Why should I be investing in silver instead of 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. 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. Gold tends not to be discarded and is mainly used in the manufacture of jewelry and some high-tech electronics. Mostly, though, it is utilized as a storehouse of wealth which, for the most part, simply gets 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. 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.

The fact that silver 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 a myriad of industrial applications. Examples include electronics, such as cell phones, circuit boards, plasma television sets, GPS units, laptops, personal computers, automobiles, super-conductors and virtually every conceivable electronic gadget one can imagine.



The medical field is also utilizing silver in 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 silver 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.

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" 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 the cheapest, safest and most profitable way of investing in silver is to purchase, store and insure the actual silver bullion itself. Whether you buy rounds, bars, or even one thousand ounce "bricks" of 99.99% investment-grade silver, you never have to worry that your investment in any precious metal will be devalued, debased, or monetized (unlike the U.S dollar and all assets based on the dollar).

No government can print any of the precious metals, ensuring that owning them is one of the best hedges you can have against inflation, deflation, stagflation and most importantly, hyper-inflation. 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 such as China, who, until very recently, have prohibited their citizens from owning silver. Now, they not only allow their citizenry to purchase the silver but are actually encouraging them to do so. They are also sharply limiting the amount of silver that is exported every year.

There are many reasons for investing in silver but 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. 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 that actually provide the investor with a sense of certainty at a time when uncertainty seems to plague just about every other investment.

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