The Silver Bull Market: Investing in the Other Gold

In The Silver Bull Market, Shayne McGuire examines the vital investment considerations about silver alongside the significant drivers of the metal’s bull market. Although silver moves closely with gold in financial markets, it differs from its sister metal in that more than half of demand is derived from multiple industrial processes. While its significant reliance on film photography has ended, today silver’s industrial demand is driven by technological progress (brazing alloys and solders, smart phones, tablets, plasma panels and new applications like silk-screened circuit paths and radio frequency ID tags); photovoltaics (solar panels); and new medical applications (silver is both biocidal and highly conductive). Though Warren Buffett disdains gold for its lack of utility, he regards silver differently: in the late 1990s, he purchased 130 million ounces, one-fifth of global production at the time.

Author’s Note:

Financial market cycles, bookmarked by the booms and the busts, are often illustrated by magazine headlines like “The Death of Equities,” which appeared at one of the best times ever to buy stocks (the summer of 1979), or hyperbolic book titles like Dow 36,000 (1999), which preceded a decade-long period of stock market stagnation. It is always difficult to point to a bull market in a book since its author runs the risk of having the text become the poster child for the end of the run.

My view on silver—that it is likely to outperform gold in the present environment—is not new, as I expressed it openly in both my books on gold.1 But it is important to point out that this is in reference to silver as an investment for the years immediately ahead, not that silver is somehow superior to gold. Gold is, in my view, the most respected form of long-term wealth preservation in the millennial history of finance and should be a part, however small, of every diversified investment portfolio. Though silver is more highly correlated with gold than anything else, I believe the market has yet to reach a decision regarding the white metal’s proper position in the investment arena.

Gold is slowly being reincorporated into mainstream finance following what was, historically speaking, a very brief absence. Since gold and silver moved together for over 3,000 years (separated in value by a spread solely reflecting gold’s greater rarity), I think it is rational to assume that, given their similar nature, the metals will continue to move together as they have done in this new century.

Considering the white metal’s history of investment disappointments years ago and that its price is more volatile than gold’s, most investors simply ignore silver completely. When the metal became part of the fund I manage, my colleagues and I soon discovered that our pension fund, Teacher Retirement System of Texas, had become the largest nonbank holder of silver in the world. For a pension fund with a penchant for extreme risk management, this seemed bizarre considering the minor scale of the investment. Though our fund is one of the world’s largest with over $110 billion under management, the silver investment represented one-tenth of 1 percent of our total assets—a small fraction of the value of our shares of Apple Computer, a single security.

If no other major investment fund in the world owns a significant stake in one of the best-performing assets of this new century, I thought that it made sense to write a book about silver. I hope you, the reader, find this one useful.

Contents:

• Silver Moves with Gold, a Vital Asset for These Times
• Thinking about Future Inflation
• Silver’s Supply and Demand Dynamics
• Poor Man’s Gold Is Different from Other Inflation-Protection Assets
• The Gold-Silver Ratio, a 3,000-Year-Old Exchange Rate, Is Out of Historical Balance
• Always Keep in Mind the Risks of Investing in Silver
• 1792: The American Monetary Foundation on a de Facto Silver Standard
• 1873: The United States Joins the International Gold Standard and Leaves Silver Behind
• 1934: The Federal Government Speculates in Silver
• 1960s: As the Last Silver Dime Is Minted, Silver Demand Surges in the Electronic Revolution
• The 1970s Silver Boom, the 1980 Crash, and the 20-Year Bear Market
• 2001 to the Present: The Bull Market Begins as Silver Reenters the Financial System
• Deciding on the Best Way to Invest in Silver
• Two Investment Considerations: Market Manipulation and Potential Confiscation
• The Most Widely Respected Silver Investment Coins
• Your Local Coin Show, the Past Decade’s Best-Performing Stock Market
• Silver Mining Stocks
• Platinum and Palladium: Alternative Metals as Old as the World, but as New as the Internet, as Investments

The Silver Bull Market: Investing in the Other Gold By Shayne McGuire pdf