Silver Sale: 75% Off!
Here's an excerpt from the most recent Delaire Report reminding us of just how undervalued precious metals really are.

There is no question the price of silver today at $32/oz. is cheap based on historical measures. Sure the nominal price of silver almost hit the 1980 highs of $50 back in April of this year. But when we’re comparing data from 30 years ago, we need to adjust for inflation to make sure we compare apples to apples. If we use the inflation-adjusted price of Silver from 1980 up and until now and if we use the Consumer Price Index (CPI)the price for silver adjusted for inflation should be around $140 an ounce and $114 if using the Producer Price Index (PPI).

Now when we compare Silver with more popular metrics like stocks, it is also relatively inexpensive. In 1980, the Dow to Silver ratio got as low as 18:1. In other words, one share of the Dow Jones Industrial Average bought you 18 ounces of Silver. Today, one share of the Dow buys as much 365 ounces. (Silver $33 & DJIA 12045).

If you compare it to a much broader index like the S&P 500, we see similar results. In 1980, one share of the S&P500 bought as little as 2.3 ounces of Silver. Today one share of the S&P500 buys us 33 ounces of Silver (SP 1246). Although these may seem like big numbers on the surface, silver has been outperforming stocks for 11 years. This is nothing new. For prudent investors, the trend in place for the last decade has been: Precious metals over equities and bonds.

Right now there is a lot of negative sentiment regarding silver, mainly due to the lack-lustre performance of the white metal over the last few months. But one good indicator for me is reports from major financial institutions. Usually they are so off the mark it is incredible. For example, recently HSBC raised its silver price targets in light of a “slight upward bias” it now sees for gold’s sister precious metal.

HSBC increased its 2012 silver estimate to $34.00 from $32.00 per ounce, and its 2013 target to $32.00 from $30.00 per ounce. The firm also introduced a 2014 silver estimate of $28.00 and reiterated its five-year forecast of $25.00 per ounce.

AS I have had mentioned in the past, we are all entitled to our own opinions but when you consider that the price of silver can jump more than 6% in one session, I find these price projections to be ridiculous. Silver is an extremely volatile metal and with the current financial crisis around the world prudent investors are looking to accumulate physical precious metals, in particular gold and silver. And, as I don’t see any solution any time soon, I maintain that investor demand for silver in 2012 will exceed investment demand of 2011, and this alone will push prices back above $40 an ounce.

While the near-term picture for silver remains uncertain the long-term drivers of silver's up trend is still in place. Enormous and growing Asian economies like China and India are getting richer... and they have deep cultural affinities for precious metals. Plus, the Western world has lived way beyond its means for a long time... the debts and liabilities it has taken on can only be paid back with devalued, debased money. This is bullish for "real money" assets like gold and silver.

With sentiment so negative toward silver (and just beginning to turn back up), it's a great time to take a position in this long-term bull market.