What precious metal is rarer than gold? Silver, of course – while there is technically more silver in the ground than there is gold, there’s actually less of it above ground. Part of that is because industrial demand is much greater for silver – nearly half of all silver mined is used in sectors from medicine to food to electronics. Gold is one of the rarest elements in the universe, made in the intense heat of supernovae, but not much silver is presently being mined and industry has consumed about 90 percent of all the silver ever mined. With high demand and low supply, silver is poised for a major upset and could offer you much higher growth potential than gold.
Value investors in search of an opportunity with a lot of room to grow should be watching silver very closely. Silver’s lower price makes it very accessible. You can buy a lot of physical silver right now. The time to buy silver as an investment is now, because once markets start to go into decline, prices will already be shooting up, and silver moves quickly.
Silver is undervalued compared to gold. Right now, the silver-gold ratio is about 65:1, but historically that ratio has been 15:1 throughout much of currency’s history. While gold and silver typically move in concert, a correction in the silver-gold ratio could see silver quadruple without gold budging an inch. Investors want to know what’s behind silver’s undervaluation and when will markets see silver’s true value?
Silver Price Manipulation
With demand outstripping supply and eating away existing silver stocks, you would expect the price to already be shooting up. Many believe that the price of silver is being manipulated by central banks and governments that want to reinforce the credibility of their printed currencies. Leading theories are that paper silver is being used to artificially inflate silver supply around the world. The discrepancy between paper silver and physical silver means there is an artificially high amount of paper silver being traded – if they were to be cashed in for fulfillment, there would not be enough silver to satisfy them all. That’s one reason why it’s so important to invest in physical silver, which you can purchase online from dealers like Silver Gold Bull.
Bear Markets See Silver Rise
In April 2011, silver traded as high as $53 an ounce, nearly five times where it traded in October 2008, when it had gone down to $10 and change. This was in an economy where some of the largest banks in the world needed bailing out and entire developed countries seemed like they were on the brink of bankruptcy. The crisis was so deep that the global recovery since then has seemed anemic and such a big shock in recent memory has many investors just waiting for the next big one. With stock markets reaching new records, some investors are now expecting a correction, especially as the future of free trade deals like NAFTA come under questions. When a correction happens, silver could easily triple in value. Gold would almost certainly see major gains as well, as it always does when confidence in the global economy is low, but $5000 gold seems far less likely to astute investors than $50 silver.
Trading Gold and Silver
“Gold bugs,” or investors who are very bullish on precious metals in the long run, often trade between gold and silver. Rather than look at the gold price and silver price in dollars, they look at the silver-gold ratio and make trading decisions based on accumulating greater quantities of silver and gold. For example, on October 13, 2008, you could trade one ounce of gold for 80 ounces of silver. Two and a half years later, on April 18, 2011, silver reached a peak of nearly $45 CAD, but more importantly, the silver-gold ratio dropped to 32:1. If you traded your silver back to gold, you would effectively have turned 1 ounce of gold in 2.5 ounces, increasing your gold position without investing capital.
Silver and Asset Gains
Gold is a popular investment choice for investors who are concerned about the safety of their wealth. It doesn’t produce dividends or generate income (unless you take out a gold bullion loan), but it is a very stable store of wealth. Silver, which has been going through a pattern of low prices lately, has far more potential for you to see asset gains. Invest in silver if you’re looking for a value investment with room to grow.
If you’re interested in buying silver to grow your wealth, buy silver bullion coins and bars from dealers like Silver Gold Bull. Physical silver is the most reliable way to protect your investment from third-party risk. Buy a safe at home or use allocated storage. No investor looking for an undervalued opportunity should miss out on silver right now.