Benefits of Silver
There’s no doubt that gold is the more established precious metal investment, however there are also many benefits of silver. With its myriad industrial uses, silver can outperform when economies return to growth, as well as being an essential hedge in times of downturn.
Silver has a diverse array of applications:
|Currency coins||Jewellery||Tableware||Utensils||Disinfectants||Chemical Reactors||Catalytic converters|
|TV Monitors||RFID chips||Mirrors||Switches||Photographic film||Silver Nitrate Solutions||Electrical contacts|
|CDs||Hearing aids||Conductors||Calculators||Computers||Micro biocides||Cell phone batteries|
Demand for silver is surging, due to its combined appeal as a tangible safe haven asset and its various industrial uses. Many financial analysts, investing experts and even geologists have one belief in common: a silver shortage is upon us.
According to metal experts, despite the lack of global stockpiles, new technologies will continue to increase the demand for industrial applications of silver, placing further strain on global supplies.
Industrial silver demand has a greater sense of urgency than gold demand, because it is needed rather than simply desired. This dramatic shift in the silver supply-demand curve recently, has led to it fast-becoming a top-asset choice for cautious investors.
Gold – Silver ratio
Traditionally and generally speaking, the ratio between the gold and silver price has always been around 12:1. This means it took 12 ounces of silver to buy 1 ounce of gold.
That ratio is now closer to 80:1, which bucks the relationship that the two metals have had over the last hundred years and suggests that silver is massively undervalued.
Buying silver coins or bars, separates that portion of your wealth from the banking system and protects it from the various counterparty risks posed by the financial institutions.
Capital Preservation & Inflation Hedging
As with gold, one of the major benefits of silver is as a safe haven. With huge levels of Sovereign debt and paper money printing, traditional currencies have devalued significantly. Physical, precious metals such as silver, should be considered as an alternative store of wealth. Political unrest in various global regions threatens the stability of investment markets, leading to many investors purchasing precious metals, to protect their portfolio capital values.
Due to the safe haven nature of precious metals, silver can provide essential hedging and balance, to a mixed portfolio of assets. An allocation of silver may enable an investor to increase their risk appetite in other asset classes, whilst balancing the overall portfolio risk. Owning silver physically, in the form of bars or coins, provides additional diversification from traditional paper assets, which have recently been threatened by the global downturn.
Silver has exploded in the precious metals market, especially since the financial meltdown of 2008. In 2009, silver investment increased by 184% in just one year! In several of its applications – such as medicine and photography – the silver actually expires after usage. This means that the total amount of silver available in the world reduces each day. With increasing global demand, it’s easy to understand why the potential for capital growth in silver is significant.