– Live Silver Spot Price
A Guide to the Price of Silver
When there is uncertainty in the economic conditions, investors turn to precious metals, gold in particular, as safe haven investments. Many investors do not realize that there is a much more accessible and affordable substitute to the yellow metal- silver. While the precious metals enjoy a bull market, the gains shown by silver is extremely heartening indeed, perhaps far more so than gold itself on many occasions.
In recent times, experts and analysts have started to throw the spotlight on this precious metal as a worthy replacement for the yellow metal. As a result many savvy investors are now investing in this metal and sitting back to enjoy the ride as silver bullion price continues to escalate to spectacular heights. JM Bullion, a leading online silver dealer, has become one of the most preferred options for buying silver at competitive prices.
Silver Outperforms Gold in Recent Years
Silver prices have been consistently outperforming the yellow metal when bull markets for precious metals are in force. Sometimes, silver has even tripled or quadrupled while gold prices have failed to show the same degree of increase. There is no doubt that we are right in the midst of a bullish precious metals market at present. Judging by the way gold prices have been soaring in the recent times, it is clear that investors are pulling out of the dollar and getting into metals in a big way.
Looking at the data for gold and silver prices from mid 2010, it is evident that while gold price has gone up by nearly 30%, silver prices have zoomed well over 150%. Investors should note that experts believe the metal has not yet achieved its peak price. Analysts have predicted that silver may well zoom beyond the $100 mark if silver prices are calculated based on the increasingly skewed silver- gold ratio.
Price Predictions Based on Silver – Gold Ratio
This ratio has been in use historically to represent the price correlation between gold and silver prices. The United States Coinage Act of 1972 fixed this ratio at 15:1, meaning that one troy ounce of gold was equivalent to 15 troy ounces of silver. However, this ratio has witnessed immense volatility especially in the last few decades. During the 2008 recession, this ratio was at a startling high of 84:1. Although the ratio is no longer at this level, it has definitely not dropped to the historic 15:1.
Today, the ratio hovers at around 43/ 44:1. Analysts believe that sooner or later, the silver gold ratio will return to the historic levels. If this were to happen, then the price of silver will need to soar to new heights to keep pace with the improving price of gold. With gold prices hovering at around $1600 today, the price of silver will surely have to exceed the $100 mark if it were to keep to the 15:1 ratio.
Why Silver Price should go up?
There are several other valid reasons to support the expectation that silver prices are bound to go up in the near future. It is on basis of these that experts are advising investors to increase their exposure to the metal right now to position themselves at an advantage in coming times.
Reason 1: Increasing Industrial Demand
Silver has always had an edge over gold because of its many applications in manufacturing processes. Historically, there has always been demand for silver from industries of various kinds, including pharmaceuticals and electronics (think cell phones and computers). This demand has been steadily increasing as industrial activity in emerging nations slowly gains impetus. Add to this the fact that products like cell phones and computers are fast becoming essentials rather than desirables and we see why a huge wave of industrial demand for silver is all set to swamp the market in near future. As demand picks up, it is inevitable that silver price will follow suit.
Reason 2: Investment Demand
Investors are increasingly turning to silver as a viable and worthy substitute for other precious metals. The fact that this metal is still very much within the affordable levels makes it a good investment for even those who have never before invested in metals for lack of funds. For those investors who portfolios are over weighted with paper assets, the increasing silver price per ounce is particularly attractive even as the dollar continues to lose its sheen.
Well known experts including Alan Greenspan and George Soros have cautioned that the dollar will continue to lose value and this has given new impetus to the switch from dollar to silver. The dollar’s fate is worsened by the fact that the government has resorted to uncontrolled printing of paper money to shore up the failing economy. The tactic will only end in hyperinflation, analysts point out. In turn, metals, including silver will gain new strength as safe haven investments.
Reason 3: Limited Supply
There is yet another reason for silver bullion price to soar to new heights and that is the fact that the supply of silver is fast depleting. In 1900, it was estimated that about 12 billion ounces of silver were available across the world. However, by 1990, research groups estimated that this figure had dropped dramatically to just over 2 billion ounces. Above ground silver in refined form is less than 1 billion ounces today.
Demand has made great inroads into the globally available silver reserves, and this has brought about immense strain on the supply chain. As both industrial and investor demand for the metal continues to increase, it is clear that the mismatch between demand and supply will manifest itself in the form of steadily increasing prices. Investors should note that silver supply is finite and also that increasing silver prices have not impacted production levels historically.
Clearly there is enough of a case to buy into the metal right now before the silver price per ounce touches unreachable heights. The fact that the metal is easy to store and maintain in good condition for a lifetime only makes it even more attractive as a long term investment. Affordability and proven performance makes silver bullion an ideal choice for investors who want to hedge against inflationary trends especially as the dollar continues to lose value day after day.