If you are looking to expand your investment portfolios and invest in some commodities, silver can be an excellent option. This metal offers considerable promise for both the most experienced investor looking to increase their assets and the curious newbie just beginning to develop an investment strategy. Many investors appreciate the security that precious metals, such as gold and silver, can offer, making them popular options. Silver in particular, however, has shown considerable promise, making it worthwhile for investors to take a careful look at this metal.
- Price comparison to other commodities
One of the most appealing aspects of silver is that it is affordable for nearly any investing budget, especially when compared to gold. This makes it much more attainable for those who want to invest in metals and commodities to diversify their portfolios.
Those interested in investing in silver will also notice that current silver prices are low compared to the metal’s prices over the past few years. This means that silver is currently a low risk investment vehicle, and the price could easily begin increasing. Silver, like other metals, tends to have price adjustments that happen in waves.
There are a number of different factors that influence silver prices, and they all tend to rise and fall in cycles. For example, take the mining and production of the metal. As prices fall, it becomes less profitable for the mines to keep producing silver. If the price falls low enough, some of the mines will have to close, less of the metal will be produced, and prices will likely rise. Given these cycles, professionals such as Louis James, a metals and mining investment strategist, believe that the price of silver will soon turn profitable for holders of the commodity.
- The popularity of silver in the industry
One of the most important factors in determining the long-term profitability of any commodity is its demand. Industrial and technological advancements continually call for increasing amounts of silver, which indicates that the precious metal will remain in demand for years to come.
According to SBC Gold, silver has hundreds of different medical and industrial applications, and its usage continues to rise. Electronics and the latest advancements in technology have driven this growth forward, as everything from cell phones to monitors to medical instruments contains amounts of silver. Most people do not realize the prevalence of this metal.
As technology continues to progress and spread around the world, the demand for silver is only slated to increase. As demand for the metal increases, the price will similarly increase. This is because there is a limited amount of silver physically in existence and inventories are currently at historic lows.
- The unprecedented amount of money being printed by governments
Governments today have become increasingly dependent on printing more and more money to combat their financial difficulties. World currencies are no longer anchored to a standard, such as gold, which has lead to a currency crisis in a number of countries. However, when the economy struggles, gold and silver tend to do well. Investing in silver now – when prices are reasonable and affordable – gives people the opportunity to find a safe haven for their assets, should a market crash come in the future. Louis James believes that in the event of a crash, the price of silver may reach record highs.
These professionals tend to look at trends from the past when high inflation has impacted the prices and rates of precious metals. For example, inflation rates were recorded at very high numbers in the late 1970s and the early 1980s. While there were other factors that influenced the cost of silver at its peak in 1980, both gold and silver saw high prices that rose from 1977 into the early 1980s, reflecting the rise of inflation. The years 2008 and 2011 also saw smaller spikes in inflation, which in turn caused slight spikes in precious metals prices. In April 2005, the price of silver was $8.54, but in March of 2008 it was $20.05. By October 2008 it was back down to $10.20, but in April 2011 it hit $51.54, only to fall back down to under $40 the next month. The 2011 spike was also accompanied by considerable investor fears of more inflation, which led to a greater jump than in 2008.
There are several good reasons why investors interested in growing and diversifying their portfolios should investigate the potential of silver. If you are considering this metal, you should carefully examine your budget and the expectations for silver to determine if it would be right for you.
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Audrey Clark is a skilled freelance blogger covering a range of topics from careers and finance to travel and leisure, along with everything in-between. When not writing, she’s always on the lookout for her next adventure. Connect with Audrey on Twitter and Google+.