Gold shines, but silver is the moneymaker

Silver has been a better hunting ground for speculative profits than gold this year. A big reason is how much cheaper it is for a speculator to get into the metal.

By Charley Blaine Jul 18, 2011 9:04PM
So why did gold (-GC) jump to a new high and silver (-SI) rise above $40 for the first time in two months.

The short answer is uncertainty. Uncertainty about European debt problems. Uncertainty about the U.S. debt ceiling negotiations and the health of the U.S. economy. Uncertainty about the health of European banks and even U.S. banks. Uncertainty about how serious China is about reining inflation.

But there's an additional very good reason silver moved 3.3% Monday, to $40.34, while gold was up only 0.9% to $1,600.

You can get a lot more silver for $1,602 -- nearly 40 1-ounce silver bars.

That's why silver has been much more volatile in the past few years and why volume in silver trading has exploded and why the metal is likely to remain volatile for some time.

Volume in the iShares Silver Trust (SLV) exchange-traded fund has averaged 44.7 million shares in each of the last six session, a third higher than the daily volume for the ETF in June.

The daily volume in the SPDR Gold Shares (GLD) exchange-traded fund was just 21 million shares in the last six days. Admittedly, the volume jumped 57% from the June average.

And because silver is so much cheaper than gold -- at least on a nominal basis -- you could make a lot more money on silver than on gold.

Between the end of 1999 and 2008, gold jumped from about $290 an ounce to $884, a gain of some 245%. Silver moved from $5.41 an ounce to $11.27, a gain of 145%. Gold clearly was the better buy. Since the end of 2008 to now, gold is up 81%; silver is up nearly 120%.

So far in 2011, gold is up 12.7%, but silver is up 30.4%. So far this month, with talk about Greek debt default and its effect on other members of the European Union and the debt ceiling, gold is up 6.6%; silver if 15.8%.

If margin requirements for silver had not been boosted substantially, silver silver would be up a lot more. We know this because the silver ETF was up 56.6% for the year on April 28. After the margin requirement took effect, the silver ETf fell back to as low as $33. The ETF's return fell to as little as 9%. It's back up to 31%.

The gold ETF is up 13% for the year.

VIDEO ON MSN MONEY

16Comments
Jul 19, 2011 9:16AM
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ezwipe3, the article is stating the facts, (with a couple math mistakes) your response states nothing except you don't have a clue. Let me enlighten you...

Silver has always been a precious metal, like gold, for at least 6,000 years. Gold and silver was our money until the Federal reserve Dollar was taken off the gold standard in the 70's.

The dollar you have in your pocket is not a US dollar, it is a Federal Reserve note, and the Fed isn't Federal, they are 12 private banks... we do not own our own money, just like Spain, they use the Euro.

We are running out of silver, in 10 years they figure silver mines will be depleted, even now we use 10 times more than they can mine, as silver is mainly a by-product from most mines.

It's used in almost everything electronic, and because silver kills germs, it is used in medical equipment, and all of US Military underwear.

So collect your rocks, I'll buy silver, and in 10 yrs my silver may be worth as much as $1000 an oz.

 

Jul 19, 2011 11:49AM
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Not a word in the article mentioning that silver is:

1) Indispensible for high tech and electronic usage as it is the element most reflective of light and most conductive of heat.

2) Most silver used in such applications is not recoverable (as in gone, no more)

3)There is less above ground silver today than there is gold. (the silver price has been manipulated and held down by collusive bank shorting in the paper markets since the early 1970s. Due to physical demand from Asia, this game will soon come to an end).

 

As Lyndon Johnson said when the US stripped it's circulating coinage of silver in 1965;

"Silver is much too valuable to be used as money."

Jul 19, 2011 7:28AM
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Iron is the new precious metal. Shootin iron.
Jul 19, 2011 9:41AM
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Oh, boy - here comes a flood of "geez, you said that a long time ago (when silver was less than five dollars)"!  It'll go a lot higher than $40, too.  A lot.

 

The money-cheapening that is the real reason for the big precious metal numbers (it's a question of confidence which to you beleive in most - the value of gold or the [choke] "full faith and credit of the U.S. Government) has already been done.  The phony money, in other words, has already been printed (can you say fourteen and a half trillion dollars in "public debt?"). 

 

People who know even a little history would rather have an ounce of gold than sixteen hundred of the government funny money dollars, in other words.

