Why Silver Prices in 2013 Will Continue to Perform
One example of resource nationalism is one of the major silver producers, historically and presently, Peru. In fact, that country still has the largest in-ground silver reserves, according to the U.S. Geological Survey.
The country's president Ollanta Humala came into office as if he were going down the road of nationalism, like Hugo Chavez of Venezuela.
He has moderated his views since the initial fear of outright nationalization at mines, but there are still many questions remaining about the future course of mining in the country. Any sort of government action in Peru affecting silver production there would surely raise silver prices globally.
Gold/Silver Ratio
An additional factor affecting silver next year is a historic one.
The gold/silver ratio has throughout much of history been at around 16. That is, the price of gold has been 16 times higher than the price of silver.
Today this ratio is about 54. This means, based on the long-term historical ratio, silver "should" be over $100 an ounce.
Of course, most of the history of this ratio occurred when silver was considered money and not demonetized as it is today.
But the key here for investors to keep in mind is that during periods of monetary crisis, such as the 1970s, the price of silver tends to increase much more than the price of gold.
Jim Rogers and Silver Prices
Another plus is that some "smart" money is touting silver.
Legendary commodities investor Jim Rogers recently pointed to silver as the metal of choice over gold in the current economic climate.
He recently told Tom Lydon of ETFTrends "Governments print money – that's all they know. So own real assets like silver. . .and you'll survive."
Rogers added that he owns all the precious metals but said if he had to buy one today, it would be silver. He pointed to the fact that silver is the only major commodity which has not reached a new all-time high in this commodity bull market and is still cheaper than it was 32 years ago – a good a reason as any for investors to expect more gains for silver in 2013.
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