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David Morgan discusses the demand for silver.

Big Al
February 2, 2012

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Discussion
9 Comments
    Feb 02, 2012 02:39 PM

    Wow : I sold out my position in Sandridge Oil [SD] severl weeks ago at a nice profit. I then bought a large position in Sandridge Permian Basin Royalty Trust [PER]which is nice. SD just announced that they are buying a private company that has lots of shallow oil wells in Gulf of Mexico. They plan to get more “Oily” , which is fine , but it tanked SD as a stock for the short term. Probably because you cant do any internal research in the new aquistion as its not a public company . I might repurchse SD at a much lower price. oddly enough the PER oil trust rose again today in a nice modest uptrend [plus royalty payments]. most of my oil stocks ere up nice today, as well as my silver mines. love to all S

    Feb 02, 2012 02:42 PM

    Thanks Scott H.

    Glad you are doing well.

    Hopefully, it will be a great year for all of us.

    Big Al

    Feb 02, 2012 02:17 PM

    I agree with David that the exact numbers aren’t as important as the general direction and trend. The trend is your friend.

    Silver uses like Solar, medical/dental, water purification, technology = taking silver is being taken out of supply constantly. The investor hedging against currencies & inflation component is the fear hoarding, just like reasons for gold.
    Gold doesn’t have that strong industrial component other than as jewelry; but it isn’t used up as jewelry because it gets recycled. Gold changes form but rarely if ever gets destroyed. Silver is recycled sometimes, but much of it is gone each moment and that will keep a floor under its price when investor demand dips. This will also lend towards silver miners becoming more and more valuable as they have real tangible wealth in the ground.

    **Also, why shouldn’t silver keep going up just to move the Gold:Silver ratio closer to 1:20 or even 1:16 which is when the bull is at it’s final run. 1:50 or 1:40 gives silver a great deal of room to even double/triple way before gold will double again.

    Big Al & David – love the time you both spend being consistent, putting the message out there, and visiting the fundamentals so often; instead of just the technicals and chart pattern identification. Fundamental shortages in supply/demand still are the essence of trade and economics and the industrial component in Silver during certain periods can put a bit more zip on Silver than it’s big brother.

    Keep it up guys!

    Feb 03, 2012 03:20 AM

    I traded 1 one ounce gold coin for today over 40 new condition silver peace dollars dated 1923 or 1922 today. Plus got about $200 cash. If gold / silver ratio moves from 51x to 30x or less, I think that will end up a fairly nice trade. Plus you get the added flexibility of more easily using them for barter if needed. How long does it take silver to move to a more favorable ratio? Years?

      Feb 03, 2012 03:57 PM

      Who knows exactly when the Gold:Silver ration changes from 1:50 to 1:20 but your trade will be quite profitable at that point. Most financial institutions or funds buy huge sums of precious metals, so gold is easier to store. That same amount of silver would take up 50 times more space. However, when the masses of smaller retail investors really come into the market (they still have not at a mania level despite all the bubble calls) they’ll buy silver because it is still a precious metal exposure, much more affordable, more divisible, and the key – has a multiplier effect. If you have 1 gold coin and it goes up $100 that is great. If you have 100 ounces of silver and it goes up $10 = $1000. Leverage is the money play. Access and divisiblity is the hyperinflation silver is money and fear hedge play.

      Also, as for the industrials people only look at manufacturing in US, China, Japan, Europe. Solar, dental, medical, and water purification are new uses that are rapidly expanding for Silver and those have nothing to do with whether Chinas GDP slows from 8-9% to 6%. Silver is being used up and will be used up faster than market “experts” realize because they are looking at the wrong correlations on the industrial side. They are only considering the electronic/wiring side of the industrial. When the average person realizes there are much higher percentage gains to be had from Silver and Palladium over the percentage increases in Gold; then the 1:16 ratio for Gold:Silver will show true again. Then buy a house with that silver 🙂

        Feb 04, 2012 04:46 AM

        Shad, thanks for your insight and comments. That sounds encouraging to know.

          Feb 05, 2012 05:11 PM

          You are welcome and I hope we can all profit and preserve our wealth with silver as piece of our portfolios. To your success!

        Feb 04, 2012 04:11 PM

        I would not prognosticate this right now, but some feel that silver could in the future surpass gold in value, for the reasons you say Shad.

          Feb 05, 2012 05:16 PM

          I have heard that as well John, because silver is getting used up. That is what makes commodities worth something when currency crisises happen. They have a use and need by people (like oil, corn, cotton). In this case Silver has many uses and is simultaneously a precious metal. Gold’s ornamental use is it’s primary commodity purpose, and the rest is as real money. I can definitely see Silver narrowing the gap on gold over time and agree with David that anything under $30 on the short term is a good buying opportunity. If it goest to triple digits, then anything under that is a good buying opportunity. It is an exciting time to see how things progress over the next 2 years.