Is Now the Time to Buy Gold or Silver Bullion?

As a former business owner who experienced inflation first-hand in Israel's financial turbulence of the early 80's, I know what happens when a government wipes 3 zeros off the currency overnight. In today's economy, many investors around the world are preparing for inflation by buying gold and silver bullion. Since 2007 gold prices have risen from $657 per ounce of gold to $1,400, a 213% increase. Silver, rose even faster from $10 per ounce to $33, a 330% increase. So is now the time to buy silver bullion? Or should you buy gold? Let's look at the facts.

What Are the Quantities of Silver & Gold in the World?

According to the Silver Institute's 2005 Silver Survey, there are between 250 to 650 million ounces of silver in the world. By comparison, there are 4.82 billion ounces of gold worldwide according to the World Gold Council. There is, therefore, seven times more refined gold in the world than silver, making silver the far more scarce commodity. According to the law of supply and demand, the scarcer commodity will rise faster in price. And yet the price of silver is still around 1/42 of gold, permitting an investor to buy 42 silver ounce coins for the price of a single gold ounce coin. All these facts point to a single conclusion: That buying silver bullion instead of gold is likely to prove the more profitable investment.

How Much Silver & Gold Is Mined Each Year?

According to Gold.org, gold mines around the world mine around 2,600 metric tons of gold per year, which equates to 83.6 million ounces. On the other hand, according to the Silver Institute.org, silver mines around the world retrieve about 586 million ounces of silver. Therefore, seven times more silver is mined each year compared to gold. However approximately 84% of mined silver goes to industry, maintaining the low amounts of silver bullion held by investors.

At What Ratio Have Gold and Silver Risen in Price Overtime?

In the last 20 years, silver has risen from $4.50 per ounce to $33, an increase of 750%. By comparison over the last 20 years gold has risen from $350 per ounce to $1,400, an increase of 400%. In other words, silver has shown a tendency to rise almost twice as fast as gold.

Will Silver Continue to Out Perform Gold?

As government debt increases worldwide (and with it inflation) investment in metals will continue to grow. With demand prices will continue to rise depending on available supplies. Since silver is far more scarce than gold, the price of silver should continue to rise faster than gold. Therefore, now is the time to buy silver bullion.

References:

1. Gold-Eagle.com: "Silver vs. Gold"
2. Gold.org
3. Silver Institute
4. APMEX

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