Silver and Gold

“Silver and gold, silver and gold,
Ev’ryone wishes for silver and gold.
How do you measure its worth?
Just by the pleasure it gives here on earth.
Silver and gold, silver and gold
Means so much more when I see,
Silver and gold decorations
On ev’ry Christmas tree.”

Remember the Rudolph the Red Nosed Reindeer Christmas Special? Yeah every time I hear silver and gold mentioned in a sentence I think of that song. Not sure why.

But that’s not what this post is about. I’m writing about the real stuff. Real silver and gold. Gold closed at $640.40 an ounce yesterday and silver closed at $13.49 an ounce. What does that mean? To understand better what it means we have to look at where these 2 metals have been over the last 5 years.

Gold: 11/01 $279, 11/02 $320, 11/03 $390, 11/04 $440, 11/05 $480 & 11/06 $640

Silver: 11/01 $4.05, 11/02 $4.45, 11/03 $5.38, 11/04 $7.62, 11/05 $8.20 & 11/06 $13.49

Silver has tripled in price and gold is only 2.25 times its price in 2001. That’s in 5 years! We saw a peak of $14.87 per ounce in silver this year … and gold hit $725 on May16th this year. Will gold break $800 yet this year? Will it break the all time high of $850 set on Jan. 21, 1980? What about silver? It’s high was $21.79 an ounce in 1979. How long before silver breaks $15?

These are just recent prices. Prices within our memory. But if you look back over the last 600 years you see a different picture of silver. In 1344 silver was valued at $400 an ounce (in 1998’s dollars). In 1477 it peaked at $806 an ounce. After that it began a steady decline and in the 1890s gold and silver were going for the same price per ounce – $20. Since then silver bottomed out at $4.73 an ounce in 1992.

What is driving these metals to go up? In one word, China. China has been consuming record amounts of copper and silver and now gold. China legalized gold ownership this past year. That means billions of people now have the right to own gold that had been denied that right until just this year! I read somewhere that China has more millionaires than Canada has residents!

So with pricing being so high, is it to late to get into the gold and silver market? My guess is no. In the past, the “bull markets”, of silver and gold lasted 19 – 22 years. There is a minimum of 15 more years of movement in the gold market. For gold to reach the high of 1980 (in 2006 dollars) it would have to sell at almost $2000 an ounce. And based on history the market always beats what it’s done in the past. Silver would have to trade at $126 to beat it’s high in 1979. So are you ready to ride this next wave?

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2 Comments

Filed under Journal

2 responses to “Silver and Gold

  1. Alicia

    I’ve got some in a precious metals mutual fund, haven’t done too bad. Our builder complained that people are coming in and stealing the copper piping out of the houses they are building!

  2. You stand to do well if you keep the moneies there. HOWEVER, I am a firm believer in taking posession of your gold and silver. You don’t really own it until it’s in your hands. I’m not saying all of it, but some of it. I believe in buying gold and silver coins. There is a slight premium for buying the coins, but if you ca work up a monthly deal with a coin merchant you will do much better.

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