Why do we invest in silver?

Silver has always been much affordable than gold. It is known as the “Poor Man’s Gold”. There is a big difference in the prices of gold and silver. Silver can be traded between $26/oz and $50/oz while gold sells between $1500/oz up to $1900/oz. You could practically buy more than 50 ounces of silver with just an ounce of gold. So why invest in silver?

Do silver prices go up?

Analysts said that in the early 2011 up until September, silver’s trading price reached $50/oz. But in 2012 it decreased to almost only $30/oz. Because of this silver appears to be strengthening its pattern and predicted to reach even more than $50 at the end of 2012. Financial firms are always aware of these kinds of information thus giving us credibility in their predictions.

If you then plan to purchase silver today which is at $30/oz and the price would reach $40/oz, you would be making a great profit already. What more if it reaches $50/oz.

Having discussed these points, let us now talk about the investing part.

Silver rockets high during inflation

Although silver is not a huge investment, it stays safe during inflation. During the times when the value of currency goes down, the value of silver goes up. This is the reason why silver increases its value if the Fed produces another round of currency notes. This is then what they call inflation. To cut this short, inflation is an advantage to value of gold and silver.

Silver is an industrial metal. Unlike gold, silver is not accessible and cannot be recovered easily. This is because most silver are used in over 9,000 applications. These include hearing aids, solar panels, cars, medical equipment, phones, and many more. Because silver is used in these things, it is very costly to recover them and even sometimes it is already used up and can be gone forever.

As you can see, silver then is already increasing in demand although not from investors. Still it puts a positive effect on its price.

Silver supplies are decreasing

Silver is in demand because it is used up thus putting silver mines in great pressure. But because silver is cheap, other exploration firms have closed because of limited capital. This then made silver hard to acquire because they have been decreasing or have been used up. There has been a prediction that silver worldwide will be gone by 2030. This is very alarming because there have been no substitutes for silver. Only silver has the highest thermal and electrical conductivity any metal could have. Because of this, prices of silver will be driven up.

Given this situation, how high then will the value of silver go?  It is always predicted, even through conservatism, that silver will reach $100/oz.

What you don’t know about silver

There is a small group of influential banks who have been controlling prices of silver. They do this through paper shorting for at least 16 years. These contracts are only “naked shorts” , meaning that they don’t actually have physical silver. Banks often push the silver’s price back down everytime they go up. But, controlling the price of silver can’t last forever because eventually the demand will grow and it will be very hard for banks to dominate the price of silver.

The ratio of gold and silver price is biased

Over the years, the price ratio of gold and silver has been a 16:1 ratio. But due to massive controlling in the market, the present ratio is now 55:1 which means that it has more than doubled. Today, gold’s value is about $1700/oz, so if we would follow the fair ratio , silver would have been selling for $107/oz, and that is more than what the price is presently. But still, many analysts believe that silver will reach a $400+ value.

The analysts believe so because historically during the early 1980s, silver has reached to a high of $49.45. This price wasn’t topped over the years but in the early 2011, it reached $49.76 per ounce. But silver hasn’t broken the record in 1980 because if we were to follow the pattern, silver would have been $144/oz at present.

Little do we know that the calculation of inflation by the government has evolved through the years. It was way different from how it was done way back in 1982. So if we use the same method in the past, silver would reach to a shocking $506 an ounce. The main point here is that silver would have to double its value before it would be fairly priced.

Here are a few tips on how to invest on silver

1.  Direct purchasing at local shops

This is the simplest way to acquire silver. Local shops are around to offer you silver coins, silver bars or silver rounds. Buying collectible coins are discouraged because it would be much costly for its value. You should buy them for the silver content it has. Buying in these shops should be of caution because you may be easy targets of thieves or mugging.

2. Buying from dealers

If you have a larger capital for investment, you might want to directly buy from known dealers. The metal will be shipped to you after purchasing and you will take possession of it.

3. Buying from online retailers

There are online sellers who sell individual silver coins. Usually, it is more expensive in purchasing online. Others put at least a 15% premium on the usual spot price of silver. This method is not highly recommended by experts.