Right now, with the ratio of silver prices to gold abnormally low, there is a lot of room for silver to move up sharply – which it will when people realize that economic growth and the need for more energy will put the squeeze on silver supplies. Unless the economy slips into deep depression (which we don’t expect) silver prices will shoot much higher over the next five years or so. We would not be surprised to see triple-digit silver before the end of this decade. Words: 568
In further edited excerpts from the original article* Dr. Stephen Leeb (http://www.completeinvestor.com) goes on to say:
The Growing Silver Squeeze
Solar collection, a form of solar energy, uses hundreds of thousands of mirrors (called heliostats) spread over a wide area to concentrate the sun’s rays on tanks of water. The sunlight turns the water into steam which is then used to drive a turbine. The method uses silver because it is the best thermal conductor and the best electrical conductor and a small amount of silver can substitute for large amounts of other materials (such as aluminum).. In this case, silver forms the highly reflective surface of the mirrors. Silver, despite being fairly cheap now, is in short supply and that creates an excellent opportunity for investors over the next few years.
Because of its unique chemical properties, roughly 50% of the silver mined each year is used for industrial purposes (rather than things like jewelry, cutlery and coinage) and as electronics proliferate, so will the demand for silver. Solar power generation today, however, accounts for only a small portion of silver use but as China and others ramp up solar, demand for silver could sharply accelerate.
Recommended Investment Options
1. Silver ETFs
The easiest way for conservative investors to profit from silver’s rise is to purchase shares in the exchange-traded fund SLV. This ETF tracks the price of silver and gives you a convenient alternative to owning silver bullion directly.
2. Silver Wheaton Stock
A more aggressive approach – and our top recommendation for active investors – is to invest in Silver Wheaton (SLW). Silver Wheaton is one of the world’s largest silver companies but what makes this outfit special is that it doesn’t actually operate any mines. Instead, it purchases silver production from mining companies at a fixed price under long-term contracts. This allows its profits to rise with every increase in silver prices, while protecting it from rising mining costs.
Silver Wheaton has entered into so many such contracts that its production will likely rise at an annualized rate of 15% for at least the next five years – if not more. As an investor, Silver Wheaton gives you a highly leveraged silver play that could pay off handsomely over the long haul. It takes advantage of the growing silver squeeze, the growth of China and the world’s need to develop alternative energy.
One must realize, however, that silver is much more volatile than gold, and Silver Wheaton is more volatile than silver so you have to have strong nerves to ride the ups and downs. Nevertheless, if you want to capture more than 100% of this explosive move, this stock is a great way to go.