson to name two, but we must consider Silver's unique position as a precious metal.

There is little doubt that at some time between now and July we'll see it test a low point, perhaps as low as $22 or $23 USD. It won't be there long and will move above it's current highs pushing $40 USD soon after it tests that low.

Silver, unlike Gold and other PM's, is also a commodity that is consumed by many industries such as the electronics, alternative energy, automotive and the medical fields. Therefore it has a solid demand as an industrial and that drives the market as much as investment. Gold has always been the investment of choice among those inclined to keep a liquid portion of their portfolio in precious metals.

However, Silver is a very small market and therefore one needs to be cautious as moves within the market that would be considered small in Stocks or Gold, for example, have a much bigger affect on the Silver market. It's just not seen as a store of wealth and is therefore more volatile than those that buy and hold Gold for investment.

However, one needs to be cautious as the world economic crisis worsens, because many average citizens who do not normally buy PM's begin to look at Silver as a form of alternative currency and this could effect the markets price. Silver has begun to be monetized like Gold and is seen as the best alternative to fiat currency for everyday transactions; i.e. an alternative currency form.

What you need to keep in the back of your mind at all times is the relative small size of the market, as I stated earlier. As Gold climbs you may see one or more large investors dump their Silver and run to Gold, but don't panic and follow suit if you are a small holder (less then 10,000 ounces). Silver will come roaring back to it's previous price and continue to climb, because it is a commodity that is NOT recycled and is a finite supply.

Most metal experts see $50 USD for Silver by years end and almost all agree the historic ratio will return to 16:1 at some time in the near future. When that happens, even if Gold stays in the $1,600 USD range, puts Silver at $100 USD. Almost certainly within the next three years Silver will test $150 USD or higher.

In the short term owning Silver will create wealth and should the unthinkable happen, like a collapse of our fiat system (not really so unthinkable), you'll be glad you're holding some physical Silver to use for trade.

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