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Is Silver a Good Investment Opportunity?

8 May 2014 | Added by Lisa Casagrande

 

Is Buying Silver Bullion a Good Investment Opportunity?

Gold Bars | Silver Bars

Is buying silver bullion a good decision? Through the history of mankind, silver has often been underestimated in comparison with gold. Some people say that gold is silver’s big brother. Other say that, silver is the ’’gold’’ of the poor, somehow intoning that it should not be considered as desirable or worthwhile. Although silver has been frequently overshadowed by gold, these assertions are in no way justified. Consider the following:

 

Buying Silver BullionFor example, silver was part of the USA monetary system for a very long period of American history. In 1934, official US policy under President Roosevelt banned ownership of gold bullion for citizens of the US. It lasted until 1974. A good modern example is India. The Indian government has brought in tariffs on gold imports. In both of these cases, gold is suppressed, giving silver a long awaited chance to shine.

 

Economic Indicators


Let’s reconsider some economic indicators. One ounce of gold is approximately 61.5 times more expensive than one ounce of silver. On the other hand, silver reserves outnumber gold reserves by a factor of 10.6. So, according to these numbers, the gold and silver ratio should be 10.6:1 and not 61.5:1, which is the actual ratio. This means that the price of silver, although lower than the price of gold, is still very high, considering basic economic laws of supply and demand. Silver PriceAlso, the production of silver was 9 times larger than gold production in 2012, which leads us to a similar conclusion. So, generally, silver provides a good opportunity for investment

Issues with volatility

Peaks of silver and gold were very volatile in past decades. For example, in the 1970’s, silver rose 38-fold while gold rose 25-fold. The prognosis in the long-term for precious metals assumes that silver will outperform gold.
This can raise questions, considering the volatility of silver prices, but here is one more example that indicates that buying silver bullion is a good investment opportunity. In the period of 2008 to 2011, silver had a real roller-coaster ride. The first big fall of 60 percent ended in a total fiasco, and then – boom, a 600 per cent increase! Patient investors tripled their money, so nobody can deny that for some it was a huge success. According to these events from a not so distant past, investments in silver seem to be an idea well worth considering. Buy silver bullion, put it into a safe deposit or vault, and be confident that with patience and awareness you can realise it's investment potential along with it's other advantages when it's next selling cycle comes around. Disturbance in macroeconomic flows will determine a new place for silver in the world nowadays. Stock markets will continue to tumble, and central banks will be forced to change their politics in order to prevent further turbulence. This means that silver, as a precious metal, will be a likely part of the solution to the crisis.

 

The numerous uses of silver

Silver also has numerous industrial uses, and these are growing over time. Silver can be found in many modern electronic devices, including the fast-growing markets of smart phones and tablets. It is also a crucial element in the production of photovoltaic cells which are used in solar panels. Producers of these products use a very small amount of silver per unit, so they can withstand a large price increase. Silver has its use in medicine as well, due to its antibacterial properties.  It is also the most electrically conductive, thermally conductive and reflective metal on Earth. With this wide spectrum of use, silver is a sound way to invest your money if you are concerned about the erratic track record of paper currency and stocks.

 

The instability of paper currency

No fiat currency has ever lasted during the course of history. For example, the US dollar used to be the strongest currency in the world. It held that position for a very long time. When the Federal Reserve was created in 1913, the dollar lost about 96 to 98 per cent of its former value. Nowadays, one dollar’s value of, for example, milk or bread would be 2 to 5 cents in 1913. Paper currencies are quite unstable in modern times, and the world economic crisis is proof of that claim. So, if you cannot rely on paper, try a precious metal – as we’ve shown, silver is a well respected asset.

Let’s be honest, there is no ’’risk free’’ investment. However, we can say that precious metals showed less turbulence than currencies throughout history. Silver can be a great choice for those who are able to take the time to properly research their options - buying silver bullion can add a valuable boost to your investment portfolio. If you are looking for an investment with very few negative characteristics and ample positive ones for the next few years, silver is definitely a good choice.

By Lisa Casagrande | https://www.goldbullionaustralia.com.au

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