Looking to invest in a popular, yet extremely volatile market? Try silver.
The silver market can make – and destroy – fortunes in a very short time.
“Current investors in silver now have survived a parabolic rise, a subsequent plunge in price and some extremely dramatic wide trading ranges,” reported Thomas Reuters. That means “current owners of silver are very solid, committed, long-term investors.”
Even so, if you are looking for the greatest profit potential and volatility in an asset, silver could be the best investment opportunity of the past decade.
Silver is a steal at these prices
Silver is especially attractive because it functions as a precious metal in that maintains its value over long periods of time. Yet it is also an industrial metal that is consumed, and demand for silver by producers of computers, mobile devices, photovoltaic cells, and water purification systems is rising rapidly.
While gold is roughly double its nominal high of $850 in January 1980, silver is still barely half its nominal high of around $50 an ounce set in 1980 and April 2011. That makes the white metal affordable for the average investor looking to protect the value of his or her money.
Silver is inexpensive relative to gold. If one is bullish on the price of gold, and if silver is inexpensive relative to gold, then silver is good value a fortiori.
French investment bank Societe Generale issued a research report March 4 stating that investors who want to put money into precious metals may increasingly turn to silver as the “cheaper alternative” to gold.
According to James Carrillo, senior portfolio advisor for Swiss America Trading, silver is not only cheap on a nominal basis but also from a valuation standpoint : “Silver is grossly oversold at current levels, more so than any time in the past five years.”
He added that due to strong physical demand, “silver should be rising.”
The trend in industrial demand for silver is positive. About 53% of silver is used in industrial products, according to the Silver Institute in Washington. Silver is used in industries that are generally growing. Additionally the number of products in which silver is found is generally increasing. As a consequence, the uptrend in industrial demand for silver is a secular trend that is outpacing the rate of growth of the global economy, thus making it resistant to global recessions.
Investors should avoid ETFs and simply buy physical silver
Investors should avoid ETFs and simply buy physical silver coins, bars and rounds. If one wants to hold silver bullion coins or bars in a bullion vault, they should be stored outside the banking system, in a bullion vault in an account that allows its clients to take delivery of their silver.
The idea of taking physical possession of gold or silver currently seems almost taboo in the mind of the mainstream precious metals investor, although many alternative minded investors tend to see personal physical possession as the only safe option in the event of a financial collapse scenario.
If you decide to invest in physical silver assets do so only from a reputable dealer like Goldbroker.com, Goldswitzerland.com or Bullionvault.com. This is especially important if you’re purchasing over the Internet, where you will want to look for a well established dealer with a long history and stability in the business.