silver bull market IRA retirement investmentApril 26, 2013 -- "Despite the sharp drop in both gold and silver in mid-April, this is probably not the final end of the precious metals bull market and silver coins present a particularly interesting opportunity," wrote finance columnist Scott Burns on AssetBuilder.

He suggested that gold’s current decline could simply be the result of slowing economic growth in India and China.

“People in both countries have long believed more in gold and silver than in paper money,” he wrote. “But when they have less paper money, they buy less gold and silver.”

In his positive review of Shayne McGuire’s new book, The Silver Bull Market: Investing in the Other Gold, Burns concurred that silver, and silver coins specifically, were a particularly important and often overlooked part of a well-conceived and diversified investment strategy.

“Mr. McGuire isn’t one of those TV shills urging you to put every dime of your IRA into gold or silver,” Burns clarified. “Nor does he suggest, anywhere in the book, that we are heading for some kind of Armageddon. In fact, he doesn’t sell precious metals. He buys them. He manages the precious metals portfolio for the Teachers Retirement System of Texas. Just as he made a prudent and reasonable case for gold in an earlier book, he has now made a strong case for owning some silver… The operative word here is ‘some.’”

Burns went on to caution that the precious metals portfolio manager and author believes silver will continue to be more volatile an investment than gold and investors should be careful, but that he also makes a strong case for why silver may appreciate more than gold in the coming decade.

Burns laid out McGuire’s key conclusions.

  1. Gold and silver have been used as money for centuries.
  2. Gold and silver are real assets that are not someone else’s liability. Independently, they both have real value while the growing supply of paper money has no intrinsic value.
  3. Even a minor resumption in the use of gold and silver as a financial asset would have a dramatic impact on the precious metals. This is because both represent such a small sliver of the global asset base. For example, The Teachers Retirement System of Texas is the largest and one of the only institutional investors in silver, yet less than one-tenth of one percent of its assets are in silver.
  4. The current exchange rate between an ounce of silver and gold is at 58 – almost four times the historical rate. “Gold isn’t 58 times as rare as silver,” Burns commented. “Gold is so valuable that little of it has been lost while the supply of above ground silver is shrinking.”
  5. Silver and gold are easily stored at no cost and can be removed from the financial system entirely, something that can’t be done with cash, stocks, bonds or other instruments.
  6. McGuire’s concluding argument is that almost anyone can afford to invest in an ounce or a coin of silver. “Silver is everyman’s gold,” stated McGuire.

“With the price of gold at $1,400 an ounce, buying a single ounce is a non-starter for most of the world’s population,” wrote Burns. “At that price, buying an ounce of gold is a bit like laying out $160,000 for a single A share of Berkshire Hathaway. Institutions can do it, ordinary people can’t.”

However, at $24 an ounce for silver bullion, and a bit more for a silver dollar that weighs an ounce, nearly anyone, anywhere can invest in silver.

“Better still, it can be purchased quietly and invisibly,” Burns wrote. “It is traded in coin shops and coin shows, not just in the United States but all around the world.”

Read more about Scott Burns take on a silver bull market at AssetBuilder or go directly to Shayne McGuire’s book The Silver Bull Market: Investing in the Other Gold.