Investing In Silver
Gold isn’t the only precious metal that people invest in. Alongside gold, there has always been Silver. So in this section of the site, I’ll be talking about gold’s poorer cousin – why you should invest in silver, why it could potentially be a better investment than gold, where to buy it and how to store it.
While not everyone can afford to buy a 1 Troy Ounce gold coin, buying silver is much more affordable.
Why Silver Is Cheaper Than Gold
Silver was always more abundant than gold which is one reason why it’s price has always been lower than that of gold.
Gold is a lustrous metal, often seen as the metal of gods. It doesn’t tarnish. Silver, unless extremely pure, will tarnish over time. It’s not silver itself that tarnishes but other metals mixed with it. Sterling Silver is 92.5% silver and 7.5% other metals. It is those other metals that react with air and water which leads to tarnishing.
The Gold/Silver Price Ratio
The price of silver has always followed that of gold, though it tends to lag behind gold’s ups and downs. The gold/silver price ratio is found by dividing the price of gold by the price of silver. 250 years ago that ratio was 15:1. Today it’s about 75:1.
This leads many analysts to think that a correction is long overdue and that the ratio will correct itself at some point, taking back to the historical 15:1 ratio. Some even think that ratio could drop to 10:1 or even 8:1.
What does this mean?
A Canadian Silver Maple Leaf coin currently costs about $17 with the gold/silver price ratio at 75:1. If that ratio were to return to 15:1, that same silver coin would cost $85 to buy. A 500% increase in coin value.
Why Invest In Silver?
There is an expectation among analysts that silver is greatly undervalued right now and that it could significantly outperform gold as an investment.
Historically, as I mentioned, there’s always been more silver than gold. But gold is an inert metal. It has some small amount of industrial uses. Silver, on the other hand, is a much more useful metal and has a great many practical uses. It’s used in photography industry on film, whether that’s on the old pre-digital cameras or by movie studios when filming movies (and not using digital cameras). Silver is also used in medicine and many industrial processes.
The upshot is that due to all this use, for the first time in history, there is now more gold on the planet than silver.
So silver is becoming more rare. And along with that, it’s value should increase.
Check out this video over on my free membership site where analyst Bo Polny talks about why he thinks silver will go to $100+ per ounce this year. This guy has a phenomenal track record in predicting market moves!
There’s no doubt that gold is alluring but given that silver could go to the moon, investing in silver to some degree is a choice I made for myself. I tend to invest mostly in gold but when silver prices drop, then I’ll pick up a bit more silver and a bit less gold.
I’d love to hear from you if you’ve invested in silver yourself and if you prefer coins, rounds or bars. I’d especially like to hear from you if you’re in the European Union. I know that while gold is exempt from Value Added Tax there, silver is not. That tax adds about 20% to the cost of buying silver.
Leave your feedback in the comments below or elsewhere on the site so other readers can benefit from your experiences. 🙂
