We have advocated investments in platinum and gold on a number of occasions during the past four years. Both of these precious metals investments have done very well during this period. Now, the word from our precious metals specialist, Michael Checkan, is that the next big thing could be silver. This month, he'll tell you a bit about this special metal - a metal that was more valuable than gold in ancient Egypt. Then, in next month's communiqué, we'll talk more about the investment case for silver with a specific action to take for making a conservative investment in it

In 1997, during the tech stock mania, Warren Buffett bought 130,000,000 ounces of silver. He put 1% of Berkshire Hathaway assets into "the poor man's gold". Likewise, George Soros, the man who made one billion US dollars in one day, has invested in silver during the past five years.

What did these two giants of investing see in silver that the average investor did not see? In my opinion, Warren Buffett bought "wealth insurance" for his vast stock holdings. Instead of a "golden anchor" for his portfolio, he bought one of silver.

Silver: as financial insurance and potentially the next big commodity winner

Meanwhile, the bigger risk taker, George Soros, saw silver as one of several undervalued commodities. The 1990s may have been the time of the "new paradigm" with money being made in paper investments. But, so far in the New Millennium, money is being made in commodities.

I must admit that my commodity focus has not been on silver during the recent past. Instead, I have focused on platinum and gold as you have read in past Communiqués. During this time, platinum has gone from about US$325 per ounce to a high of US$715 and currently trades just below US$700. Meanwhile, gold has gone from US$270 an ounce to a high of US$392 and is now trading at about US$354.

The best investments in the New Millennium so far have been tangible ones like real estate, platinum, oil, gold, natural gas etc. If indeed this is the commodity millennium, silver has been quietly sleeping.

So let me tell you a bit about this sleeping beauty amongst metals. Silver was "fixed" at US$1.29 per ounce during most of the 1960s, as were foreign exchange rates. All of this changed in the 1970s. Both silver and currency rates were freed, and the values of these commodities were determined by supply and demand.

Silver's image was severely tarnished in the late 1970s after the failed attempt by the Hunt family from Texas who tried, with assistance from some Middle Eastern Sheiks, to corner the silver market. Falling from a record high of US$50 per ounce in January 1980, silver finally bottomed out in the mid 1990s at US$3.50 where it languished for years in a trading range of US$3.50 - US$6.00.

But all of this changed in late 1997 when silver shot up to US$6.38 per ounce in reaction to dramatic reductions of warehouse stockpiles. It was finally confirmed in February 1998 that the highly regarded investor, Warren Buffett, had purchased more than 130 million ounces of silver. Mr. Buffett is respected for his ability to find excellent long-term investments.

Silver, along with platinum and palladium, are considered the "white" precious metals. Unlike gold, the white metals are not used as reserves by Central Banks. They are used in industry. However, at one time, silver was used as money and was considered a reserve metal.

Why silver is such a special metal

Silver has properties that make it unique and irreplaceable for industry. Nothing else combines strength, elasticity, electrical conductivity, malleability, fatigue and corrosion resistance. Silver can't be substituted. It has too many unique properties.

Industrial and health uses make up almost half of the demand for silver. Another 30% goes into silver jewellery while most industrial silver is used in photography, and this use isn't likely to be replaced by digital cameras anytime soon.

Other industrial uses for silver are: as a catalyst, as an electrical conductor, and widespread use as batteries for everything from watches to spacecrafts and satellites. And new industrial uses for silver are constantly being discovered.

Silver's price is close to a 5000-year inflationadjusted low. Over 90% of all the silver that's been mined in the past 5000 years has been used up by industry. Today, the world's silver inventories are at the lowest point in 200 years. At the same time, demand for silver is greater than ever.

Each year, the silver supply falls over 100 million ounces short, and the known and recorded silver in commodity warehouses and elsewhere only comes to 150 million ounces. Industry requires almost 900 million ounces each year. Mining and recycling falls way short of providing the necessary silver.

There is a case for buying silver as an investment and next month we will show you how you can get yourself in on the action.

Action to take: If you can't wait until next month, for immediate information about investing in silver call Michael Checkan collect at his US offices at 001 301.881.8600. Or you can email Michael at rcheckan@assetstrategies.com or visit his website at www.assetstrategies.com. Michael is also speaking at the Euraxxess Wealth Forum in Zurich - details enclosed.

BACK to Michael's Corner main page