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Even Better than Gold… Silver set to Rise 204%

Posted By Matt Insley On September 1, 2011 @ 5:07 pm In Precious Metals | No Comments

When gold hits $2000, this investment could rise 204%…

Yesterday we heard Eric Sprott, a leading resource investor, explain why [1] gold is destined for $2,000 and beyond. Making it a great buy even at historic highs.

Today, Sprott doubles down, this time on silver.

“I still believe silver is a very safe investment today,” says Sprott. “When we look at the data points, they scream at us that it’s undervalued.”

In fact, according to data published by GoldCore silver may indeed be a better short-term investment than gold. According the report “Gold remains less than 5% from its record nominal high of $1,913.50 per ounce while silver remains nearly 20% below its record nominal high just below $50/oz”

Continuing on the same theme Sprott said this “You just see things developing in the market that could make it explode at any moment in time. I always think in three to five years for sure it will trade at 16:1. When it actually happens, I don’t know. It could get parabolic at any moment. We have a financial system that’s on the edge of a cliff here.”

The key to this last statement is Sprott’s assumed gold to silver ratio at 16:1 (incase you’re wondering, yes, this is just about the natural occurring ratio of gold to silver in the earth.) With this ratio in mind, if gold goes to $2,000, silver could jump from $41 this morning to over $125. A rapid gain of 204%.

Again, we tap Eric Sprott in response to questions posed by the legendary James Turk:

James: Even from a diversification point of view, to mitigate risk you need to own some gold, you have to have some silver. You need to have a tangible asset for your monetary asset, rather than just fiat based on nothing except politicians and government rhetoric.

Eric: Right. You have to own it yourself or have access to it. You have to own it through trustworthy people like yourself, like ourselves. People who have pledged themselves to try to get people to get into precious metals for all the right reasons for the last 10 or 11 years, or even longer, for that matter.

James: Yeah, who thought $50 silver a year ago was possible, other than a couple people like ourselves?

Eric: It was quite predictable. I thought anyway. [laughter]

James: When it comes to markets, nothing’s predictable, but it was an easy call.

Eric: Right. It was easier than most. Because if you looked at the history, oh, my god, if this thing goes back to $24, it’s going to $50 almost automatically. And it did. And it did it almost in the time frame that you would have imagined.

So when I was on the road and said if it goes to 24, it’s probably going to 50 in like four months. Well, I think it took six. But who’s going to argue over a couple of months, right?

James: Yeah. Particularly given the double price.

Eric: Yeah, exactly. I think the investors are coming around to it. I was actually in a little dismay when I was listening to the bubble-vision. And like every third guy likes gold now, and is willing to admit that maybe you got to have gold in portfolio.

Which was disturbing, having gone through the 11 years when no one would even mention it, or said it was a barbarous relic or whatever. So I kind of monitor now how many people talk about silver. It’s not many, but you can see it creeping into the conversation.

If silver is starting to “creep” into the conversation it may just be time to ante up and grab some silver — physical silver, according to Turk and Sprott.

After all, as Sprott concluded “That’s the ultimate thing that’s going to happen. You need something to back the currencies. It’s got to be something physical. So gold’s got to play a big part. Silver’s going to play a big part. Maybe other commodities do. I have no idea, but those would be the two key ones that are usable, fungible in everyday use.”

If you don’t want to have the bulky physical silver you may be interested in a worthy proxy. Similar to his physical gold fund, Sprott also offers a physical silver fund.

The Sprott Physical Silver Trust (PSLV: NYSE) offers investors access to silver price appreciation — but importantly also allows them to take physical silver. If getting physical silver is important than this trust may be for you. Also — as with yesterday’s gold article [1] — it’s important to note that I have absolutely no financial interest in this trust or any financial affiliation with Sprott — the research you’ll find here is 100% independent.

Now’s the time to get into silver. With a pullback from a high near $50 silver could soon see an explosive run higher — even more so than gold.

Here’s to $2,000 gold and a quick 204% in silver. That’s all for now.

Keep your boots muddy,

Matt Insley


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[1] explain why: http://dailyresourcehunter.com/eric-sprott-changes-gold-market/

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