In Ted Butler's Archive


In the investment world, the most important consideration is valuation. Determining whether an asset is fairly valued, overvalued or undervalued is the single most critical issue for an investor. Assets that are undervalued or overvalued can remain in that state for extended periods of time, but history suggests a much better outcome when holding assets considered to be undervalued. Obviously buying low is better than buying high. The main means of determining how an asset is valued is by time-honored measurements, including historical comparisons.

Silver is the single most undervalued asset currently available, both in its own right and compared to every other asset. Silver’s absolute undervaluation can be seen in measuring its current price to its past price. The current price is down 70% from the price peaks of seven years ago. Current prices are below the cost of primary mine production, an age-old sign of undervaluation. On a relative basis, silver is cheaper than it has ever been compared to just about every asset in the world, including gold.

Rarely in the past 5,000 years has silver been priced cheaper relative to gold than it is today (the silver/gold ratio). Every other time it was priced this cheaply, it soon vastly outperformed gold. That appears unavoidable this time as well.  Today silver is the most undervalued investment asset of all. There is a good reason why silver is so undervalued. Its price is manipulated in COMEX paper trading. The assertion that an asset is the most undervalued of all had better have a darn good reason for what caused the undervaluation. Silver has the best reason ever.

By definition, the more undervalued the asset, the less the risk and the greater the profit potential. The search for the most undervalued assets is not as simple as it sounds. For one thing, investing in undervalued assets runs counter to the popular behavior of buying assets that are going up in price. However, this results in overvalued assets containing more risk and less potential reward. It’s a fact of life that the assets most undervalued are also the most out of favor. It takes clear and independent thinking to invest in an undervalued asset. If you take the time to consider an investment in silver, you will conclude that it is the most undervalued investment asset of all by every possible measurement. The only catch is that you must arrive at this conclusion while silver remains undervalued.

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