The Silver Bull - Small Investment - Big Returns
The case for silver
When I used to hear the words Silver Bull, I would immedietly think of a nice, shiny Lamborghini. Now when I hear those words, I think about of the money that is being made in silver.
With metals hitting record highs, I am often asked how one could take advantage of the markets. I tell people if you are looking for security by Gold, if you are looking for some potentially serious returns, I recomend is Silver. One of the reasons I like silver is because it is cheap, and in this type of environment, your biggest goal should be to aquire as many ounces as you can.
Another reason I like silver is for its wide range of uses. Silver, in addition to being a monetary metal, such as gold, has many industrial applications which I think could provide protection in case of a collapse. What I am looking at is the supply and demand. Nearly 95% of the worlds silver supply is consumed for its industrial applications. Silver is used in electronics like CDs and DVDs, cell phones, flat screens, and computers. Silver also has many medical applications. The "Silver Bullet" is used to prevent bacterial infections in burn victims and, silver lining is used in medical wraps.
Today the above ground silver supply is estimated to be around 300 Million Ounces. At todays prices, that means it would only take about 4 Billion dollars to buy the worlds supply. In my opinion, I don't think it is going to be long before the worlds supply is consumed. We have already seen this happen before when the Hunt brothers cornered the markets back in the early 80s. The price of silver peaked at $54 ounce. Granted they cornered the market but, this time there is a legitimate demand. A major sign of a bull market is new highs and, we have not seen that yet in silver.
Besides the usual supply and demand, there are escalating geopolitical events that could affect the price of silver. We are all familiar with the MENA situation. That is the Middle East and North African countries. We have just recently witnessed what happens to the price of oil during conflict with an oil producing country. Libya only represents less than 2% of the worlds oil supply and the price has gone from $70 PBO to over $100 PBO. I asked the question the other day if anyone thought that the Libya situation could spread to Saudi Arabia, and my fellow Hubber, joshhunt83, believes not only that it could spread, but that we are already starting to see it. Saudi Arabia supplies 14-16 Million BOPD, Lybia supplies 1.5 Million BOPD. What do you think could happen to oil prices if this does in fact spread to other Middle Eastern countries?
Then there is the financial crisis we are facing here in America. Our situation here is a joke. Actually its not that funny. We are in danger of not being able to pay the interest on our loans. When you consider that we pay nearly a dollar in interest for every dollar borrowed, its pretty scary. What does the Fed do when we can't pay our bills? Print more money. We are flooding the markets with liquidity and, our dollar is going down faster than Monica Lewinsky in the Oval Office.
So what does this all mean for silver. I believe these could be the catalysts for some major moves not only for silver, but for all commodity prices over the coming months and years. Silver is cheap and it is very easy to invest in. Silver's qualities are so unique, there is simply no substitute. I believe Silver's story is more compelling than Gold and, I also believe if you are an investor, you must own some Silver.
Then again, you don't have to take my word for it, Warren Buffet has a buck or two. Click the link below to see how much silver Mr. Buffet owns.