Silver Bearish Investor Vs. Silver Bullish Investors

Recently, Robert McEwen, chairman and chief executive of a Canada-based gold mining company is very bullish on the future outlook for gold. “I expect it to test $850 by the end of 2008, and by the end of 2010, north of $2,000, possibly $5,000,” McEwen stated in a recent interview with Chris Ralph.

And many investors bullish on gold believe, in spite of the price increases in the past several years, actual production of newly mined gold from most nations continues to decline, as costs rise at existing mines — leading the price of gold and silver much higher.

Silver prices have also remained relatively strong. Many experts believe that although demand from jewelry makers will likely drop off as gold prices rise, jewelry demand is likely to be offset by increased purchases from investors who are seeking a liquid investment alternative to the dollar.

And, investment in gold and silver for both large and small investors has been made considerably easier in recent years with the creation of Exchange Traded Funds – funds whose assets are gold or silver held in storage.

However, others argue there’s the very real fact that gold itself doesn’t do anything. Gold has some industrial and jewelry uses, and it’s been used as a currency for much of human history. But as a wealth creation mechanism, gold is pretty useless.

Gold does nothing more than remain relatively scarce, which bullish investors argue gold protects wealth from governmental irrational exuberance.

Investors bearish on gold believe, gold is expensive to keep as an asset with the storage fees, and insurance. While, many other companies will hold value as well as pay dividends while the investor holds the asset – unlike gold, which pays no dividend.

“Even if inflation runs rampant, any cost increases felt uniformly throughout the economy will be at least partially passed on to consumers by businesses. That alone will likely help protect some corporate value, at least among companies in crucial industries,” agues Chuck Saletta a Motley Fool Contributor.

Along with bearish beliefs, gold mining companies will find new mining methods to extract gold from the earth; with supply flooding the gold market prices would not reach $2,000.

The bearish debate says gold does nothing more than temporally hold wealth, and many agree mining companies will find new methods to extract gold and by doing so will supply enough gold to keep prices at current levels.

Regardless of either side you chose, bulls or bears, there are many investment options available to invest in gold. After educating yourself, chose the best option for your situation.

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