Investing in Silver Summary Silver is our primary recommendation given that the current fundamental picture for silver is better than at any other time in history. We believe that silver will rise to new all-time highs as history repeats itself like the late 1970s. How high will the price go? Consider the differences between the 1970's and today. The 1970's was a period of extreme inflation, high interest rates, high oil prices, oil shortages, and geopolitical unrest. By January 1980, gold and silver reached all-time highs of $850 and $52 per ounce, respectively. Thirty years later, we are again experiencing an increasingly inflationary period, higher oil prices, and considerable worldwide geopolitical unrest. However, unlike the 1970's, the US has severe trade deficits and consumers do not have significant savings or even negative savings. The dangerous and unpredictable derivatives and sub-prime mortgages of today were unheard of in the 70's. Furthermore, foreign influence on the US economy is at its highest in history. Foreign investors now hold almost 50% of US assets, the US is dependent on foreign oil production and foreign exposure to a falling US dollar is severe. Supply and Demand The supply and demand fundamentals for silver are extraordinary. There has been an ongoing deficit in silver for 12 years. Annual supply for silver is approximately 650 million ounces while annual demand is approximately 800 million ounces, resulting in an annual deficit of 100-200 million ounces per year. Essentially, more silver is consumed by industry than is produced by mining and recycling combined. 70-80% of silver brought is market is mined as a by-product of copper mining, gold mining, and zinc and lead mining. There are very few true silver mines in the world. Therefore, mild increases in the price of silver will not force substantially more silver out of the ground. Photography accounts for much of the silver consumed globally. However, so little silver is used in each photograph, that a price increase in silver will likely not reduce demand. Thus, with a relatively inelastic supply and inelastic demand for silver, a dramatic explosion in price will be required to bring the supply-demand deficit back into balance. Silver Compared to Gold Taking into account known refined and mined silver reserves, there is far less silver in the world than gold, approximating 150 million ounces of silver compared to 400 million ounces of gold. The historic silver/gold price ratio was 15 or 16:1, but in recent years, silver is relatively cheaper ranging from about 40:1 to 80:1. As a result, silver is currently undervalued, and cheaper than historic norms; thus, it is a better investment than even gold if you want to "buy low and sell high". Conclusion While there has been a large increase in the paper futures contracts in the gold market to suppress the price, the relative amount of paper contracts for silver is much higher. In other words, when the price of silver really begins to rise due to the fundamental gap in supply and demand, many will be caught in an impossible situation. They will be forced to buy silver or go bankrupt. Either action will cause a dramatic rise in the silver price. If they default on the silver contracts, that will signal to the world the severe shortage of silver, and signal a great investment opportunity. Here is what leading experts in the market are saying about the current precious metals market. Quote from legendary investor, Jim Rogers "I'll undoubtedly buy more gold!" Rogers says, predicting it will double from its current value in the next few years. Quote from legendary investor, Richard Russell "I believe that fortunes will be made in the years ahead by those who are now establishing major positions in Gold and Gold shares. These primary moves last longer than anyone thinks possible, and they take the items higher than anyone thinks possible. We are now in a primary bull market in Gold. I believe Gold will make fortunes for those who now take major positions in precious metals." Quotes by Howard Ruff from The Silver Lining: Part II - March 7th, "Silver always rises during Gold bull markets, usually twice as far and fast as Gold, but the supply/demand situation (ETFs and jewelry and industrial usage) dwarfs all other reasons why Silver will soar in price, perhaps much more than twice as much as Gold. Silver is the investment of the century. It will move with Gold, but further, as has already been demonstrated. Gold is up about 200%, and Silver is up more than 300% over the last couple of years. We will eventually find that Silver at today's $15 to $20 is the bargain of the century." Quote by Ian Cooper, from Gold World - Saturday, March 8th, "Since the start of 2008, Gold has gained nearly 20%, as funds, speculators, and nervous investors shift to the safe havens of Gold on expectations of more rate cuts.