The Silver Option

It's often said, there's three secrets to running a successful small business. LOCATION!. . . LOCATION! . . . LOCATION!And when it comes to investing, we, at Lear Capital believe there's three secrets as well.DIVERSIFICATION! . . . DIVERSIFICATION! . . . DIVERSIFICATION!

It's a simple concept to understand that you should never put all your eggs in one basket.Don't invest all your money in stocks or bonds or real estate or precious metals for that matter.And of all the investors out there, I think those who invest in precious metals understand this premise the best.Spreading the wealth is spreading the risk.If you fail to do so, you aren't really an investor.I would call you a gambler.

Now, let's define diversification a little further.When you do invest in stocks don't invest in just one stock or one sector or one index or one of anything.Spread the wealth and you spread the risk.Same with Real Estate.If you are going to invest in real estate besides your own home, consider land, commercial property, apartments etc.Spread the wealth and you spread the risk.In the case of precious metals the rules are no different.Spread the wealth blah blah blah . . . you get it!

All that said, I just wanted to pay a little homage to silver and explain just a bit about why I think it should be part of a well diversified metals portfolio.First, just as gold, silver has had a long history of being money.It has intrinsic value, in fact, it was used in commerce in the U.S. some 30 years longer than was gold.Originally, its value was set as 1/16th the value of gold because there was approximately 16 times as much silver supply in the world as there was gold.

With silver prices now sitting near 1/60th that of an equal amount of gold, some say silver is way undervalued.But let's forget that argument for the moment and just look at one supply dynamic and that is, tens of millions of ounces of silver is consumed by industry every year.In fact, according to one source, 90% of all the silver mined has been consumed by industry.Today, demand is still rising and supplies are dwindling.You know what that means.

I think many people would be surprised at just how many industrial uses there are for silver.It is these uses that some say will double the annual demand for industrial silver by the year 2020.

• RFID tags for stock control and ID cards are "taking over from bar codes";
• Solar panels - forecast to grow by 20-40 times in 10 years;
• Wood preservatives to replace arsenic;
• Wound care & other medical use, food hygiene, and anti-odor textiles - because silver, a biocide, inhibits bacteria.

And let's not forget investment demand.Did you know that for silver to reach its inflation adjusted high it would have to be $130 an ounce?As gold demand soars to hedge against inflation, so will silver.As an American Eagle Gold Coin protects your savings and retirement accounts so should the American Eagle Silver Coin.As gold supply and demand fundamentals drive gold prices higher silver prices could be driven higher yet.DIVERSIFY! . . . DIVERSIFY! . . . DIVERSIFY!