Here is the second part in a two part article on the reasons for buying silver bullion.
We continue with our list of the top 12 reasons for buying silver bullion today.
Here are the final 6 reasons.
7. Industrial metal
Silver is an industrial metal which ensures an additional demand component to gold. Silver has hundreds of industrial and medical applications – as the best conductor of electricity it’s used in switches, medicine, batteries, plastics solar cells, water purification, computers, cars etc. There is furthermore a continuous growth in the applications for silver.
8. Silver is cheaper than gold – the “common man’s” gold
Silver is cheaper than gold and is often referred to as the common man’s gold. Even if the price of gold recently has fallen just below $1400, it’s still considered as being too expensive for many. Silver on the other hand currently has a price in the $22.30’s area, which makes it much more affordable.
9. Silver is still not well known as an investment
Silver, similar to gold, is still not a mainstream investment. For most people, owning silver in paper form is uncommon, not to mentioned actually buying physical silver bullion. Securities such as bonds and stocks are the dominating asset classes for the majority of investors. When it comes to physical gold and silver we are instead flooded with advertisements to sell them at cheap prices. Once this trend is reversed it will add a strong catalyst for rising silver prices.
10. Silver has more price potential than gold
Silver prices are more volatile than gold prices in general, which can work to both your advantage and disadvantage in the short term. The silver price has increased with approximately 19% per annum since 2002 – gold by 15% per annum. If you buy silver bullion today, with the drivers for all precious metals being so strong, silver can offer you a very attractive potential, and “pick-up” to gold, over the coming years.
11. Silver is undervalued compared to gold
One ounce of gold currently buys 61 ounces of silver. Over the years this ratio has varied a lot. Since 1687 it’s been between 14.4 and 99.76. During this period the average gold to silver ratio was 27.28. In 2011, when silver peaked just below 50 the ratio was at its lowest since 1983, at a level of 32. This means that silver in relation to gold was at its priciest point for 30 years.
Since the beginning of the 1990s silver has been on a rise versus gold, thereby decreasing the ratio, so the overall trend is that silver is appreciating versus gold. If silver was to return to it’s historical average, with a ratio of between 17:1 and 27.28:1, the silver price would be between $50-$81 (given a gold price per ounce of $1379). That leaves room for a significant price increase from the current level.
12. Significant risk in silver paper market
The explosion of silver (and gold) ETF’s over the recent years have made precious metals much more accessible for investors. The characteristics of these instruments should not be confused with the characteristics that define physical silver bullion though. The “paper instruments” have an inherent risk as they rarely have actual ownership of all the metals in their exposure. They don’t provide full allocation and would thus, in a real time of crisis, not provide the same level of security and insurance as physical bullion would. “Paper silver” is more suited for speculation. Buying silver bullion on the other hand provides one of the best crisis hedges that one can own.
If you are looking at buying silver bullion then choosing a location where silver bullion can be purchased free of VAT will ensure that you get the cheapest silver bullion. Two premier locations and distributors are outlined below.
Please click below to access the best bullion distributors
BullionStar.com Singapore – cheapest bullion
Liberty Silver Estonia – cheapest bullion