When I did my first research on silver in 2004, the one conclusion I came to was that eventually there would be a shortage. I think it is inevitable. Why? The stuff is so versatile. You can use it in so many products. Now they are using it as an anti-bacterial agent. And just about every new technology uses it: wind turbines, solar panels, electric cars, you name it.
Even if investors go away, there will be a shortage at some point. But investors are lining up for silver and I don't think they are going to stop.
So, the question is how high will silver prices go once a shortage hits? I think $100 is a conservative estimate and $500 a bit on the optimistic side. It will likely be somewhere in the middle of that range.
The next question is how do you profit from this coming escalation in prices? Well, of course the smart thing is to get some physical and just hold it.
But then there are mining companies. How will they do at $100 and $200 silver. My guess is very well.
Also, no one is currently in silver mining companies. That means there is a big chance a lot of people will get interested at some point. And that my friends is what you call a mania.
Will we get it? My compass/gut says yes. I just hope my current stocks are the ones that benefit. Of course, I'm big on SIL. I think that stock will take off in a mania market. I have an investment in it, and I highly recommend it to friends and family members.
I also think that we could have a crash in stocks in the next 12 months and SIL could drop by 50%. But I don't think it will stay down long and that it will be a fantastic buying opportunity, much like late 2008 when stocks bottomed (many were down 70% or more).
But even if you invest today and watch yourself take a big hit when the crash comes, the odds are very good we will bounce off that bottom and go much higher (gold and silver mining stocks that is).
My take is to keep your powder dry and wait for the bottom. But to buy physical today each month and keep collecting it on the dips (now is a dip at $33).
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