The Pure Logic of Investing in Silver

Both silver and gold are precious metals and investing in these is considered very safe. However, silver seems to be the metal of choice because of the following reasons:

1. One of the golden rules of investing in precious metals says, “Buy silver first, then gold.” People do just the opposite. Gold is now at $1,880 per ounce, while silver is at $43 per (August 2011 rates). Gold seems to have reached fair value or peaked, while silver seems to have scope for appreciation because it is used in many other applications.

2. Gold is considered as a safe haven. It is not used much in industrial applications. Silver on the other hand is a versatile precious metal. It is used in electronics, soldering, medical equipment, water purification, and more. Plus, it is used in the regular cutlery and jewelry trade. The consumption of silver is increasing at a rapid pace, but its mining output cannot keep pace with its demand.

3. The developed nations are in bailout mode. Their governments are printing money to sustain and boost the economy. According to Brian Ostroff, the managing director of Windermere Capital, a Canadian investment firm, America and Europe are printing 20% more banknotes than their precious metal reserves permit. He reasons that you suddenly cannot make 20% more gold or silver to sustain this extra currency printing. Other economists share the same opinion and some of them term silver as “gold on steroids.”

4. Gold is at $1,880/ounce and silver is selling for $43/ounce (August 2011 rates). That means 43.7 ounces of silver can buy 1 ounce of gold. Now here’s a startling fact – way back in 2008, when the market crashed, it took 90 silver ounces to buy one gold ounce. What does this tell us? It tells us that the silver:gold ratio is rapidly declining and that silver is appreciating much faster than gold.

These were the reasons that make silver such a sweetheart to invest in for a long term. Gold also makes an effective investment, but it does seem that investing in silver makes more sense at these levels under the current economic climate.

Read our related article: When You Invest in Silver You Invest in The World

Read our related article: 5 Things Every Silver Investor Should Know

» Contact Cornerstone Asset Metals today to learn more about buying silver as an investment.

Past performance is not an indication of future potential values.