Is investing in silver better then investing in gold?

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Answered by: Keith, An Expert in the Metals Investing Category
When it comes to investing in precious metals, investing in silver over the past decade has out-performed gold, percentage-wise, rather significantly. There are many reasons to believe it will continue to do so. One main reason is the supply. The global supply of gold is far greater then that of silver, one reason is that gold tends not to be discarded by individuals or industry because of it's high value. Also its industrial uses are rather limited, mainly being utilized in the manufacture of jewelry, some high-tech electronics, yet for the most part, it is used as a storehouse and preserver of wealth, which, usually just winds up getting shifted around from one vault to another.



The same cannot be said of silver, which gets discarded in significant amounts every single day, both by industry as well as individuals(consider for example how many cell phones you have gone through in the last decade!). Investing in silver makes even more sense when you consider that it is being consumed by industry at a higher rate then is being mined, making investing in silver more then just good common sense, it's makes good financial sense. For even if the price were to double, triple or even skyrocket beyond what most experts predict it will in the comming months or years, this increase would in no way prevent the industries that utilize the metal from purchacing it, as it is normally used in such small quantities that they would no doubt continue to purchace it(Example: If silver were to rise to $150 an ounce, the price of an average cell phone would rise by approximately $25. Not only would this price increase not deter most consumers from purchacing a new cell phone, it would likewise not deter a cell phone manufactuer from producing cell phones)one reason being that silver contains unique properties that cannot be reproduced or substitued by a cheaper alternative, making investing in silver a bargin by any standard at the current price.

The fact that silver currently is far cheaper to own per ounce then gold allows one to own vastly more ounces, thus achieving far greater profits from any upward movement in the price per ounce. Another main reason one should consider investing in silver is the global demand. Unlike gold, silver is utilized in myriad industrial applications. Examples include electronics; such as cell phones, circuit boards, plasma TV's, GPS units, laptops, automobiles, super-conductors and virtually every conceivable electronic gadget one can imagine.



The medical field is also utilizing silver in revolutionary ways like never before. Because of silver's unique anti-bacterial qualities, it is being woven into the very fabric of the garments worn by doctors and nurses as well as being mixed into the paint that is used to cover the floors, walls and ceilings of hospitals, clinics, operating rooms and other surgical facilities. Silver sulfadiazine is one example where a silver compound is used to treat patients by wrapping infected wounds in gauze bandages that are infused with this compound. There are many other medical uses for silver or silver by-products for treatment, most notably in burn centers where staving off infection is of paramount importance. It is also a unique and indispensible catylist in extensive chemical reactions, including, but not limited too, the purification of water.

Photography also consumes around forty-two percent of the above-ground supply of silver every year and although, investors account for only about eight percent of the demand for above ground supplies, most invest in what is usually termed, "paper silver" which is often used to describe such financial vehicles as ETF's, bank certificates, mining stocks, pooled accounts, etc.

What is not usually touted by those in the financial community is the fact that one of the cheapest, safest and most profitable way of investing in silver is to purchase, store and insure the actual silver bullion itself(perhaps one of the reasons they do not reccomend investing in silver is that they themselves in no way benefit financially?). Whether you buy minted coins, rounds, bars, or even one thousand ounce "bricks" of 99.99% investment-grade silver, you never have to worry that your investment in silver or any precious metal for that matter, will be devalued, debased, or monetized(unfortunately this cannot be said of the U.S dollar as well as all assets based on those dollars).

The U.S central bank(The Federal Reserve)obviously, cannot print any of the precious metals, ensuring that ownership of this asset class is by far one of the best hedges you can have to protect yourself and your family against inflation, deflation, stagflation and most importantly, hyper-inflation(a situation where fiat currencies, such as the USD, inflate at such a rapid rate that their purchacing power can be destroyed virtually overnight). Of all the precious metals one can choose to invest in, however, investing in silver will undoubtedly give you the most, "bang for your buck."

This fact has not escaped the notice of world powers, for example: China, who, until very recently, have prohibited their citizens from owning silver. Today however, they not only allow their citizenry to purchase the metal but actually encourage them to do so. They are also sharply limiting the amount of silver that they export every year, a signifigant factor considering they are the worlds third largest producer of the commodity.

There are many reasons for investing in silver, yet, the some of the best reasons for doing so, also happen to be the simplest to understand. The demand for the white metal is exponentially increasing every year, as the above-ground supply continues to dwindle at an ever-increasing rate since the late 1990s. This fact is evidenced within the price charts that cover the price of silver over last decade. Within the last ten years silver has gone from $5.00 an ounce to almost $50.00 an ounce, making investing in silver one of the most cost effective methods of participating in one of the few asset classes left that actually provide todays investor with a sense of certainty at a time when uncertainty seems to plague just about every other asset class.

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