What are the 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.
Cheaper price of silver
As the gold silver price ratio is 75:1, 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 an important factor 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.
Good performance of silver over the years
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 in an effort 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.
Silver is cyber-crime proof
Most asset classes, including stocks, crypto-currencies, 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.
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.
Common customer questions and our expert answers
The benefits of silver are wider ranging than for gold. For investors, silver offers value (being 75 times cheaper than gold), a hedge against unstable markets, and a tangible asset with intrinsic value. Industrially, silver’s main benefit is its unsurpassed ability to conduct electricity, so it’s used in many technologies. It also offers health benefits due to its anti-bacterial qualities.
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.
Sovereign silver is commonly used to improve the immune system in fighting infections like cold and flu. It is also used to help speed up injury recovery for abrasions and contusions due to its stimulus to blood vessels and antibacterial abilities. Sovereign silver is a hydrosol which can be bought in convenient bottles for repeated use.
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, but also benefit 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, silver has far greater upside potential then gold.
Colloidal silver can be used to treat viral infections which antibiotics cannot such as bronchitis or pneumonia. It can relieve sufferers of airborne allergies when used as a nasal spray. Most commonly, it is used as an anti-inflammatory and antiviral, with it even helping fight the HIV and hepatitis viruses. It’s antibacterial qualities help fight anti-biotic resistant superbugs.
Silver Britannias are affordable to buy and store, as they can be bought in tubes of 25 and monster boxes of 500 coins. As a legal tender coin, any value increases are completely free from Capital Gains Tax. Being issued by The Royal Mint, the coins are very liquid and easy to sell worldwide.
The primary benefit of buying silver bars is the lower cost per gram when compared to smaller silver coins. Silver bars can be bought in large sizes such as 5kg, and yet still be affordable due to silver’s low price. Storage of silver bars is also easier due to their convenient size they can be stacked.