Buying Silver Now is Like Buying Gold at $552 Today

Why Silver is So Attractive in 2012

As of today (January 18th 2012) physical gold bullion is trading at $1649 an ounce. If you had the chance to buy gold at $552 today, would you? Well based on current levels buying silver right now at $32.6 an ounce is like buying gold for $552 an ounce today.

Let’s do the Math:

Silver is currently trading at about 65% (32.6/50) of its 1980 high.

If gold was trading at 60% of its 1980 high, it would be trading at $552 (0.65*850).

Although many experts are making predictions and projections of $2400 gold short to mid-term, even a modest move upward to just under $2000 is a respectable amount of appreciation from it’s current spot price of $1649 an ounce. However if you are bullish on gold bullion then why pay $1649 when you can pay $552 by buying silver bullion and then opt to exchange it for gold when the gold/silver ratio is at an extreme (in favor of silver).

For this to occur, silver has to outperform gold over the investment period and at least equal gold’s performance relative to its 1980 high. Therefore if gold is to reach five multiples of its 1980 high ($4250), then silver should do the same ($250) and in this example would create a gold/silver ratio of 17. If silver outperforms gold, then that means that the gold/silver ratio should decline over the investment term.

As outlined in previous articles the institutional buying of silver has already begun. Canadian-based Eric Sprott Management CEO Eric Sprott filed a follow up prospectus for the purchase of an additional $1.5 billion of silver bullion to cover expected demand for the company’s exchange traded fund (ETF), PSLV. The current signals certainly point in the direction that silver will outperform gold over the remaining part of this bull market in precious metals, as well as, at least equal gold’s performance relative to its 1980 high. In this scenario investing in silver is the clear winner with the option to exchange for gold making it an even more attractive investment.

» Contact Cornerstone Asset Metals today to learn more about buying silver as an investment.

Past performance is not an indication of future potential values.