Saturday, August 16, 2014

Silver's Share Of Global Financial Wealth

Imagine that you hold have $100,000 in total wealth. Hypothetically you may have $30,000 (30%) in real estate equity, $30,000 (30%) in stocks, $30,000 (30%) in bonds and $10,000 (10%) in emergency cash. This seems like a pretty normal composite of how the world holds its wealth.

How much of the world's wealth is held in silver market?     0.01%



       


That means with each $100,000 accumulated, the world holds $10 in silver. That is half of one ounce of silver. Half of a single coin.

The following are a few of the reasons why silver remains an attractive investment to me personally:

- Global central banks are flooding the financial markets with unprecedented QE programs

- Many governments around the world will be unable to pay off their debts without diminishing the purchasing power of their sovereign currencies

- Geopolitical turmoil

- New industrial demand for silver entering the market every year

- Extremely high demand in the physical precious metals market (especially in Asia)

- Silver recently falling below the all-in cost of production (roughly $20 an ounce), which has shut down or postponed future mining projects (supply) for years. Silver rests at $19.50 an ounce as of this writing.

Beyond these basic bullish arguments for owning silver the chart above intrigues me the most. What if the world were to sell just a tiny fraction of their stocks or bonds and put just a tiny fraction of that money into the silver market?

The tiny spec of dust that is the physical silver market would experience a Bitcoin moment, just as it did back in the late 1970's.

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