Why Invest in Physical Silver?

Anyone keeping a close eye on world events will no doubt be aware of growing geopolitical instability. This, along with many other factors, is considered by many experts to be a potential catalyst for huge growth in the silver market.

Though it is more volatile than gold, there is a lot more potential in silver based on its current market price, which is partly down, due to its safe haven status and growing industrial demand.

Silver Market Fundamentals :

  • Silver is extremely undervalued. Historically, one ounce of gold buys 15 ounces of silver. The ratio had always been set at 15:1. In the modern climate, however, that ratio has been as high as 52:1, and it is still heavily weighted in favor of gold. If this ratio returned to the way it was, the price of silver would skyrocket, but even if it only returns to its 20th century average, the price of silver would still double.

  • Over the course of human history, many civilizations have used silver as a base currency. It is durable, divisible, rare, useful, and cannot be created by decree. It may be hard to imagine a currency based entirely on a precious metal, but paper money and coins with face value that does not match their metal content is a very recent invention. Many countries, including Mexico and Zimbabwe, have lost their way with this system of “false” currency, and the implications of such an event are disastrous. However, the ones sitting on a stockpile of precious metals were able to dodge this disaster and even profit from it.

  • A return to metal money is a possibility, because the consequences of having created massive amounts of fiat money in the last thirty years are irreversible.

  • Silver is five times as rare as gold and demand is such that producers cannot cope with it. Silver production has been slowing for 15 years and while much of the gold in the world is currently being hoarded, much of the world’s silver is in use. This makes large quantities of gold much more accessible than large quantities of silver, and the laws of supply and demand state that when something is rare and sought-after, its price inevitably increases, often exponentially.

  • Except for petroleum, silver has the most industrial uses of any commodity. Its primary use (which may come as a surprise) is in mirrors, as it is more reflective than any other metal, but thanks to its unrivaled ability to conduct heat and electricity, it is also used in many computing and electronic industries.

  • Other abilities that this unique precious metal possesses include strength, malleability, sensitivity to light reflection and a capacity to support extreme temperatures. These unique properties have rendered silver indispensable for industries worldwide. Silver is also used in medicine and has found its way into many health products, due to its unique antibacterial properties.

  • Some financial analysts believe that silver is one of the most important products in the world, and that it represents a fantastic investment opportunity.

  • There are many short positions on the silver market, and as the price increases, traders holding these positions will have to cover them, which will contribute to a further price increase.

  • A large number of “paper” silver certificates have been sold, but there is not actually enough silver to deliver on them, should there be a sudden demand. At the moment this “paper” silver offer offsets a price hike, but this growing shift into tangible assets (like physical silver) will make those ETFs and other paper certificates explode, along with the price of silver.

In order to avoid any third-party risk, you must hold PHYSICAL silver, preferably stored outside of the banking system.