Before I could answer your question, I have to admit, I do not
follow the silver market that much.
One question we might want to ask ourselve: Between gold and
silver, why did Buffet choose to buy silver instead ? He must have
had a very good reason for not choosing gold since both of them
are precious metal.
Buffer is a very conservation, valued, and practical investor.
He only buys the companies that produce the products that people
use every day. Once you consume it, you buy it again (ie. Coke,
McDonalds).
Silver is an industrial commodity. Its main purpose is for industrial
uses. Are there any major seller of silver other than the producer
itself ? This commodity has a direct relationship between the
demand (industrial consumption) and the supply (producer).
The silver is in the trading range since 1988 with the price trading
between $4.6 to $7.3. You can not tell which direction is the major
trend. If we are going to have a big boom in a few year from now, the
silver market will make a move. Or if the North America runs into
recession, the trend will definitely be down.
Buffet started buying in July 97 to Jan 1998, in $5 to $6.3
range. Since July 1997, the price of the silver went as high as
$7.26, did the price of gold go up along with silver ? No !!
In the past there was price correlation between gold and silver. |
