Are you aware of silver shortage and silver backwardation?

The whole world supply of gold is now approximately 8 times of that of silver.  Gold is hoarded, silver is consumed.  Silver is widely used in medical equipments, electronic gadgets and commemorative coins.  Since the last silver boom in 1980s,  silver as an industry material has been almost depleted and in severe shortage. The current silver supply is only sufficient for about 3 months of industrial use.

Silver trading has been in backwardation since February this year which implies severe physical shortage.  Backwardation means near term future contracts are traded lower than ones further out.  Silver backwardation has not been seen since Warren Buffet snatched up 130 million oz silver back in 1997 which drove silver price significantly higher.

With the US Federal Reserve printing money to make the base money surpass 3 trillion dollars, we are seeing more and more investors buying Gold, Silver, Platinum and Palladium to seek safe heaven.  Silver is the best investment in the precious metals section due to its historic monetary value and heavy industrial use. The historic gold to silver ratio is about 1:12.  Silver price will have a long way to catch up from the current ratio of 1:34.

Silver was often called poor man’s “gold”.  For the first time in the history, it is more scarce than gold. There is good possibility in the far future, the investment and industrial demand of the white metal may drive silver price to the roof if the scarcity of silver supply persists.

The inflation is catching up.  It is wise to diversify your investment to include precious metals to take advantage of the global silver shortage and current silver backwardation. Welcome your comments below and thank you for sharing your thoughts.  Please visit my other articles on Internet Marketing Training, Financial Freedom Training, and Personal Growth and Personal Development Training.

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