Silver is an excellent option for diversifying investments. Silver is usually bought and sold in the form of coins, jewelry, bullion, or bars. Investing in silver results in a tangible physical object that can be held, transferred, and stored with no obligations to or from a financial institution.
1. Intrinsic Value
Silver possesses intrinsic value, which means it is valuable in and of itself. Paper currency is known as fiat paper. This means that it is a currency issued by a government without any physical commodity backing up its value. The value of fiat paper, stocks, bonds, and even bank accounts relies on complex interactions of countless factors within the economy and society overall.
An economic recession can devastate investments, and inflation affects the value of the currency. Paper assets must be guaranteed by other parties. Investing in silver transforms wealth from paper assets into a hard asset. Silver has a positive correlation with inflation, so it gains value as the currency loses value.
2. Ease of Liquidation and Value in Unstable Markets
Silver is easily liquidated. There is always a market for silver, so it can be sold and converted to currency quickly if an emergency arises. Historically, silver is known for losing value faster than gold in bear markets, but silver also gains value faster than gold in bull markets. The ratio of losses and gains isn’t equal. Silver gains value faster than gold and other commodities during periods of economic instability. Silver prices grew by 3,900% during the economic crisis in the 1970s, while gold prices grew by 2,500%.
3. Long-term Stability
The long-term value of silver is almost guaranteed. Although silver ceased to be a form of legal tender when the silver standard ended, it has functioned as money in various societies for over 4,000 years. Some nations still produce collector’s coins and mint bullion with nominal values. Silver coins can be used to barter for goods and services regardless of economic conditions.
Although the chances of a breakdown in society are very slim, silver coins would be the ideal form of wealth in such circumstances. A complete breakdown isn’t actually necessary for silver coins to become a commonly used currency. Paper money only has value if people believe it does. Turmoil domestically or abroad can lead to mistrust of paper currency and doubts concerning the economy overall.
4. Silver Is Affordable
The value of silver fluctuates depending on speculation, supply, and demand. These factors affect any commodity, but the silver market is smaller and more volatile than gold markets. This can actually be a huge advantage. Silver is more affordable than gold, so it offers an opportunity to invest with smaller amounts of capital. Buying when the value is down can lead to significant profits when silver markets improve.
Silver is also more useful as a currency than gold. The lower value of silver makes it easier to break and use for purchases. It is also much easier to sell a small amount of silver to cover an unexpected expense. Some commodities face limits on buying or selling depending on the item and various circumstances, but no limitations apply to silver.
Silver jewelry is currently experiencing a surge of popularity, although it has always been stylish and desirable. Many precious and semi-precious stones are best served by silver settings, and silver is an excellent canvas for intricate designs and filigree. Silver is hypoallergenic and less expensive than gold or platinum.
Silver is more durable than gold, and silver jewelry pieces can become family heirlooms passed from generation to generation. Silver jewelry is also a form of wealth. The silver holds its value, and it can be melted down into bullion or bars if necessary.
6. Silver Is a Staple in Electronics
Silver is the best thermal and electrical conductor out of every known metal. It is the most effective coating material for electrical contacts. Silver is malleable enough to form into thin sheets or wires, and it is exceptionally resistant to corrosion or oxidation. Almost every computer, mobile device, household appliance, and vehicle contains silver.
The push for renewable and efficient energy sources will continue to grow, and demand for silver will grow right along with it. Silver is an essential component of solar panels. Silver oxide batteries are lighter and last 40% longer than lithium-ion or mercury-based batteries. These batteries are used in watches, hearing aids, digital cameras, cell phones, and many other devices.
7. Silver’s Shining Future in Healthcare
Lesser known uses for silver include wound care and medications. Silver is an excellent anti-microbial. Antibiotic-resistant bacteria are a huge concern for healthcare providers worldwide. Fungal infections that don’t respond to traditional medications are another emerging threat. Anti-fungal treatments are very harsh and often pose a risk to people and animals.
Silver is used in wound care products to treat or prevent fungal and bacterial infections in wounds without harming the host. Silver will become even more valuable in the medical field as resistant bacteria and fungal organisms spread around the globe.
8. Silver Is a Finite Resource
Silver’s unique properties and use in diverse industries create constant demand, but the supply of silver is limited. Studies conducted by the Silver Institute have found that most easily accessible sources of silver have already been depleted. Silver used to be mined in the same fashion as other metals, but now only 25-33% of new silver comes from traditional mines. Silver is usually obtained as a byproduct of mining operations targeted at other metals.
The expense of silver mining contributes to a cycle of low prices followed by less production. When silver prices fall, mines have to cut back production. The loss of production is often accompanied by a halt in exploration to find more silver deposits. When silver prices recover and value increases again, the lack of new silver and a dearth of new sources drive price gains even higher.
9. Silver Has Poor Recycling Returns
Silver recovered from scrap and recycling was once a reliable source as well. Silver used to be essential to photography. Most modern photography doesn’t require silver anymore, so old film and equipment were scrapped to recover the silver content. Silver used in modern electronics is much more difficult to recover.
Each circuit board or device uses a minuscule amount of silver. Recycling electronics is expensive, time-consuming, and polluting. Many methods of recovering precious metals from electronics involve harsh acids and toxic byproducts.
The adverse effects on health and environmental issues can be avoided with proper precautions and appropriate facilities, but operating such facilities is expensive. It isn’t economically feasible, in most cases, to recover silver from electronics because the amount in a single device is so small.
The history of silver as a commodity and its market performance are good reasons for investment. Current use of silver across a diverse range of industries offer even more reasons to invest. Paper assets rise and fall with nations and economies, but silver’s value stands alone. Silver investments are beneficial to experienced investors and new investors alike.
9 Reasons Silver Is a Promising Investment
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