Alex: …Now silver as I know is something that is very close to your heart as well. I’ve been recommending silver for some time, and I own some. It’s been very frustrating for silver investors for more than eighteen months. But that is the nature of the beast with silver. You have a very disappointing period, and then it will suddenly double in a period of months.
Eric: Well I think the same thing goes on in the silver market that goes on in the gold market, except it is more obvious. When silver got to $49.50 not that long ago, it traded over a billion ounces of paper silver in a day, and we only produce 800 million ounces of silver in the mines a year. I always ask people to think about the guy who sold a billion ounces of silver that day – what’s he thinking? There’s no way he can supply it. And therefore it must be somebody who thinks that by selling the billion ounces he can dampen the enthusiasm, which they did, of course they had the changes in the Comex rules all at the same time which helped them.
But I think that silver will triple the performance of gold, because ultimately we will go from a 55 to 1 ratio which we’re at today, down to 16 to 1 which was the typical ratio. And we see lots of signs in the silver market for incredible demand. I’m just awestruck that in the US, the US mint sells as many dollars of silver as they sell of gold, which means they are selling 55 times as many ounces of silver as gold. And yet the mines only produce 11 times more. I mean something’s got to give here. We can’t have the world buying 55 times more silver than gold, when quite frankly for investment its only available three ounces of silver for every ounce of gold, as most silver is used for industrial purposes.
So I’m pretty upbeat about silver!
Alex: So you think $100 silver is realistic in the next year or two?
Eric: Well I think obviously with gold at $1600, I would believe that silver should be at a hundred. Does it happen in one to two years? Maybe not, but I would certainly say in two to five years it happens. And that’s just with gold staying still!
Fortifying stuff indeed! And based on silver’s history, is quite realistic too.
But if you’re buying silver, a few key things to recall are:
- To buy as low as possible (like now), and with as low a margin as possible
- Hold with a long-term view, and
- Expect any number of swings and roundabouts in the interim!
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