Last updated on August 5th, 2022 at 02:01 am
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When it comes to precious metals, gold tends to steal the limelight. Although it is often overlooked, silver happens to be a worthwhile precious metal investment, too. Just like gold, silver offers a measure of protection in the event of economic crises. If you are interested in silver prices or information related to silver investments, there is at least some information you need to know.
Influences on Silver Prices
Like many other precious metals, silver is often in high demand. However, the price of silver often fluctuates. You should always be aware of what factors influence the price of silver, so you know when to invest.
Supply and Demand
As with any product, supply and demand is the biggest influential factor when it comes to the worth of silver. If there is a limited supply but a constant or high demand, the price of silver will rise. Silver supplies may drop if a mining strike occurs. Pay attention to reports of a mining strike, and you will likely see the price of silver increase. The introduction of new silver will also drive prices up.
You will often find silver in various products aside from jewelry. Believe it or not, silver once dominated the photography industry. Silver was often found in photographic film because it provided light-sensitive properties. It is because of those light-sensitive properties that you will also find silver in solar panels.
By the same measure, many newly formed technologies move away from the use of silver. In fact, silver no longer dominates the photography industry thanks to new and improved technologies. Therefore, the price of silver will fluctuate based on whether silver benefits the use of certain products or not.
Trends in Economics
Always pay attention to economic trends. If the economy runs stagnant, people are less likely to spend money. When the economy is in good shape, people will make more purchases.
Although people are not as likely to purchase jewelry when the economy is low, luxury items remain in high demand. Therefore, the price of luxury silver items will hover at higher prices.
Historically speaking, silver was once one of the most important precious metals because of its medicinal properties. In fact, Alexander the Great would drink water from silver containers because he believed it sanitized and disinfected the water. Parents gave children silver spoons to suck on like lollipops to ward off illnesses, too.
Silver has antibacterial properties, which explains why it was once used in a variety of medications. In fact, silver used to be the most popular way to cure terrible illnesses such as syphilis and tuberculosis. Eventually, the Food and Drug Administration decided to remove silver-based medications from the market, though it was widely used in clinics and hospitals.
Today, silver-based medications are alternative medications rather than widely prescribed medications. Before vaccines excited, colloidal silver was the only reliable existing cure for polio. When the FDA decided to remove silver-based medications from the market, a terrible polio epidemic occurred, thus proving the importance of silver.
Is it Worthwhile?
Despite the history of silver’s use and understanding factors that influence the price of silver, you may still wonder if it is a worthwhile investment. Take into consideration that gold, which is among the more popular of all precious metals, is not as widely used as silver. The demand for gold in industrial applications is only between 10 and 15%. Silver, on the other hand, permeates your life daily.
Silver exists in technology, medical equipment, jewelry, and biocides, which is barely the tip of the iceberg. Although new technologies often replace silver, it has done nothing to quell the industrial demand for silver. That is because new applications that use silver spring up nearly every single day.
When weighing the worth of silver, keep in mind that silver used within industrial applications is often destroyed. Therefore, manufacturers cannot smelt the silver back down for use in additional applications. Because of the destruction of silver, the demand for more silver increases.
There is simply no point trying to recover a minute speck of silver found in batteries, cell phones, and even casino chips. Therefore, the only solution is to request additional silver. Investing in silver can offer you the benefit of owning a piece of a precious metal that is often in the highest demand.
Unfortunately, recessions and depressions can decrease even industrial demands for silver. Make sure you watch the local, national, and global economy carefully to determine when you should invest and when you should walk away. Investing in silver is not something you should do on a whim while hoping for the best.
There is absolutely no investment that comes without risks. Investing in even the most valuable and in-demand product comes with high risks. Silver is no different. Whether you purchase silver sheet metal, silver bullion, or any other form of metal, the investment is all the same, as are the risks. Understanding those risks is of extreme importance if you plan on investing.
Investing in silver is like betting. You are betting that demand will rise and so will the value of your investment, thus making you money. Silver is a volatile investment. You will come across situations where the value of silver suddenly rises, which prompts investors to buy into it. As such, the value of silver will rise even higher, which gives it a sense of sustainability.
However, as more and more people invest, you will suddenly see rapid spikes or drops in value. In the past, marketers limited the amount of silver available for investment because of its volatility. As such, investors saw the value of silver suffer a sharp decline. Because it is so volatile, investing in silver is a risky gamble, but one that is worthwhile if done right.
To further understand the risks, you should always analyze silver investments throughout history. Researching the historical value of silver as it rises and falls will help you understand the risks versus the benefits of investing. Historically speaking, silver prices resulted in annual losses approximately 43% of the time since 1990, which is nearly half.
If you have decided to purchase silver, you will notice that you have at least a couple of options. You can use the exchange-traded fund (EFT) to use a variety of funds to gain access to different metals, including silver. You can also buy physical forms of silver, such as bullion. Understanding the pros and cons of both forms will help you determine which you should buy.
Many people wrongly assume funding options are not as reliable as owning physical silver that you can see and touch. While it might seem more comforting to reach into a vault and touch the silver you own, there are beneficial reasons to invest in funded silver. For starters, EFT’s can better track the continuously fluctuating prices on silver.
Also, it is easier to sell EFT’s to interested buyers. You cannot simply hope that a wise investor will purchase a bullion without first testing the legitimacy of it. Silver labs can test and confirm the legitimacy of silver, but that can take time. If you want to trade off your silver quickly while prices are high, your best bet is to invest using EFT’s.
That said, there are beneficial reasons to consider investing in bullion, too. When you purchase bullion, you own the silver. It is yours and yours only. When you buy into EFT’s, however, you do not own the silver. Instead, you are a shareholder who lacks any title to the metal, which can make some people feel uncomfortable. Physical silver, however, such as coins and bullion, belong to you and no one else.
Determining which form of buying offers you the most based on the pros and cons allows you to get started with silver investing. You cannot invest if you don’t know what form you prefer to purchase and the risks and benefits involved with each.
You may come across people trying to scam you. Sometimes you will find people attempting to sell silver coins or bullion online. That is not to say that online buying is not reliable. However, some people may attempt to make money by fooling you. Make sure you work with a reputable professional when buying and selling silver to avoid scams.
When it comes to honest sellers, the biggest threat to the market is the high-pressure sellers who push rare silver of numismatic coin. Although there are plenty of rare silver coins out there for sale, it is too difficult to determine who is telling the truth. Make sure you check the accuracy and legitimacy of all silver you purchase before providing the seller with any money.
Of course, the best way to avoid potential silver buying scams is to stay away from rare coins altogether. Instead, stick with bullion buying or EFT’s. Of course, if you choose to buy silver in physical form, you will still need to check the legitimacy of the sale.
With all this knowledge in mind, investing in silver should be easier. Staying informed about silver investments allows you to begin your investment journey safely. If you jump in without any prior knowledge, you could end up putting yourself at significant risk of scams, purchasing mistakes, or phenomenal losses.