When it comes to precious metals, most investors are dazzled by gold. The issue with gold though, is that for many, it is too expensive to afford — one ounce of gold translates into more than $1,600 — and it cannot be used as money. Silver, with a price at the moment around $30, is more accessible to investors of all budgets and has direct liquidity.
Silver is also a precious metal with a wide range of industrial and commercial uses. As reported by Gold Fields Mineral Services, in 2012 the demand for silver came mainly from industry (43%). Investors made up 30% of the demand, 21% was absorbed by the jewelry industry and the remaining 6% was used by “photography and producer de-hedging, or closing out positions that had been used as a hedge,” according to the GFMS report.
In 2013 the demand for silver in industry is expected to rise. New, thriving markets such as Asia, will account for a big part of this rise in demand. In China, jewelry demand is rising every year, which translates into an increased demand for precious metals, especially silver. A Frost and Sullivan report that jewelry demand in China is highly probable to rise up to 35% this year.
The combination of new markets that are emerging the last five years, along with the consistently low interest rates, is constantly increasing investment demand for silver as well. And because Barack Obama will be the U.S. president the next four years, investors foresee that if he sticks to his financial policy, the value of the U.S. dollar will drop. This of course attracts more investors to put their money in hard assets such as precious metals.
Another reason that specialists believe silver prices will reach up to $54 per ounce in 2013 is the fact that historically the gold/ silver ratio has been 1/55, which means that one ounce of gold will buy 55 ounces of silver. This means that silver is seriously underrated at the moment, and it is expected to make a great come-back.
There are two sources of silver right now: Underground silver and the amount that is currently on the market and in investors' safes. The truth is that no-one knows the exact amount of these two silver sources and investors are not willing to sell their silver coins or bars because of fear of further inflation, so they stick with their hard assets.
If you are interested in investing in silver, bars and coins are one of the ways to do it. You can purchase them and keep them at home or a bank safe. There are different types of coins with slightly different prices, as the silver purity differs. You need to keep in mind that when buying coins or bars, you are paying an extra fee for the fabrication of said bars/coins. This has to be no higher than 16% for coins and 5% for bars. Other options to invest in silver, without actually having to keep it at your home, are exchange traded products like CFDs, vanilla options trading, EFTs, binaries and certificates of silver ownership. Ask your investment consultant for the best option for your needs.