Silver Shines Strong when Investing in Precious Metals

Filed Under Investment Management.

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There is perhaps no more trusted and dependable conveyance of wealth accoutrements than that among precious metals.  Be it gold, silver, platinum or palladium, investing in precious metals as opposed to paper instruments such as bonds and bills brings with it a peace of mind that cannot be found among the schemes of a fiat economy.

Even so, there can be found an exuberant – many would dare say dizzying – dynamic at work among something deemed as stable as precious metals.  Consider the recent roller-coaster taken by the gold market: within less than a year the cost of gold per ounce has dropped $600 to a July price of $1,200.  Analysts put the blame for the short-term instability on a combination of mass importing of gold into China and India, commercial uncertainty about mining operations, and gold itself as a sentimental display of material wealth.

Platinum and palladium are also in flux at this time.  Valued as much for their place in manufacturing as for their use in fine jewelry and medical instruments, platinum and palladium have become something of a headache for those short-term investing in precious metals.  What was projected to be an upward spike in platinum and palladium prices has instead become a sinkhole.  The erosion beneath can be traced to a less-than-anticipated need for palladium from European industry and continuing labor disputes at the mines in South Africa where most of the world’s platinum and palladium is excavated.

Silver Lining Playbook

At this present time, silver as an avenue of investing in precious metals is being seen as a remarkably resilient asset for 2013 and beyond.  In many ways silver is the perfect “happy medium” of the precious metals.  It maintains its historical value as a coined, crafted and ingoted commodity alongside gold.  However, silver has for quite some time also found countless applications in commercial industry.  Personal computers, phones, photography and pharmaceuticals: each of these areas and many more are reliant upon silver, either as a pure metal or as one of its compounds.  The industrial consumption of silver has risen 50% during the past decade and as countries with developing manufacturing capacities bring those facilities online, the value of silver is poised to soar even higher.

Of course, most of those investing in precious metals will not be taking into account silver’s wonderful conducting properties or the applications of silver nitrate.  They will be far more intrigued by silver as a traditional means of material wealth: especially in a period of austerity, voluntary or otherwise.  Silver as an incarnate store of affluence is as honored by time and custom as gold, if not of equal value.  Nonetheless, silver is still renowned for holding its own value as a tangible, easy-to-use and readily negotiable asset.  That it is considerably less in value than gold has ironically made silver a more tempting entry point for those investing in precious metals.  Being it that a Silver American Eagle can be found for $24 while a Gold American Eagle can set a person back $1,400, and one quickly assesses that silver is the layman’s choice for getting involved with the precious metals market.

The Long and Short of It

As with investing in precious metals across the board at this time, the market for silver can be seen as one to enter now and keep holding for the long term.  Although not as skittish as that of platinum and palladium, the silver trade has long paralleled gold in terms of market performance.  This owes as much to investor psychology as it does to concrete supply and demand.

However, there are few who would argue that silver is not a sound addition to any portfolio.  And any consideration in regard to investing in precious metals would be wise to look at silver as a significant portion of one’s array of assets.

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