Factors To Consider When Investing In Silver


If you have been thinking about investing in precious metals, it is likely that investing in silver has been a thought you have entertained. There are several applications that utilize silver in order to work properly. Such things as solar power panels, electronics, medical equipment, transportation, appliances, televisions, computers and more rely on silver. It is because of this that the stores of silver are in steady decline.

In 1945, the silver stores were at 10 billion ounces. This number has declined in recent years to a level of 1.5 billion ounces in 2010. Part of this is due to the demand of silver being on the rise. In the year 2012, silver production set an all-time high of 787 million ounces. However, with the demand increasing to over 1048 billion ounces, the stores of silver have been in decline. As the stored continue to deplete, there is a good likelihood that they will disappear altogether, making investing in silver a great idea.

Considerations for Silver Investors

It is important to keep in mind that the silver that is in production and circulation is massive. Only a portion of it is actually used for investing in silver. While the investment silver number have risen from 55 million ounces years ago to the current level of 160 million in 2012, the demand for silver dwarves the investment aspect. Investing in the metal does not control the market, which leaves the possibility for a good return even greater for those who do invest.

Mining costs have been rising, which makes it more difficult to get more silver into society. Since the silver stores are decreasing, the need for silver is increasing from major players like Nokia, Sony, GE and Apple, and the cost of mining silver on the rise, the price for silver is enjoying a major jump.

The one thing holding many back from investing in silver is a look at the silver prices in recent years. A quick glance will show that the prices for silver have been volatile to say the least, with major rises and sharp declines being normal. However, the overall outlook of silver has been a gradually increasing price over the years making it a good long-term investment rather than a short-term moneymaker.

The Effect of the Gold-Silver Ratio

One of the biggest things to look at when investing in silver is the gold-silver ratio. This is the ration of trading gold to trading silver. Even with a ratio as high as 83.73 in recent history the number is in decline. The ratio is expected to get as low as 20-30 in the near future. As the ratio continues to drop, the price of silver will continue to rise.

The current high ration implies that more people are selling off their silver investments to invest in stocks as short term investments. As the stock market declines, the prices of silver will increase. This is because investors will buy up silver again to protect their stocks against losses and maintain their overall value.

Silver Investment Considerations

Those investing in silver can look to the governments of the world to see that they are investing in silver as a protection from such global recessions as was seen in 2008. This is why more investors are taking advantage of the lower than usual prices to buy up more silver. As the numbers begin to rebound, those who purchased while the prices were low will see a big return on their investment. It is important to note that this investment will pay off years down the road, and should only be used to diversify or protect your long-term investments.