Thursday, May 28, 2009

Picking Up Some Silver

I picked up some silver today via the ETF (SLV). I don't claim to be an expert about metals, but I've been reading a lot about smart investors moving into metals, and I too am not that comfortable with the amount of money our government is throwing around. Many are buying gold. Specifically John Paulson and David Einhorn, two excellent hedge fund managers. But I did some research and saw the gold/silver ratio has been out of whack. The historical average (and the actual amount available on earth) is about 15:1. In more recent times, that ratio has moved higher, but now it sits around 63:1, and I think it will correct. So I asked myself, what is more likely to happen, silver to appreciate, or gold to depreciate? Normally I'd say a combination of both. But with these guys buying gold like they are, I'd say either silver is going to appreciate, or the ratio is going to get even more spread.

Just taking an educated guess on this one. There has been some great commentary on this via Seeking Alpha, so I'll just defer to the experts. Good stuff here, here, and here.

Disclosure: Long SLV.

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