Dow Jones Industrial Average: up 11%
S&P 500: up 13%
NASDAQ: up 16%
Oil: down 1%
Gold: up 29%
Silver: up 89%

What should you buy in 2011? Based upon the performance in 2010, Silver is the clear winner.

There are many ways to invest in Silver:

1. Silver coins and bullion. Open an account at Bullion Vault to have them buy and store silver bullion for you.
2. Silver ETF (NYSE ticker symbol: SLV) claims to hold Silver and tracks the price of bullion
3. Central Fund of Canada is audited to contain about 45% of its assets in silver (NYSE ticker symbol: CEF). The rest is in gold bullion.
4. Silver mining stocks (NYSE ticker symbols: HL, SVM, CDE) which provide good leverage to the price of silver

As a new investor, be careful when someone says “never” or “always” in regards to investments.

While real estate never went down before 2005, the fact that so many people believed it was a “can’t miss” investment made it a losing investment. When too many people act with greed in their eyes and hearts, bad things happen.

Look at the chart below:

As you can see, real estate has gone down since 2006. And Gold has far outperformed real estate or the stock market since 2000.

To learn how invest properly and not get hooked into investing manias, take the Investing 101 eCourse. It has an entire chapter devoted to investing manias, how to spot them and how to avoid them before losing your shirt.

Take a look at the below chart of gold. As you can see, prices are behaving in an orderly, upwards trend.

The rising trend line acts as support and the top line is resistance. Project these trend lines out about 30 days and they will converge. What happens then or before then?

In my opinion, prices will break out higher to $1300 at least. What to do if you’re sitting in cash? you have two options: 1) Don’t take a chance and buy now at $1243, 2) wait until prices again test this lower support line around $1220, maybe $1210 if you’re lucky.

If you want to learn more about Trend Lines and the science of Technical Analysis, then download our Investing 101 eBook which contains an entire chapter on Technical Analysis filled with more examples and charts like the one above.

The Gold to Silver ratio represents the price of silver relative to the price of gold at any given time. The ratio is simply the price of gold divided by the price of silver represented in the form of a ratio. If the price of gold is $1,000/oz. and the price of silver is $20/oz. then the gold to silver ratio would be 50:1, or simply “50″ (1,000 divided by 20 is 50).

Natural Supply

One factor determining the gold to silver ratio is the physical ratio of these naturally occurring elements in the earth’s crust. According to the U.S. Geological Survey, on average silver occurs at 0.07 parts per million, and gold at 0.004 parts per million in the Earth’s crust. Thus, the naturally occurring gold to silver ratio is 17.5:1.

Historical Ratio

Historically, the price of silver drops faster than gold in a precious metals bear market and rises faster than gold in a precious metals bull market. The ratio is therefore applicable in determining market direction.

In the last great precious metals bull market, 1960 – 1980, silver outperformed gold about 2.3 times (230%). Gold rose from $35 to $850 or a gain of 2,429%. Silver rose from 90 cents to $50, or a gain of 5,555%, and 229% better than gold.

Current Ratio

The 200 year average for the ratio is about 30:1. As of May, 2010, the gold to silver ratio sits at about 67 where gold is $1,190/oz and silver is $17.80/oz. If the ratio just reverts to its historic average of 30, silver will outperform gold very nicely.

Trading Strategies

One way to trade the gold to silver ratio is to buy silver through the Silver ETF (SLV) when the ratio is high, say over 75, and to buy gold through the Gold ETF (GLD) when the ratio is low, say under 25.

For more information on the Gold to Silver ratio:

1. Gold Eagle
2. Bullion Vault
3. Silver Seek

The Euro is about to die. The Yen has collapsed and the U.S. Dollar is a terminal patient on life support, although it has rallied recently. But soon, all national currencies will fail. There is just too much debt in the world with no one to buy it. In other words, the entire WORLD is BANKRUPT!

When that realization becomes mainstream, people will look to preserve whatever wealth they have by buying gold. Gold has been a store of wealth for 5,000 years and will continue to be so.

There are many ways to invest in gold:

1. Buy1 oz.  gold coins and store them in a bank deposit box or in a safe at home. Buy only Canadian Maples, U.S. Eagles or South African Kuggerands. Stay away from the “collector” coins since you will pay for something else besides gold – some person’s estimation of a collectible value. I store gold maples in my bank’s safety deposit box.
2. Buy gold through Bullion Vault and have them store it for you in a safe vault in one of three locations: New York, London or Zurich. Your physical gold is audited every quarter and is insured by Lloyd’s of London. You wire them Dollars, Euros or Pounds and they buy the gold for you and store it. I hold gold in Zurich through Bullion Vault and highly recommend them as a safe, easy way to own gold.
3. Buy shares of gold mining companies. This is the most risky way to play the rising price of gold but also offers the greatest opportunity for profit. The biggest gold miners in the world are Newmont Mining (NEM), Barrick Gold (ABX) and Goldcorp (GG). I own ABX and GG. Smaller miners that I recommend include Eldorado Gold (EGO), Hecla Mining (HL) and IAMGold (IAG) which I also own.