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Commodities Corner
Nov. 13, 2009, 7:00 a.m. EST · Recommend (14) · Post:
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By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- Silver's not so much a poor man's gold anymore and investors may soon realize that the white metal's the real treasure.
True, at $17 per ounce, silver is cheap -- trading around 60 times less than gold's record price of more than $1,100. But year to date, it's climbed 52% in value compared with gold's rise of around 25%, according to data from FactSet Research.
Silver is a precious metal, after all, one that has historically outperformed gold in a bull market and doubles as an industrial metal -- and supplies of it are depleting at a much more rapid pace.
"Silver is unique in terms of being both a monetary and an industrial metal," the Bullion Services Team at GoldCore said in a recent report, pointing out that it's severely undervalued. "Silver remains the investment opportunity of a lifetime."
Gold's prices have climbed nearly 11% in the last two months. In that same time span, silver's up by only 3.1%.
And "investors looking for returns continue to wager on higher gold prices, whether it be on concerns over equity or currency markets ... or to make quick short-term profits," according to CPM Group's latest Precious Metals Advisory.
But investors would be better served to turn their eye toward silver.
"Silver is highly correlated to the safe haven of gold and is, in effect, a leveraged sister of the precious yellow metal," according to GoldCore, an international bullion dealer. "Thus, informed investors use gold more for wealth preservation purposes and silver in order to make a return."
'Silver remains the investment opportunity of a lifetime.'
Bullion Services Team, GoldCore
That's particularly important to keep in mind as investors change the way they perceive the paper-asset markets.
As stocks, currencies, bonds and other paper assets have begun to disappoint investors, investor attitudes have been shifting, said Mark Leibovit, chief market strategist for VRTrader.com.
"What begins as a trickle ends as a tidal wave when the panic peaks [and] when public revulsion at the U.S. dollar begins, the tidal wave will become a tsunami," he said.
Under that scenario, "silver, far more volatile than gold, will benefit most," he said.
Forced to pick just one, Chris Mayer, editor of Agora Financial's Capital and Crisis said he'd rather own gold. Others disagree.
"Silver does not have the same appeal as gold," said Mayer.
"What did India's central bank buy in record amounts ... [and] what did China double its reserves of this year? Gold," he said. "They aren't buying silver."
"It's not like comparing oil with [natural] gas, where you are comparing the energy equivalent of the two and there is some economic incentive when the gaps get very wide to switch to one or the other at the margin," said Mayer. "That doesn't exist with silver and gold."
And when the global industry remains mired in a slow growth pattern, the market's not going to see sky-high prices for a metal whose "lion share of demand comes from its industrial applications," said Jon Nadler, a senior analyst at Kitco Metals.
- nclsacker | 9:01 a.m. Today9:01 a.m. Nov. 13, 2009
The latest international trade numbers border on blasphemy: Why is the U.S. trade gap widening at the same time that the dollar's plumbing year-plus lows?
18 min ago2:03 p.m. Nov. 13, 2009 | Comments: 7
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