Look Out Above for Gold and Silver Prices

Greg Hunter
USA Watchdog

Gold hit another all-time high yesterday, closing well over $1,450 per ounce.  Silver’s closing price of more than $39 per ounce is the highest it has been in 31 years.  Why the big jump in gold and silver prices?  The answer is pretty scary because there are many reasons precious metals are heading higher.  Let’s start with the most obvious —inflation.  Kitco.com reported yesterday, “The precious yellow metal got a fresh influx of investment buying based upon heightened inflationary expectations, safe-haven demand and a weakening U.S. dollar index.” (Click here for the complete Kitco.com story.) You can give the same reasons for rising silver prices.

In the case of silver, many experts say it is way undervalued and will outperform gold as an investment.  Asset manager Eric Sprott said Monday that one of many reasons the silver price is rising is that demand “is massively underestimated.” Financial writer Harold Goodman recently wrote an excellent silver article for SeekingAlpha.com.  Goodman backs up the “undervalued” silver premise by saying, “This next chart (above) is from a brilliant article by Mark J. Lundeen, and shows the price of silver in constant 1920 dollars, but indexed for inflation using U.S. currency in circulation rather than a flawed metric such as CPI.”   “The surprising result is that silver today is priced at only $0.16 in constant, inflation adjusted 1920 dollars, even though it was selling for $1.32 in 1920! To reach its equivalent 1920 price of $1.32 an ounce today, it would have to be priced at $296 an ounce. And unlike 1920, there is a serious shortage of physical silver inventories available for sale today . . . .”  (Click here to read the complete Goodman article on SeekingAlpha.com)

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