 

Ron Paul says 10,000; odd, but I started saying that in 1996.

Jul 19, 2011 9:26AM
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All of this is silly.  You may or may not do well buying Gold or Silver, but the question is not what is the price of gold or silver, the question is what is it worth.  Historically it is worth a lot because it hard to find and so expensive to get.  The value reflects the labor involved associated with the needs of people to have that material.  Because it is so rare and you can't grow it, it is a good currency, because no one can devalue it easily.  If the current cost is only driven by speculation and not by the value of the material, it will eventually fall in value and when that happens the people pushing this gold and silver buying will all ready be out of the market and those buying now may well left holding bag.  (However, no gold)
Jul 19, 2011 8:17AM
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Wouldn't an increase in gold from $290 to $884 be an increase of 205%, not 245%?  And the silver increase 108% from 5.41 to 11.27, not 145%?
Jul 19, 2011 6:57PM
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Ditto Barry S.!  The main reason i would invest in CERTAIN silver or gold coin NOT bullion would be to have something that cannot be stolen from me by the gov't when the dollar goes down the drain and is worthless or close to it, thereby sending the Feds scrambling to save THEIR butts (u dont srsly think they'll worry bout OURS do you?)  by confiscating OUR stash, which, was done as everyone knows--Roosevelt's Executive order 6102 !!  At that time in history a lot of people held gold. It was pretty common. One day, When bills become worthless the only REAL money will be silver and gold to buy food, supplies etc. You would prob be able to get your family to a doctor by bartering, but in big retail its gonna be metal or perhaps gems! Some states out there are already using an alternative money instead of the US dollar. NOT too long ago quite a few of the other Countries around the world had a secret meeting  to DISALLOW our U.S. currency paper as payment for debts and future trade!  (geez I wonder who that might have been and GEEZ we WEREN'T invited? Awww man!)  I dont know about you but I would seriously consider stashing some of the little shiny circular stuff for food, etc. when the not so mighty dollar flows the rest of the way---into the septic system. 'Nuff said!
Jul 19, 2011 3:38PM
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When everyone is talking about how much higher a stock or element will go, that is the time to get out, or watch it very closely.  Once the talking heads get louder, the party has been going on for a long time.  If it was so good, why is anyone selling?
Sep 7, 2011 5:59PM
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As per some analyst Gold could top out at $6000 per oz ( not per pound) and ratio of Gold to silver at 10,  Silver could go up to intraday high as much $600 per oz before this decade ends. Compare to all time high Gold before 1990 at $850/oz  it is still cheaper at current price.

 

The simple reason is world leading economy will get ugly from worst before they get better any time soon. Smile

Jul 19, 2011 4:06PM
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I would guess countries pay foreign debt in gold.. but not sure.. the only people hurt by high gold prices are those who have to pay in gold for all us normal people we don't give a hoot

Sep 6, 2011 11:08PM
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Silver "has been" the money maker would be more accurate.  It has gone up more than gold on a % basis over the past few years.  It's absolutely in a bubble though.  It would have been a good investment a couple years ago obviously, but using that argument to predict the future is insane.  Those metals are so expensive because of the US and Euro problems.  They can't get much worse.  What will happen when they get resolved?  The bubbles will pop for sure.
Google the phrase "invest in silver international" and you'll see a much better article by land of sheep.  Very fitting title for all the people with a herd mentality.

Nov 20, 2011 7:07PM
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Why do you run articles that are 4 months old?
Jul 19, 2011 4:08PM
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i like private enterprise but with gas going up and down 20 cents a day it's time to say No to the gas investing market and set a price that can stand for 6 months or a year. Gold means nothing unless your King Tut
Jul 19, 2011 4:25PM
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Let's see, 80 years ago gold was $36 an ounce and now its $1600 but it's all driven by speculators. Speculators do distort the value of oil, gold, grain and other commodities but it’s not the only factor. Currencies by necessity devalue over time, but this is excessive. People in this country worked for a dollar a day and economists screamed that Henry Ford paying $5.00 would destroy our country.

Jul 19, 2011 1:18PM
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And when I have some food and you want to come around asking if you could have some iin exchange for some type of metal (which I cannot eat), I will tell you to go jump in a lake...I would rather have something to eat than some shiny metal anyday...
Jul 19, 2011 2:13PM
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so if I sold my Korgorant, theoretically I could get 1,610 for it?
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