When I first discovered why I should buy Silver
and protect myself from the coming devaluation of our currencies, it
still took me a few months to act because there is a lot of
misinformation surrounding this precious metal. This article will help
those that are still unsure about buying silver by laying out the facts
about what has been dubbed as perhaps the greatest investment
opportunity of our lifetime.
If you are paying attention you will have noticed that Gold
has been increasing steadily in value since the beginning of the last
decade. This trend is set to continue throughout this decade as smart
investors realize that gold is a protection against inflation and the
destruction of the purchasing power of all currencies.
If gold is set to rise, then shouldn't you be buying it? Perhaps, but many people believe that silver is a far better profit opportunity due to some astonishing fundamental reasons.
(1) The Gold-Silver ratio: Throughout history the
ratio between gold and silver has been in the range of 12:1 to 16:1.
What this means is that for every ounce of gold you would be able to
exchange it for 12 to 16 ounces of silver. This was generally the case
because there is approximately 12 to 16 times more silver in the earth's
crust than there is gold.
Although this ratio has remained quite constant, the current ratio is
50:1. With one ounce of gold you can currently buy a whopping 50 ounces
of silver. What this means is that silver is currently extremely
undervalued compared to gold. As gold gains in value over this coming
decade, silver will gain even more as the ratio of Silver to Gold
reverts to the mean. This provides a massive profit potential for those
that are informed. Here is a good resource to learn more about this
ratio -Silver to Gold Ratio.
(2) Above ground supply: In 1950 there was 10
billion available above ground ounces of silver. By 1980 that number
shrank to 3.5 billion ounces. Now in 2011 it is estimated that above
ground supply has dropped to approximately 500 million to 700 million
ounces.
The reason that the supply of silver is shrinking is because it has
become the second most used commodity in our society. Currently there
are around 10,000 applications for silver including but not limited to;
electronics, photography, jewelry, mirrors, and solar panels. The only
commodity with more applications is oil which currently has about 30,000
applications.
(3) Non-recyclable: Silver is used in 10,000
applications but almost all of these applications use microscopic
amounts of silver. For example most computers use approximately 1/10th
of an ounce of silver. At $30 per ounce that silver has a value of $3
and is thus not economically viable to retrieve. As a result most silver
is not-recycled and is lost to landfills forever. This only places more
pressure on the supply side.
In conclusion, most people are putting their cash into this precious
metal because of the coming inflation but there are many other reasons
for investing in silver such as the reasons listed above. As with any
investment there are risks that you should consider, so do your
homework, and good luck! ~Conor Hughes~
