Silver is cheap, dirt cheap

In this clip, billionaire investor Paul Tudor Jones talks about gold being the investment for the next 12 to 24 months. In fact, he states that gold “has everything going for it.”  A few days later, Bloomberg reported that Tudor pulled the trigger on an $82 million purchase of gold-related shares.

Silver, however, is the better investment, with a gold-silver price ratio (GSR) of 90.  Historically, the GSR has been closer to 60.  At $1345 gold, silver a GSR of 60 would put silver at $22.42.  And, there have been times in the last decade when the GSR hit 40, which, at $1345 gold, would put silver at $33.62.  Actually, when silver went to $50 in 1980, the GSE was 17.

Jones is probably aware of the GSR; however, there is no good way to put $82 million in silver shares because 70% of the silver mined comes as a by-product of copper, lead, zinc or gold (primarily copper).  While there are mining companies that produce primarily silver, $82 million would have a major impact on their prices.  Further, selling those stocks would be difficult without putting great downward pressure on them.

With a GSR of 90, silver is dirt cheap.  A very neglected asset that is just screaming to be bought.  In fact, over the last few months we’ve had wealthy clients place several orders for more than a million dollars for silver, and their reasoning went along the lines of “Silver is just too cheap not to buy.”

Throughout the centuries, silver has been used as money right along with gold.  Nowadays, though, the industrial uses for silver far outstrips those for gold.  And, silver’s antimicrobial properties for medical uses are starting to be recognized.

But the really big boost in silver’s price will come when the “man on the street” starts buying (because of inflation, an economic scare such as in 2009-2011 or war).  With, say $50,000, he would get about 36 ounces, literally a handful of coins.  However, with silver he would get about 200 pounds.  It’s a psychological thing.

With the GSR at 90, now would even be good time to trade gold bullion for silver.