Warning Fools! Silver Will Fall by 66%
The silver bubble took on a new dimension this month, with the price of the metal rising nearly 30%. Last Monday, share volume in the iShares Silver Trust ETF (NYSE: SLV ) was five times its daily average in the first quarter. While many investors may cite capital preservation as a reason to buy silver, an analysis of the historical data suggests that those who pay nearly $50 an ounce will eventually suffer massive losses.
Gold's real return: aero
Like gold, silver has lived up to its billing as a store of value -- if you measure your holding period on a geological timescale. Using data from precious-metal dealer Kitco, I constructed a series of inflation-adjusted silver prices going back to 1800, according to which the metal generated a historical average return of 0.4% per annum. (Much of that small premium over inflation is due to price appreciation over the past 10 months. If we use the price of silver in mid-2010, the average annual return falls to 0.1%).
There is no reason for investors to expect anything more from silver: Why would a metal -- a commodity with no yield -- accrete value? But silver's price volatility disqualifies it even as a stable store of value. For proof, just take a look at 10-year trailing real returns since 1810 (based on average annual prices):
The silver bubble took on a new dimension this month, with the price of the metal rising nearly 30%. Last Monday, share volume in the iShares Silver Trust ETF (NYSE: SLV ) was five times its daily average in the first quarter. While many investors may cite capital preservation as a reason to buy silver, an analysis of the historical data suggests that those who pay nearly $50 an ounce will eventually suffer massive losses.
Gold's real return: aero
Like gold, silver has lived up to its billing as a store of value -- if you measure your holding period on a geological timescale. Using data from precious-metal dealer Kitco, I constructed a series of inflation-adjusted silver prices going back to 1800, according to which the metal generated a historical average return of 0.4% per annum. (Much of that small premium over inflation is due to price appreciation over the past 10 months. If we use the price of silver in mid-2010, the average annual return falls to 0.1%).
There is no reason for investors to expect anything more from silver: Why would a metal -- a commodity with no yield -- accrete value? But silver's price volatility disqualifies it even as a stable store of value. For proof, just take a look at 10-year trailing real returns since 1810 (based on average annual prices):
The silver bubble took on a new dimension this month, with the price of the metal rising nearly 30%. Last Monday, share volume in the iShares Silver Trust ETF (NYSE: SLV ) was five times its daily average in the first quarter. While many investors may cite capital preservation as a reason to buy silver, an analysis of the historical data suggests that those who pay nearly $50 an ounce will eventually suffer massive losses.
Gold's real return: aero
Like gold, silver has lived up to its billing as a store of value -- if you measure your holding period on a geological timescale. Using data from precious-metal dealer Kitco, I constructed a series of inflation-adjusted silver prices going back to 1800, according to which the metal generated a historical average return of 0.4% per annum. (Much of that small premium over inflation is due to price appreciation over the past 10 months. If we use the price of silver in mid-2010, the average annual return falls to 0.1%).
There is no reason for investors to expect anything more from silver: Why would a metal -- a commodity with no yield -- accrete value? But silver's price volatility disqualifies it even as a stable store of value. For proof, just take a look at 10-year trailing real returns since 1810 (based on average annual prices):
http://www.fool.com/investing/genera...all-by-66.aspx
Opportunities abound for Life and Liberty -- Keep Looking up folks!
Quote:
Originally Posted by
KCIndy
If silver drops by 66%, I'll look at it as a great buying opportunity! Bring it on!! :D
Exactly -- buying opportunity!
It is difficult to make money in the metals market if you are a short term trader or an emotional trader because the peaks are often sharp and the troughs can be extended. But if you are consistent and buy on dips for the purpose of holding the asset you will be fine.
I must remind everyone here though that our real treasure is not in earthly treasures that can be stolen, but in the priceless idea of liberty. Where the spirit of the Lord is -- there is Liberty. We have what seems to be a dwindling opportunity to bless the next generation with what our forefathers gave us.
Let us be ever vigilant in our efforts to restore the respect for Life and Liberty in our land.
Let us ask the Lord God who made us to have mercy on us and guide us in the battle at hand to restore the republic. May we be a people that He would be pleased to bless once again.
Blessings,
Sandie