Whenever people think of precious metals investing they usually think of gold. Gold gets the most attention from investors, due to its high value and dramatic price volatility. Prices in 2011 came close to $2000 per ounce, and then retreated to close the year around $1700/oz. Someone who had sold 100 ounces of gold would have made a profit of approximately $30,000 is the three month time period where this price swing occurred.
Silver does not receive nearly the attention that gold does, but we propose to show why it is well worth your consideration if your intent is to profit from the price fluctuations that silver offers.
Consider these statistics:
• In early 2009, silver could be purchased for under $10 an ounce.
• Early in 2011, just about two years exactly from when silver was at the just mentioned price, it came very close to achieving an all-time high of $50/oz.
• At the close of 2011, silver had retreated to around $30/oz., but anyone who had bought below $10, then sold at the end of 2011 would still have realized a staggering 140+ percent return on investment.
• At the time this is being written, silver has gained over 25 percent in the first two months of 2012, compared to 13 percent for gold.
Historically, silver has always been a safe haven for investment capital during times of war and political uncertainty. It is also a good hedge against a decline in value of the U.S. dollar, which we are currently experiencing as the U.S. equity markets continue to recover from the housing bubble implosion that struck with a vengeance in 2008. Insulating myself from the Federal Reserve's money printing is one of the best reasons why I buy silver.
Perhaps the most important factor that contributes to silver being a solid investment in this particular era, however, is the fact that the demand for silver has outpaced the supply every year since 1990. This is mainly due to the high tech uses for silver due to its physical property that makes it a far superior conductor of electricity compared to copper. Electronic devices such as smart phones, tablet computers laptops and the batteries that power these devices all contain silver, and while the amount in each of these is basically negligible, when you consider the billions of these devices that are in use, a market for silver that was essentially non-existent twenty years ago is growing exponentially and shows no signs of this growth slowing down. Silver is predominantly an industrial metal as opposed to a monetary metal, with some influence derived from historical uses for jewelry, so an economic recovery, even in a weak one such as we are experiencing now, silver prices should rise as long as consumer spending expands.
The price of silver has very recently dropped almost $3.5 per ounce and is right around the $34 oz. level. While it certainly could go lower, buying right after a substantial downward movement is generally an opportunity to be given careful consideration.
As with all other types of speculative investing, investing in silver does have the potential to incur substantial losses. You must be sure to understand the risks thoroughly, have the financial wherewithal to tolerate fluctuations in the price of silver that result in a drawdown in your equity, and only use pure risk capital that you can afford to lose with absolutely no regrets to invest in silver in any form.