Silver Second Place?

Silver Second Place? There is plenty of room for improvement ……

Silver Second Place

The old argument that Gold is not worthy of your investment because it does not pay a dividend or interest is all of a sudden looking like a weak one. There is currently a whopping US$13.5 trillion worth of money parked in negative yielding bonds and now there is almost US$1 trillion in negative corporate bonds. Truly eye popping figures.

Just the other day the German Government sold 2.3 billion Euro’s worth of 10 year bonds on a yield of minus 0.41%. Yes negative 0.41% so that means investors have to pay for the privilege of lending the Germans money every year for 10 years.

All of this money flooding the markets is a result of the stimulus measures by Central Bankers where money gets created out of thin air.  This is why I like Silver, because Central Bankers can’t just wave their magic wand and pull Silver out of their hat.  It has to be done by good old fashioned hard yakka that comes with mining.

The other beauty of Silver is that right now it is historically very cheap vs Gold.  Below is the chart of the Gold/Silver Ratio.

Gold to Silver ratio

 

This chart shows that Gold is currently 88 times the price of Silver. The ratio has not been this high since the early nineties which means Silver has got plenty of catchup to Gold plus it has a healthy yield of 0% which is better than the $13.5 trillion sitting in negative yielding bonds at the moment.

An easy way to get exposure to Silver is by purchasing the Exchange Traded Fund on the Australian Stock Exchange, the code is ETPMAG – last sale $22.80.

Every investor should have a bit, in an era where Central Bankers have gone troppo.

 

 

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