Is This Your Last Chance to Buy Precious Metals Cheaply?

By Dr. Jeffrey Lewis    Dec 1 2009 4:21PM

Long-term investors and analysts alike are siding with precious metals, virtually exclaiming that a surge in precious metal prices is in the future.  These investors are finding that today's high inflation, excessive government bailouts, and incredibly low interest rates are a perfect mix for higher silver prices.

Leading Voices

Two notable names have been driving home the necessity of ownership of gold and silver for ages.  The first is famed investor Jim Rogers, who has indicated that he expects a full 20 year bull market in the price of precious metals and commodities as a whole. 

On the other side of the spectrum, Peter Schiff, the President of EuroPacific, has advocated physical ownership of gold and silver to protect against inflation and government spending.

Fact Checking

Peter Schiff's criticism that gold and silver will continue to rise as government inflates currency is accurate, while Jim Roger's call for a 20 year bull run in gold seems lofty at first glance. 

However, after analyzing the price of gold and other commodities, Jim Roger's investment ideology does carry weight.  Unlike Schiff, Roger's viewpoint of gold as an investment comes from its rarity and its necessity as an industrial metal, rather than its utility as an investment hedge. 

Shortages of commodities are already appearing with a variety of commodities. Oil, gold and silver production has peaked, while usage continues to grow.  In fact, iron ore is becoming more difficult and expensive to mine, and the growth of the emerging markets is bringing more than 2 billion people into the “consumer class,” further fueling future demand. 

Timing the Market

Gold and silver are already seven years into what has been projected to be a 20-year bull market by Jim Rogers.  In this timeframe, gold and silver have each exploded by more than 300%, but the historical prices for gold and silver are still well below the inflation-adjusted average. 

If gold were to reach the same inflation adjusted high of the 1980s, Rogers contends that the precious metal would be worth more than $2000 today, giving it 100% upside.  Silver, on the other hand, still trades 70% lower than its all time high and offers investors a greater upside potential.

Now or Never

Both inflation and the use of industrial metals are a constant in our lives.  After all, governments will consistently inflate their currency, and gold and silver will perpetually be used for electrical applications. 

One factor that is not a constant, however, is the supply of precious metals, which has been decreasing since they were first discovered.  It is without question that five, 10 and 15 years from now, gold and silver will have both retained and even grown their purchasing power – which means they will be priced significantly higher than they are today.  With all the data suggesting gold and silver prices are poised to grow higher, there is no better time to buy physical metals to both grow and protect your wealth. 

Dr. Jeffrey Lewis

****

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-R eview.com