Is Silver The New Gold?

Silver being the new gold is a viable possibility because of several reasons. Some of these reasons are due to the basic economics of the commodity, its uses, and some consider it a sleeping giant based on the supply and demand factor.

The basic economics of the commodity are rather simple. If past performance is used as an example, then the price and ratio difference is amazing. Recently, the silver gold ratio was at 52:1 meaning that it took 52 ounces of silver to equal one ounce of gold. This already is a huge difference. Looking at the physical differences, for every 17 ounces of silver there is 1 oz of gold making a 17:1 ratio. In the '80s, gold was valued at $850 an ounce and silver at $49.50. Today, gold was valued at $910 an ounce while silver is at $17.50 an ounce. If 17:1 ratio was true, then silver should be at $53.53. This means that silver is due for a major drive up in price very soon. Silver has many uses that include anything from photographic uses, cars, jewelry, electronics, to computer circuit boards. It is thought that because gold is basically useless and silver is a usable resource, the price is more stable than gold because gold stock price is normally based on sentiment rather than on actual supply and demand.

It is said that gold has more of a psychological affect on people than silver does. Based on this assumption, silver would probably have to come up with some pretty big gains to be the new gold.