Does Silver Possess an Inelastic Demand Curve?
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Mike Maroney: Good afternoon! My name is Mike Maroney and I am coming to you today from the Monex Precious Metals Studio. We're going to do our Silver Centric video today. We're going to talk about Silver: The industrial/monetary metal and talk a little bit about the inelastic demand curve.
The bottom line is silver has traded between $13.60 and $23.00 over the last nine years-- $13.60 being the low, $23.00 being the high. I've taken out the prices from 2011, because we're all the way up in the $50 range, but I felt that we would use the lows at $13.60 to kind of give us an idea approximately what the cost to produce is, as far as the commodity is concerned. The amazing thing about silver and what we started the video on is the inelastic demand. What that means is even if the price of silver were to go back up to $40, $50, $60 an ounce, the bottom line is, there's really no replacement metal that could be substituted for silver at that price. So, you're buying a commodity that has a major uptrend as far as industrial uses are concerned. It's also a monetary metal that, quite frankly, is tremendous in times of extreme volatility when inflation kicks in, or financial geopolitical issues start to flow, and obviously, with the current price levels doesn't it make sense to look at this as a possible diversification tool for your portfolio?
Now, is one of the greatest times to investigate investing in silver. If you would give us a call here at Monex, we can go over all these things with you to find out if it makes sense as far as your individual portfolio is concerned. If you're worried about inflation, if you're worried about the debt crisis, if you're worried about what's happening in Europe and potentially seeing the European Union break apart and what that would do to the banking system, obviously, you want to own a monetary metal, because that's a good hedge. But, at the same time, you want to have that dual potential, because silver is also an industrial commodity that's essential in the production of so many different products, and with us trading at the lower end of the spectrum, now... may be the greatest time to take an initiating position in the silver market. Give us a call today! So, we can talk to you a little bit more about investing in silver here at Monex. Thank you.