Be more than wary — stay very, very far away.
A close examination of the prospectuses for these ETFs indicates that very little physical silver is actually backing the amount of silver being sold. That is why we maintain that if you are going to invest in precious metals, you must buy the physical silver and gold.
Let me give you some background so you understand our thinking.
Right now, many governments around the world are printing money non-stop and backing that currency with nothing more than promises. We believe that, when denominated in these currencies, future prices of gold and silver can only rise.
On average, silver trades at a ratio of 15 to 1 against gold. At this time the ratio is 75 to 1, which means that the price of silver must rise to $75 an ounce in order to reach that traditional 15 to 1 level.
Now, the likely scenario if silver and gold prices increase ten-fold it is that the banking and financial sector has collapsed.
Think about that. Most investment advisors will try to put you into an Exchange Traded Fund for these metals, but that just buys you paper. In the unlikely event of a financial collapse that paper will be worthless.
It is more likely that in the end, silver and gold will simply act as a hedge for your portfolio. However, in the event of a collapse in the financial markets, they will act as insurance. This reasoning is at the root of our guidance to include physical silver and gold in your portfolio.