Silver broke the $20/ounce barrier last week and while it pulled back slightly over the following days, it closed above $20 again today.  Silver is already up over 35% since the first of the year and is up $2 since the end of last month.  But I still think it is a good buy, and will continue to be a good buy as silver has many factors going for it.

First, I'd like to mention that silver is not an investment in the traditional sense.  When you make an investment, you usually expect the money you invest to earn more money for you.  Either through capital appreciation or dividends or whatever other means you can find to generate a return on your investment.
But silver doesn't offer these traditional returns.  There is no dividend paid, and you don't own a piece of a company that is increasing in value.  So what does silver offer, and why does it appeal to investors?  The simple answer is that silver is a store of value, a way to preserve purchasing power.  While the value of a dollar fluctuates and inevitably declines in value, the amount of “stuff” that can be purchased with silver or gold remains relatively stable.  This is why precious metals do well in times of economic uncertainty... people are looking for a place to store their wealth and silver and gold offers this safe storage.

That being said, silver is not really an investment at all.  Silver is a metal that has measurable value, so while it allows one to save something of value, it will only (appear to) go up in value if the dollar goes down.  But that is only true in theory.  In practice, the price of silver is also affected by investors, exchange traded funds (ETFs), and speculators who are betting on future values of the metal.  So while silver doesn't offer an investment in the traditional sense, it still offers a safe place to store your wealth while giving some nice upward potential in uncertain times.
The bad news is that if the price of silver is going up, that means the purchasing power of a dollar is going down.  So when precious metals are trending up in value, saving your wealth in paper dollars will erode your purchasing power.

One thing that silver has going for it is the historic price ratio of silver to gold.  With an ounce of gold hovering around $1,000, the price of silver has not been able to keep up with the historical ratio.  If it had kept up, silver would currently be around $60 per ounce – more than triple what it actually is.
What's more, several geological reports say that the world will run out of silver supplies within the next 15-20 years, maybe sooner.  Now I'm not going to go on a doom and gloom path here, but even if supplies are not exhausted, silver is mainly a byproduct of other mined metals.  So the yearly mining production of silver is small and depends on the production of other metals.  We've run a silver deficit since the 1990's where more silver is consumed than is mined.  Even though the shortfall is made up by melting “reserves” and recycling scrap silver, do the math... how long can the world consume more silver than is produced?  Doesn't really matter how long it can go on, when demand is higher than the supply, the price will naturally want to move higher.  This is obviously bullish for silver, even as it reaches levels not seen in almost 30 years.

Another thing to note about silver is that demand is just starting to pick up.  I mentioned earlier that the price of silver is not only affected by the value and strength of a dollar, but also by the investment marketplace and investor sentiment towards precious metals.  This could prove to be very explosive for the price of silver if the dollar continues a disgraceful decline.  As the dollar drops further in value, more investors will seek refuge in more stable and safe investments and interest in gold and silver will continue to rise.  With potentially billions of dollars looking for a safe storage place, we're only seeing the beginning of investor interest in silver and other precious metals.  As more investors buy silver, the demand picks up and the price rises to compensate.

I guess I can knock the dollar one last time (for now)... a weak dollar is another strong point to invest in silver.  While I've explained the link between a falling dollar and rising silver prices, I'd also like to point out that the trend of a weak dollar seems likely to continue and be a long term issue in the US.  Yet another bullish point for buying silver while it's still cheap.

That's enough of a rant for now but if you are looking for a place for your money, I would highly suggest you look at putting some into silver.  I am of the opinion that silver is such a good deal, there should be no worry buying it all the way up to $30/ounce.  That's a 50% profit from where it is now and I am putting money on the notion that we'll see that price level before 2008 is over.  Heck, Over the next several years I assume silver prices will go much much higher than that.  But for now, $20 an ounce is a great level to get in if you haven't already.

Happy investing.