There is no doubt that silver is one of the most popular investments that investors can look into. There are several uses this precious metal has that make it special, so when buying precious metals, silver should be on the top of the list. For thousands of year’s different cultures and civilizations used this metal for trade and currency. The good news for investors is that since there is more silver in the world the prices for which it can be bought are usually much lower. That means that the demand for it should be up, especially when people are concerned about economic stability.
Other Uses for Silver
There are hundreds and even thousands of things that people can do with silver. When buying precious metals such as silver it is worth considering that this metal is an industrial one that can be used for heat and electrical conductivity. In fact, it is the best metal for it. Other applications include solar panels, cars, computers, and even office windows. It is also a difficult metal to recover so once it has been used for industrial purposes it usually ends up thrown in the trash. Lately medical products and clothing have also used silver due to the fact that it combats bacterial growth.
After discussing all the uses of silver (there are still a lot more) it is worth looking into why buying precious metals such as silver can also help a person preserve wealth. When paper currency devaluates people notice it when they pay for groceries, electronics or really anything they buy. That is when wealth preservation becomes important. Commodity money is thought of by some as outdated but massive printing of money contributes to the devaluation of currencies and that is when having commodity money such as silver or gold becomes very important.
The National Debt
In recent months, investors have become rather bullish in the precious metals market. That is because the United States national debt is at over 17 trillion dollars. When the interest rates go up more tax revenue is collected in order to pay interest or loan on the debt. Ten-year bonds and treasury notes should then cause mortgage loans to become less affordable, therefore causing a decline in the value of a home. Buying precious metals can protect an investor when consumer spending goes down because of a dropping of home values.
In 2011, silver’s price was close to $230 per ounce. Since then the price has dropped a lot; currently the price is under four times what it was back then. Fortunately, the cost of silver production is just over $20 per ounce. If silver were to drop below the production price then most minors would start filing for bankruptcy which would lead to a drop in production. At the current price, the downside is very limited while the upside is very high. That can mean that buying precious metals such as silver can help a person with wealth protection and with creating income.
Safety of the Investment
The price of silver since it has been traded has usually gone for about 1/15th the price of gold. Today, that price is at 1/16th the price of gold. Because of that, when buying precious metals, investors are very positive about silver and its future price. It is important to look also where the price of gold goes. Supposing that gold reaches at least $3,000 per ounce and the ratio gets back to the 1/15th then that would put silver at $200 an ounce but do not be surprised if silver actually goes much higher than that.