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||Solar panels||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 experts, industrialists and geologists all agree that the world is growing ever closer year on year to a silver shortage.Due to its unique chemical makeup and qualities, the demand for silver is more urgent than the demand for gold. Silver is needed, whereas gold is desired! This dramatic shift in the silver supply-demand curve recently has led to it fast-becoming a top-asset choice for cautious investors. In this article, we explore the benefits of investing in silver.
See below our infographic detailing the benefits of silver. We are sure you will agree that images are easier to digest than words and we hope you enjoy reading through all the benefits listed!If you wish, you can also view the full-sized infographic here.
As long ago as Roman Times the gold to silver ratio was set at 12:1. This means it took 12 ounces of silver to buy 1 ounce of gold.Moving forward to 1792, the US Coinage Act set the ratio legally at 15:1, where it stayed until the Act was abolished in 1873.Since then free-market forces have determined the ratio. Throughout the 20th century, the average ratio for gold to silver was 47:1.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. If you are looking for advantages of silver investment, then this one of them!
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.
As the gold silver price ratio is 80:1, silver is a far more affordable investment vehicle for an investor wishing to park funds in precious metals. Therefore, an investor can purchase a substantially larger quantity of the metal when compared to gold. If we compare the prices of the two metals, we realise that an investor can buy a kilo of silver for under £500, but the same quantity of gold would cost more than £30,000.This is one of the advantages of silver that has enhanced the popularity of silver as an investment vehicle. It is affordable to small and medium-size investors and buying and selling of silver is easy, with a published spot price and no haggling needed!Daniel Fisher of Physical Gold discusses, “Britannia silver coins – a collectable investment” in this YouTube video.
Fundamentally, silver investments have performed
well over the last ten years. Silver has delivered positive returns over the last ten years. In 2011, silver reached a spot price of $48 per ounce, on the back of investors pouring money into the commodity to escape volatility in the financial markets. Therefore, we can see that silver like gold, isn’t just a commodity. It acts as a currency in its own right and provides investors with an effective route to hedge against market risks. Silver has also historically tracked gold over the years and is an important factor in increasing its attractiveness to investors. Silver has a good outlook for 2018, making it an attractive asset class for investors. Both gold and silver are expected to appreciate in the New Year as investors want to hedge away from risks associated with the falling dollar, the threat of crypto-currencies and traditional companies being overtaken by new and innovative industries.
Most asset classes, including stocks, cryptocurrencies, bonds, futures, cash in bank accounts, etc. are all traded through electronic exchanges over computers. This opens up the risk of cyber-crime as hackers grow smarter and more daring each day. Virtual accounts can be raided, exchanges hacked, and viruses released to destabilise investors. However, physical assets like real estate, gold and silver are proof against the risks of a cyber-attack. This is an important consideration when diversifying your investment portfolio and indeed, one of the objectives of diversification is to reduce risk. Investments in precious metals can, therefore, fulfil this objective too and it’s yet another reason to hold silver as part of your portfolio. Cyber-crime proofing is one of the main benefits of investing in precious metals and is just as applicable to gold, platinum and other precious metals investments.
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. This is one of the advantages of silver, which many investors overlook the importance of.
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, one of the advantages of investing in silver is that it 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.
Back in 2009 silver prices rose by an astonishing 184% as investors sought refuge from the financial crisis of sub-prime lending of 2008. This backs up the theory that in times of economic adversity the price of silver (and precious metals in general) holds up well. One of the advantages of investing in silver is that its price will rise in difficult times for investors as other asset classes fall.In several of its applications – such as medicine and photography – the silver 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.
Silver coins are extremely collectable and make an ideal family heirloom to pass through the generations. Investing in silver coins such as the American Eagle, Silver Britannia, Silver Kookaburra and other coins from around the world add interest to an investment portfolio.
It’s surprising just how many advantages of investing in silver there are. Benefits are by no means all financial, but we encourage readers to contact Physical Gold Limited to discuss how making a silver investment may be beneficial to them. Call us today on 020 7060 9992 or send an email to discuss strategic silver investment.
The two main health benefits of silver are toxicity prevention and improved healing. Wearing silver can improve blood vessel elasticity and therefore speed up the healing of external wounds. Its antibacterial compounds mean it’s used in medical dressings, creams and devices.
Silver has the potential for capital appreciation due to rising demand and naturally limited supply as a precious metal. Silver investment is cheap relative to buying gold and has no counterparty risk when bought in coin and bar form. It can rise in value as a safe haven during volatile stock markets (another of the benefits of investing in precious metals). Silver also benefits from increased industrial demand for silver during technological booms.
Silver is around 75 times cheaper than gold so is ideal for those with modest investment funds. Silver Britannia coins cost around £20 each so a silver portfolio can comprise of many coins offering increased divisibility over gold where you may only have one item. Due to its low price and vast uses in technology, there are numerous advantages of silver when compared to gold.
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.