Why am I still Bullish on Silver?

I'm sure there are some who think the metals aren't doing well. Some who think they aren't where I should put some of my money for investing. Remember; I've always said that Silver and Gold are for the long haul. That you have to be willing to sit on them for a while. I have bought AND SOLD a lot of each in my life; and will continue to do so. But here's why I am still bullish. This is written in part from the "truthingold" website. But these are exactly the reasons I believe in silver.

Global stock markets continued to be wracked by rising volatility because of a range of economic and geopolitical events that are fueling greater concern among investors. This is generating renewed interest in precious metals, including gold, silver, and platinum, as investors seek safe-haven investments to avoid this volatility.

1. Geopolitical and economic risk is rising

Economic and geopolitical crises are gripping the globe. Earlier this year, emerging markets plunged as the Argentine peso was sold off; now Argentina has defaulted yet again on its debt, and there is growing concern that Portugal’s banking system is nearing collapse.

Conflict is raging across the Middle East, with insurgents controlling swathes of Syria and Iraq, renewed open warfare between opposing parties in Libya, and Israel continuing to prosecute a war against Hamas in the Gaza Strip. War in the Ukraine is also intensifying, with it fast becoming a proxy conflict between the West and Russia, fueling further concern about how far it will escalate.

These developments have thrown the spotlight firmly on safe-haven investments and will continue to push silver prices higher as investors seek a cost-effective alternative to global stock markets.

2. The gold-to-silver ratio widens further

Historically, there has been a close correlation between the prices of silver and gold. This is expressed in the form of the gold-to-silver-ratio, indicating how many ounces of silver are needed to buy one ounce of gold. Over the years this ratio has fluctuated wildly, falling as low as 20 ounces of silver to buy one ounce of gold in 1970 to a high of 89 ounces in 1991.

For the year to date, the ratio has widened, now requiring 66 ounces of silver to buy an ounce of gold. This is well in excess of the historical average of 47 ounces over the last century and well above the figure 43 ounces required at the height of the gold bull market.

If silver correlates to gold at the same level as at the peak of the gold bull market, then silver offers potential upside of 53%. Even if the ratio narrows to the average over the last century, there is potential upside of 40%.

This indicates that now is the time to buy silver as a hedge against both inflation and as a safe-haven investment in place of gold.

3. Demand is set to outstrip supply

Unlike gold, silver is an industrial commodity, possessing a range of uses in a variety of industrial applications. In 2013, industrial use accounted for 54% of total demand, and this is expected to grow. One of the biggest drivers of industrial demand for silver is its use in the manufacture of photovoltaic cells. During 2013, 35 million ounces of silver, or 6% of total demand, were consumed in their manufacture; this is expected to jump to 52 million ounces in 2014 and double to 100 million ounces by 2015.

However, while demand is expected to grow, supply remains relatively flat, with global silver supplies in 2013 falling by 3% compared to 2012. This meant that demand for silver outstripped physical supply by just under 11%.

I expect this supply shortage to continue, with silver miners including Pan American Silver Corp, First Majestic Silver Corp, and Endeavour Silver Corp winding down capital investment in developing new mines because of softer silver prices. This will further buoy silver prices as demand outstrips supply.

There's a lot of ways to own silver. Some buy the physical; some ETF's; some mining stocks; etc... We could debate what is best, but I won't. I will say that I personally believe that unless you can physically hold the silver or gold you bought in your hands....... YOU DON'T OWN IT. I look at the ETFs and similar "Paper Silver" and there's a lot more of the paper than the real stuff. In other words, if everyone who has "Paper Silver" was to say: "I want to trade this for REAL silver".... there wouldn't be enough real silver to cover the demand. See a problem here?

Anyway; that's a totally different topic. I guess it's better to own Silver or Gold ETF than nothing at all. But I do still believe in investing in silver and gold. Mainly silver. Keep learning. Best of Luck. CYA: SE: