Is Silver a Good Investment?

Is Silver a Good Investment?

Investing in silver raises normally more questions than investing in other precious metals. Is silver a safe investment? In uncertain economic times, precious metals like gold, platinum, and silver are all assets that historically have increased in value. However, is silver a good investment today? It is an uncertain question, to be quite honest. One thing is clear: silver is an asset class that is highly correlated with other asset classes, which means that it tends to move in an opposite direction of most assets, meaning that it sometimes moves up and sometimes moves down.

In short, what seems to be an unambiguous answer is no. That means that the current value of precious metals, including gold, silver, and platinum, does not reflect the long-term expectations of an investor. And that is very bad news for those who want to take advantage of a financial crisis or a major international event to make a substantial return on their precious metals hedge. (The good news is that this is unlikely to occur during the next ten years.) For the time being, let's just stick with the truth.

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The first question we need to answer is whether investing in precious metals is a good hedge during uncertain times. After all, what happens when inflation or deflation sets in? In these cases, the value of your silver may go down considerably, even in an economy that is on the upswing. In these cases, investing in physical silver is not a smart move.

On the other hand, there are plenty of times when investing in silver will yield a significant return while inflation or deflation does not exist. One of these times includes future gold sales. In many instances, gold sales will occur during economic downfalls, because physical gold is not needed to buy the items people buy in anticipation of higher value. During these times, people will have access to a large supply of gold at a low price, which will cause the value of silver prices to rise.

Of course, another time when it makes sense to purchase silver is when a country is about to go into a financial crisis. For instance, gold prices have spiked several times recently as oil and other commodities have declined significantly. As a result, more investors have turned to silver as an investment, as its value does not fluctuate with oil prices. Moreover, the relatively stable prices of silver have made it a great hedge during uncertain times for investors who like to diversify their investments but do not necessarily want to put their money at risk.

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Many times, big investors (e.g., wealthy businessmen, banks, insurance companies, and governments) use their influence to increase the price of silver. When the price spikes, this usually coincides with periods of increased stock market volatility. At these times, many investors may sell off their stocks at the bottom of the price decline, which drives up the value of the precious metal. If an investor bought his shares before the market began to fall, he will make out better than those investors who bought on the stock market during the rising days because the latter sold off their shares before the price dropped to a certain point, making him (and by extension, silver) less vulnerable during recessionary times.

In addition, some industrial sectors utilize large amounts of silver in their production process. For instance, aluminum producers mine and refine silver in huge amounts in order to create new products with silver incorporated. Thus, they are able to increase production at a faster pace without having to invest in more physical silver. In addition, some large companies such as Panasonic make use of silver in their production process, as well as its high electrical conductivity, allows them to produce a wide range of electric appliances. As you can see, silver is indeed a very important industrial use, and it serves as a useful physical silver backup, which makes it a good investment even during economic downturns.

The best time to purchase physical silver is during the bull market, which happens every three months. However, there are instances when investing in silver may not be so safe - as we have previously mentioned. It is therefore important that you consult with your financial experts, especially if you have significant investment capital. In this day and age, there are numerous online brokers available who can act as your advisors, giving you sound advice on which silver investments to make or not. Keep in mind that your financial portfolio is what matters the most, and not your emotional attachment to a particular metal!

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