Silver vs. Gold: What Investors Need to Know About Each Metal

Scales of justiceYou need both gold and silver to protect your wealth. Why? Because it’s real money. In fact, it’s the only real money today, just as it has been for 5,000 years.

Right now, you’re being exposed to the manipulation and games that the bankers and traders play with your money on Wall Street. This exposure is setting you up to get hammered when the bubble in equities and bonds inevitably bursts.

Gold is being rapidly accumulated by central banks all over the world, because they’ve lost faith in currency. They simply don’t trust the U.S. dollar, and they know how valuable gold is as a store of wealth. The banks of the world know how to keep their money. You don’t want to bet against them!

Silver, on the other hand, is becoming more and more rare every day as the stock of it is being consumed faster than it’s being mined. Some experts predict we’ll run out of silver in the next 10 years because of its expanding usages in high-tech manufacturing. Surprisingly, silver is more scarce than gold. Silver reserves are estimated to be approximately 500 million ounces available above ground compared to around 2 billion ounces of gold.

Gold is held by central banks all over the planet, because of its nature as true money and because it has historically been used to back currency. The central banks of India, China, Russia, and many other countries are accumulating millions of ounces of gold every month, which also means millions and millions of ounces are being pulled out of the market and placed in central banks for them to use it as a reserve, a hedge. Why? These countries don’t trust the U.S. dollar anymore, because the Federal Reserve is creating trillions of dollars out of thin air and diluting the value of dollars already in existence. GOLDEN_APPLE

A simple way of looking at it is to imagine if the entire economy consisted of $100 in circulation and 5 apples as all the products available in the market. If that’s the case, then the 5 apples are going to cost $20 each. Now imagine the magic central bank creates another $100 out of thin air so the total currency climbs to
$200, but we still have only 5 apples. Those apples are suddenly going to cost $40 each.

This is what’s happening right now with the currency and why everything around us seems to be getting more expensive. The reason gold and silver keep going up is because the quantity of U.S. dollars in print is exploding and will continue to do so as central banks attempt to continue to stimulate the economy. Gold and silver are the ultimate hedge against print currency. The reason they’re becoming so popular is because the other options that used to look safe — like stocks, bonds, and treasuries — no longer make sense.

One of the leading first-world governments is almost certain to return to some kind of gold standard, and the rest of the nations are going to have to follow suit. Why? Because their currency will be highly devalued if it’s backed by nothing, while a neighboring country’s currency is backed by something real. The value of gold and silver will explode overnight when this event happens. The only way to take advantage of this coming change is to be proactive and accumulate as much gold and silver as you can now.

The U.S. dollar has been the world’s reserve currency for nearly a century, but that monopoly is going to change. Gold, on the other hand, is respected everywhere on the planet. Those who own the gold will make the rules and will have the ability to maintain and expand their wealth. Those who don’t own the gold will be at the mercy of those who do.

Silver is the “sleeper,” unnoticed and forgotten by most investors. In my mind, it’s the big opportunity. Silver has actually been money even longer and more often than gold. Plus, silver is used in manufacturing everything from cell phones and solar panels to medical devices (because of its antibacterial properties).

Silver is used and then thrown away…at least right now it is. Gold gets recycled and effectively stays in circulation, but the silver tied up in manufactured goods regularly ends up in the trash heap. Because of this, silver is highly undervalued and stands ready to explode in value over the next few years. PressGoldRising1

I suspect gold will rise well past $8,000 an ounce by 2020. At the same time, silver is likely to rise and exceed $200 per ounce—more likely reaching $400 or $500 per ounce. These values are what I consider to be the most likely rational values. The actual price could end up much higher if metals go into a super bubble. The current levels for gold and silver are nowhere near a bubble yet.

This isn’t some economic doomsday scenario; it’s a natural change that’s easy to see coming. Basic economics tells you exactly what’s going to happen. Currency gets printed faster and faster – dollars, euros, yen, etc. – but the amount of gold and silver on the planet stays exactly the same. The more currency in print, the more currency it takes to exchange for gold and silver.

There is less investment grade silver available for investors than there is gold. As of 2012, there was only enough investment grade silver available for each person on earth to have one tenth of an ounce. Silver is in everything; it’s a miracle metal. In addition to being money, Silver is the most electrically conductive, thermally conductive, and reflective metal on the planet.

As for gold, it’s the only money that’s never failed! In the 5,000-year history of people using gold as money, gold has maintained its value and purchasing power. Every currency eventually fails. Gold is completely private and portable. In times of economic uncertainty and crisis, it’s the safest store of wealth. As of 2012, there was only enough investment grade gold available for every person to have one third of an ounce. Over and over throughout history, gold has been revalued to account for all the excess currency in circulation. If that were to happen today, the value of gold would be between $8,000 and $25,000 an ounce.