Forget Gold, Invest in Silver

The surge and popularity in Gold mining vacations is enough for the Masters to move on.  Even if gold can get back to $1,000 per oz., the Silver lining is where we want you to think about putting your money. Silver actually does more than make for crappy rings and bracelets sold by hippies at art fairs. Let's examine the stocks you can play to invest in Silver.

An article this week by CommodityOnline.com and Mark Leibovit's appearance on the Nightly Business Report got my attention for silver this week.

First up, the best part of CommodityOnline.com's article is the following:

Each year, silver mines produce about 650 million ounces of silver. Around 200 million ounces come from recycling and about 100 million ounces come from investor or government sales. That’s a total of about 1000 million ounces. Of that, about 42% is consumed by industrial use, about 28% consumed by jewellery, about 20% consumed by photography and around 5% consumed in coins and medallions. That’s 95% of total available silver each year.

This implies either a “surplus”, or “investment demand”, of about 5% total. At $20/oz., that’s only $1 billion per year of net investment demand.

Since the 1950s, silver use and consumption, has made silver more rare than gold, in above ground, refined and deliverable forms. Estimates suggest there are 200-300 million ounces of refined, above ground silver available to the market at the present time. There are about 125 million ounces of silver at the NYMEX, the big commodity exchange in New York. The ETF SLV has about 180 million ounces.

Despite silver's intrinsic properties as money, silver began to lose its status as money starting in the late 1800s, as nations stopped using silver, and started using only gold as money. Over 100 years of this “demonetization” has caused a serious drop in silver’s value, and this trend is about to be reversed as investors re-learn that silver is a great store of value because of its intrinsic properties.

They are talking about iShares Silver Trust (ETF)  (Public, AMEX:SLV)

Let's check out the Nightly Business Report Transcript from Friday:

LEIBOVIT: OK, my next two are silver related. Silver a big catch-up, silver should be $45 an ounce as far as I'm concerned. Now it's trading.

KANGAS: This is a composite quote, composite quote here, $176.71. And that was down $3.39.

LEIBOVIT: And that relates to silver around $17.60. Anyway silver is headed way up. I'm projecting SLV into the mid 20s now and ultimately into the mid 40s, so you want to be long SLV.

KANGAS: That trades on the American Exchange.

LEIBOVIT: Right and GLB trades on New York, correct.

KANGAS: We have time for one more.

LEIBOVIT: One more, PAAS, that's a silver play, Pan American silver. Silver is going to go as I think you want to own this, is a blue chip in silver. I am projecting at least the low 50s, probably a $60, $70 stock, particularly as silver gets going.

KANGAS: You say silver at $50 an ounce?

LEIBOVIT: Absolutely, maybe a hundred. But let's take 50 for now.

Pan American Silver Corp. (USA)  (Public, NASDAQ:PAAS):

Fellow Masters, both of these guys I just quoted are extremely bullish on silver, but I believe it is worth your attention to examine silver investing options. 

Some of your options for investing in Silver are:

Disclaimer: The Author has no positions in any of the securities mentioned in this publication.