Today we’re doing something a little different. Now I am not a financial advisor and have no professional experience, but I do know a thing or two about investing and I’ve dabbled in precious metals.
Yesterday, gold prices reached a record high at $2,000 an ounce. Silver, often called the poor man’s gold, has also been rocketing skyward and reached a seven year high at $26 an ounce, though this is still barely halfway to its all-time high of $45 an ounce.
The value of gold and silver have always been linked, due to both metals being considered precious. According to this article from Marketwatch however, the ratio of the difference between their prices has never been higher.
Now what does all this mean for someone who wants to invest in precious metals like gold and silver?
This means that either silver is undervalued or gold is overvalued. By looking at the historical prices, and the historically high gold/silver ratio, I think it’s reasonable to assume the former is true.
And if that’s true, then that makes silver an attractive investment as there’s still a lot of upside! It probably won’t hit $45 an ounce, as the one time that happened was kind of an anomaly, but I do think it has a much higher ceiling.
Concerning gold, I can’t say the same. It’s already at a record high, and holds a historically high ratio over silver, which leads me to believe its about to bump into its ceiling. Gold would be a risky investment at this moment, if you haven’t bought in before (if you bought in back in February, lucky you!)
So that’s my unprofessional advice on the precious metals market today. I could be dead wrong, however.
If you’re interested in owning gold or silver, there’s many ways to do that. You can get coins and bars, though the mark-ups for those are rather high due to the increasing demand. There’s also gold and silver ETF’s that track the prices of their respective metals, though you don’t actually own the metal if you choose this route.
There is a great new company called OneGold, put together by the reputable online precious metals dealer Apmex. It’s a great way to get ownership in precious metals that mimics an ETF but you can redeem the value of your account in gold or silver coins from the US Mint!