Gold vs. silver

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Yes, I'm a self-admitted gold bug, but I'm actually more bullish on silver. Here's why, according to John Williams of shadowstats.com:

Gold and Silver Highs Adjusted for CPI-U/SGS Inflation. Despite the June 28th historic high gold price of $1,261.00 per troy ounce, gold and silver prices have yet to approach their historic high levels, adjusted for inflation. The London afternoon fix, per Kitco.com of January 21, 1980 would be $2,382 per troy ounce based on July 2010 CPI-U-adjusted dollars... and would be $7,727 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [all series not seasonally adjusted].

In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce [London afternoon fix, per silverinstitute.org] has not been hit since, including in terms of inflation-adjusted dollars. Based on July 2010 CPI-U inflation, the 1980 silver price peak would be $139 per troy ounce and would be $450 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [again, all series not seasonally adjusted].

Note that his calculations for inflation are different than the official CPI data released by the US Bureau of Labor Statistics, which have been altered over the years and hence, grossly understate true inflation.

Also, silver has underperformed relative to gold, as it is an industrial metal used in many different applications, and with weakness in global economies, silver's price has been dampened. But it has appreciated since the market meltdown in 2008 because investors are starting to realize that silver is also a store of value, much like gold is. And because it is not hoarded like gold is, the pending shortage of physical silver will exacerbate the squeeze on silver prices.