Is silver bullion a safe or risky investment?
Is Silver Bullion an Inherently Risky
Silver has been around for as long as gold and people have praised it for its lustrous appearance. It shines beautifully and has made its way into jewelry and high-end cutlery for centuries.Silver coins were even used as a form of currency. People have viewed it as a good investment for a long time,relying on it over paper currency - particularly in times of war and political turmoil. However, in recent times, some have been put off by the tendency of silver prices to make big jumps and falls and being somewhat unpredictable. It is this volatility that has made more serious investors a bit wary, although short-term traders find silver a very good commodity to trade with for the very same reason. So, how serious of an issue is price volatility and does this mean you should stay clear of silver as a long-term investment? Let’s look at some important facts to get some deeper insight into the matter.
Silver price has gone up noticeably in the last eight years
Although silver has always been significantly cheaper than gold, the price has remained relatively stable during the past several decades. If we disregard the peaking of the price of silver in February 4th 1980, when it reached $34.50 per ounce, it was fairly stable during the late 80’s, the 90’s and half way through the first decade of the new millennium. Prices hovered in the $3.50 to $7.00 range from 1985 to the end of 2006, reaching as high as $9.00 only once in this period in 1987. It wasn’t until mid-2006 that the price of silver started climbing significantly, reaching an all-time high on August 30th 2011 with $41.40 per ounce. It remained over $30.00 per ounce until February 2013, when it started dropping and eventually stabilizing at $18.60 to $22.05 early in 2014.
It is just above $19.00 as of the beginning of June. As you can see, apart from occasionally skyrocketing, which has been shown to happen once every thirty years, the price tends to remain fairly stable for relatively long periods of time. It is only compared to the recent spike in price that the current value seems somewhat low – in fact, if we look back just five years, current prices start to look pretty good.
The demand for silver is still high
Predicting prices can be difficult, particularly with silver that can spike for a couple of months and then drop, but we can look at supply and demand to get an idea of how things are looking. Currently, Asian economies like Japan and China have an increased demand for silver – around 3% to be precise. Silver jewellery and cutlery production is also on the rise with US jewellery stores reporting an increase in sales of nearly 30% in 2013. It is important to note that silver has a wide range of industrial uses which keeps the demand relatively high, and although silver mines seem to be working around the clock, there is still enough of a demand to keep the price from dropping in 2014.
It is quite apparent that silver is looking pretty good as an investment opportunity in 2014, with smaller fluctuations that seem to even out to a decent average in the long run making it a fairly safe choice.