The Silver ETF and What it Means to Investors
The SEC recently announced a new rule that allows for what is called a Silver ETF. Now you may be asking yourself what exactly is a silver ETF? Well, ETF stands for exchange trade fund. This means that silver can now be traded on the stock market as a fund just like gold is traded and like many paper stocks.
Now you may be asking yourself, “why is this big deal?” If you have been following the precious metals market at all, then you would surely know that gold and silver are both at all time highs and that there is no real looking back.
The fundamentals of precious metals in precarious and unpredictable times are too good to pass up. And this time, it’s for the long term. Silver is almost eleven dollars and ounce from around 4.50 in 2001. And gold is around 560 dollars and ounce from about three hundred in the same year. The beauty of it all is how clean the profit curve looks for precious metals. If you trace the history of gold or silver for the last ten years or so, you will notice an unusually unfettered growth curve, very little zig or zag.
It is very beautiful indeed, especially when you consider how volatile stocks are and have been for the last twenty years. Only the lucky or ‘insider’ few were fortunate enough to make large gains in ordinary stocks.
But back to the story of ETFs. The ETF for silver is unique and it’s a very big deal. Why? Silver is a unique investment, and it is very limited. I have mentioned before that there are a myriad of uses for which silver is indispensable. I have also mentioned before that silver is real money, not fiat paper. But there is a battle going onâÂ?¦ the battle for the last amounts of silver left on earth. According to insider sources, there is only a finite amount of silver that is left for consumption. It has all been all but totally mined. Unlike gold which continues to be mined and produced.
The silver industry is balking at all of this saying that silver this is going to unnecessarily drive up prices. The investing community is saying that this will free up silver for the consumer and prices for silver will ultimate stabilize later on.
What this means for me (and maybe for you) is that you better buy now rather than later. Silver is still dirt cheap and made to look this way for certain political and economic reasons. In fact silver is trading at around one-third to one-fourth of its historical price (it should be at a 15:1 ratio with gold). Right now it is trading at a 56:1 ratio.
When you buy, buy physical silver. This will be your security against any fraud brought on buy paper funds that can happen with any company listed on the stock market. We all know that stock prices can be inflated or deflated indiscrimately and to the harm of the investor.
Remember the ETF represents silver; it is not the silver itself. You can still buy and trade it like any other stock. However, there really is no substitute and no excuse not to buy something as real as this.
The ETF will drive the prices up, just how far is debatable. However, the time for silver is due.
