Investing in Silver Silver Versus Gold why Invest in Silver Today hi Ho Silver

                                                             Investing in Silver

Silver is produced mostly as a by-product from the mining production of gold, copper and zinc. As supply for most anything tends to chase its price, the higher in price gold or copper goes, the more silver is thus mined. Today the price of gold is at an all-time high well over $1000 per ounce, so it is a safe bet that the production of silver today is also quite strong.

One rule of investing is that if what you are investing in becomes quite ample in its supply, yet, its price/value is rising, then it makes sense to buy more of the investment. The reason for such is that even though the supply of the item is rising, the demand for it must be rising more so. At some point in this nexus, a serious spike up in price will most likely happen. That spike up in price will also most likely be the top in price for that particular investment’s cycle, but missing out on this potential investment’s climactic move would be negligent.

Investing in silver can be done by either buying the precious metal from a silver dealer, thus taking physical ownership of the silver, or the easier way would be to buy an exchange traded fund (an “ETF”) that invests the fund’s assets exclusively in silver. One such “ETF” would be the “ISHARES Silver Trust” (NYSEArca: SLV).

The demand for silver always increases as the demand for gold rises. Silver basically “coattails” the price of gold, especially in the upward price cycle. Over the past 100 years plus, the ratio of the price of silver to the price of gold has been quite volatile, at times being 100 or so to 1 as well as 15 or so to 1! Today the ratio is near the lowest levels recorded in the aforementioned 100 plus years. Thus, the ratio of silver to gold should be considered very conservative if not enticing to the investor looking for a bargain. A ventured guess as to why the great spread in the history of the ratio would be answered by the fact that once gold has risen to a price that exceeds most of its potential newer buyers maximum, those same new buyers might opt for the cheaper (yet precious) metal, silver.

Prior to the advent of the digital camera, silver was in demand because of its use in film developing. The exit of the film camera caused the industrial demand for silver to take a big hit. Today, with the price of oil once again over $80 a barrel, the demand for other types of cheaper and especially “greener” energy keeps rising. One such energy alternative to oil is solar energy which uses silver in its design and operation. Thus, the industrial demand for silver is rising possibly to very lucrative price levels for those who invest in the silver!

Gold has always been correctly considered as the ultimate hedge to inflation as well as economic chaos. While economic chaos comes and goes as anything cyclical, inflation has become a way of life for the world, especially during the last century and the first decade of the 21st century. Thus silver is as good a hedge as gold is today. Should the silver to gold ratio once again revert to previous levels, silver would be enhanced in price by that effect of the collapsing ratio. Thus the silver investor would have a win-win investment!