Will Silver Outperform Gold?

Silver and Gold have held real value since history began. They have also both outlived every fiat currency created. Will this happen with the almighty dollar too? Our government is creating dollars at an alarming rate in response to the credit and liquidity crisis we have been facing. They were creating too many dollars even before this all started.

Right now it looks like we are in the opposite of an inflationary environment, but I think this will look much different in a few years. The dollar will devalue when the rest of the world loses confidence in it. When this starts to happen, gold and silver prices will sharply rise. Compared to gold, the price of silver changes based on a much smaller sized market. If people decided to invest just 1% of their savings in silver the price move would be enormous. Even just a few billionaires wanting to beat inflation by buying silver would greatly move the price.

Remember the Hunt Brothers? They tried to corner the silver market in the 1970's by forming a silver pool with the help of some wealthy oil sheiks and eventually took delivery of half of the worlds silver. The price of silver eventually reached an all time high of $54 an ounce in 1980. These same Hunt brothers just recently sold their petroleum company for 4.2 billion dollars. I doubt they will try to corner the silver market again but they might use some sale proceeds to invest in silver.

Silver has never touched and is still no where close to the previous peak of $54, but gold and just about every other commodity has exceeded it former peak in the last few years. In other words, silver's day is still to come. If silver was adjusted for inflation, it's price would need to be $120 to match it's price peak of 1980.

The author has been a full time real estate investor for 16 years and has expertise in using many different investment strategies.

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