Posted by Francis Koh on 24 Jul 2014

Bet Like George Soros and Cash in on a Silver Rally

Billionaire investor George Soros has already made some big bets on precious metals and silver miners in particular. He invested $9.4 million in precious metals streamer Silver Wheaton (TSX: SLW)(NYSE: SLW) and $10.7 million on miner Pan American Silver (TSX: PAA)(Nasdaq: PAAS).

Why will silver rally?

A range of indicators are pointing out that silver is undervalued particularly in comparison to gold, which has rallied this year, while silver prices have remained relatively flat. This becomes apparent when taking a closer look at the gold-to-silver ratio, which measures how many ounces of silver buy an ounce of gold.

At the height of the gold bull market, 43 ounces of silver bought one ounce of gold, but since then the ratio has widened, now needing 63 ounces of silver. Silver has failed to keep pace with gold despite the historically close correlation between the prices of the two precious metals.

When coupled with signs of diminishing supply as well as growing demand for use in industrial processes and the manufacture of jewelry, it is clear a sustained rally is imminent. But the key question for investors is how do they cash in on this rally?


Read More: