As bullish as I am on the price of gold, I am far more bullish on silver. Silver is the poor man’s gold. It has a richer history of functioning as money because it was more practical to use silver than gold for day-to-day purchases. It was a part of America’s monetary system throughout most of our nation’s history, and it has only been 50 years since the government decided to remove silver from quarters and dimes.
While silver may never be used as money again, I think every investor should hold some silver in his or her portfolio. Like gold, it is a store of value, an inflation hedge, and a hedge against economic chaos. But I think silver offers a better opportunity, and here are seven reasons why.
1. One ounce of gold is currently 61.5 times more expensive than one ounce of silver. However silver reserves (i.e. the amount of silver that mining companies estimate they can extract from the ground) only outnumber gold reserve by a factor of 10.6. Thus, it stands to reason that the gold/silver ratio should be closer to 10.6:1 than 61.5:1. With gold trading at $1,235/ounce, this would put the silver price at $116.50.