Why is this?
Silver is generally not held by central banks, while gold is. Silver also has a higher proportion of industrial and nonmoney uses than gold does. The metal has been considerably more volatile than gold. Finally, the silver supply-and-demand dynamics are not well-understood.
"We will not be surprised to see many funds and governments diversify their gold holdings into silver in 2011," Purves said, "as gold finds new highs and is more than 45 times more expensive than silver."
Some Wall Street types are predicting that silver will reemerge as "hard money," like gold. Investors across the spectrum recognize that gold prices continue to climb, and will increasingly turn to silver as a valid source of currency that can't be devalued by central banks printing paper money.
However, commodities such as silver and gold are incredibly volatile investments. After running up 27 percent just in April, silver retreated 30 percent in the first two weeks of May - in hugely active trading.
CME Group, which oversees silver trading at its Nymex exchange, citing a bubble in the making, restricted the silver margin (investing with lent money) requirements four times in the span of several weeks, as speculators flocked to the metals markets.
As of Monday, silver closed at $35.10 a troy ounce, up .56 percent.
There are a few ways to invest in silver, but some of these vehicles have incredibly onerous tax consequences. So beware. Because precious metals are considered collectibles by the IRS, once you sell some of these funds, you'll be taxed as much as 28 percent upon the sale.
