One of the most frequent questions I get asked is should I buy Gold or Silver? The answer is both. The percentage depends upon each individual investor. Gold is the ultimate insurance policy. Nothing will protect your assets in times of trouble or inflation better than Gold. On the other hand Silver provides a better opportunity right now for a higher rate of return. This is primarily true because the historical ratio of Gold to Silver favors a larger increase percentage wise in Silver. Under similar circumstances we faced back in the late 1970’s when Gold and Silver both reached all time highs Silver greatly out-performed Gold as the chart below indicates:
Most of you know that last week the SEC announced a major investigation into JP Morgan’s trading practices in Silver. Everyone knows now that JP Morgan has been manipulating the price of Silver for years. We’re talking about a full-blown criminal investigation by the Justice Department here. This could be huge.
JPM is the largest financial firm in the United States, boasting $2 trillion in assets. They’re also the largest hedge fund manager in the States, with $53 billion under management.
If it turns out they have been illicitly shorting billions worth of silver contracts, as some allege — and they’re forced to buy bullion to cover that position — the result would be staggering.
We don’t know exactly how this investigation will affect silver prices going forward. But if the allegations prove true and banks are forced to cover massive short positions, a relatively thin silver market could see a big squeeze — and far higher prices.
But cutting out market manipulation is only one factor that may work in silver’s favor.
Bernanke’s printing press is the other big one. With interest rates likely to remain near 0% for years, inflation will inevitably rear its ugly head. Plus, you can forget about the Fed shrinking their balance sheet any time soon…
In the long run, American reliance on Fed easing will push precious metals prices higher. Ignore scare talk about deflation — it simply isn’t allowed to happen.
As a result, higher silver prices are right around the corner!!