Another Case for Silver

Another post by Economic Free Fall www.economicfreefall.com/

MONDAY, OCTOBER 17, 2011

Another Case for Silver

Foreigners have accelerated the selling of US government bonds. Why wouldn't they? I wouldn't put my money in anything that is rapidly losing its purchasing power, especially not when the inflationary policies still are intact.

"International central banks are selling the most Treasuries since the credit crisis began just as institutional investors load up on U.S. government bonds."Read full Bloomberg article here

I just came across an article by Ted Butler from 2006. It is really worth a read and lays out the case for silver being tremendously undervalued, even compared to gold. Here are two tables from that article:

Year	Gold Market Cap	Silver Market Cap	Ratio (Price)	Ratio (Market Cap)
1900	$20 Billion (1 billion oz x $20)	$8 Billion (12 billion oz x 65 cents)	30	2.5
1950	$70 Billion (2 billion oz x $35)	$8 Billion (10 billion oz x 80 cents)	44	9
1975	$450 Billion (3 billion oz x $150)	$20 Billion (5 billion oz x $4)	38	23
2006	$3 Trillion (5 billion oz x $600	$12 Billion (1 billion oz x $12)	50	250

Year	World Population (billions)	Gold Market Cap (billions)	Silver Market Cap (billions)	Gold Per Capita	Silver Per Capita
1900	1.6	$20	$8	$13	$5
1950	2.5	$70	$8	$28	$3
1975	4	$450	$20	$113	$5
2006	6.5	$3,000	$12	$462	$2

Shocking numbers to say the least as inflation in the US since the year 1900 has been around 5000%, or an increase of about 50 times. Have in mind that the 2011 numbers for silver would show a $32 billion market cap (if one believes 1 billion ounces of available silver still exists) and $4.5 worth of silver per capita. Gold's current market cap is $8,500,000 billion or 265 times the size of the silver market. I agree with Butler, this can't go on for long and silver has to be revalued much, much higher.

Do you also own some of these?