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Silver Investing

Discover The Full Potential Of Silver Investing

It is hard to imagine a better time to invest in silver than right now. While the media effervesces with promises of recovery, rising prices and stagnating wages continue to erode the purchasing power of everyday Americans. Interest rates remain unrealistically low, eating away at our life savings. And for those of us who have always trusted in the long-term stability of stocks, we fear a stock market whose mood swings have grown manic.

We seem to be trapped in a vicious cycle of false hope while the dark cloud of economic uncertainty hovering over us grows ever more ominous. On the edge of the cloud, however, a bright silver lining illuminates the path to a better future.

Don’t Settle for Just Staying Afloat

People aren’t asking for much these days in terms of explosive portfolio growth. Just being able to break free of the weight that has been pulling us under would be a welcome relief. But we need not resign ourselves to merely treading water.

The troubles that we now face are not as diverse as they may appear. At the root of them all is the unavoidable decay of fiat money. Replace that with real money, and things get better.

Like gold, silver is real money, its value anchored to scarcity and universal desirability. By itself, that is reason enough to invest in silver. A much more compelling reason, however, stems from the extraordinary potential for profit and growth that exists in the silver market today.

To fully appreciate the magnitude of that potential, we need only to examine silver’s supply and demand.

Silver Supply and Demand

In regards to silver, one might reasonably conclude that the law of supply and demand has been repealed. For nearly a quarter of a century the price of silver has been well below that which the law would seem to dictate.

The low price of silver compared to other precious metals is much to blame for the incongruity. For one thing, the low price makes price manipulation much easier for big money and governments. For another, it makes silver accessible to vast numbers of casual and poorly-informed investors. Because they act primarily on emotions and as a pack, they exert significant and unpredictable pressure on the market.

Nonetheless, such influences account for only short-term volatility. Eventually the fundamentals must take over, and silver is long overdue for a correction.

Rising Demand and Dwindling Supply

The very fact that silver has been consistently undervalued for decades has curtailed production and brought exploration to a virtual standstill. In addition, three quarters of the annual supply of silver is produced as a byproduct of copper, lead, and zinc mining operations. The price of silver must therefore rise substantially to make it cost effective for those operations to boost production.

Finally, because most of the silver produced is irrecoverably consumed, there is no vast above-ground reserve to buffer supply. For comparison, gold reserves are 100 times greater than those of silver.

Meanwhile, demand for silver has risen substantially with the emergence of major new economies. In fact, supply has lagged demand for more than 20 years. With nothing to drive increased production, it is not surprising that silver reserves are rapidly disappearing.

We are approaching the point where there simply will be insufficient silver to meet demand. If that were allowed to happen, silver would become a runaway market that no power on Earth could control. Fortunately, that is unlikely to happen.

Restraints on the silver price have been stretched to their limit and a breakout is inevitable. Exactly when that will happen is uncertain, but a few key trends strongly suggest that it will be in the very near future.

The Trends in Silver Prices

Silver Prices From 2000 Chart

The Potential for Short-Term Profits
Long-term trends are an invaluable tool for making investment decisions. This chart of silver prices since the turn of the century gives us many important clues:

Dramatic shifts away from the trend in either direction indicate exceptional opportunities for short-term profit. Speculation bears greater risk, of course, but for many investors the prospects for profit far outweigh the risk.

For example, if you purchased silver when prices turned around in December of 2008, and sold your investment before the price peaked in March of 2011, you would have realized an annualized return of 55%. If you timed the market perfectly, you would have made a whopping 450% profit in just 30 months.

While such opportunities are easy to spot when looking at historical data, most household investors lack the extensive market knowledge, constant vigilance, and years of experience necessary to successfully time their trades. For that they must rely on the expertise and personal commitment of a trusted investment partner such as the Certified Gold Exchange.

The Potential for Long-Term Growth

Most household investors, however, are looking for long-term security and growth. One practical and effective strategy to that end is dollar cost averaging.

With this method the investor purchases a fixed dollar amount of silver each month and holds the silver for several years. The only exception to the regimen is when the current price is significantly above the trend, in which case the cash is set aside to invest when the price returns to an acceptable level.

If, for example, you purchased $100 worth of silver every month from 2000 through 2012, your $15,600 investment would have grown to more than $58,000 – an average annual return of 19% over the entire period.

Clues to the Future

While long-term trends are essential to making month-to-month investment decisions, it is in the deviations from the average and in the spread between monthly highs and lows that clues to exceptional opportunity are to be found.

Looking again at the chart above, it is clear that silver prices languished below the trend for nearly a decade. Each year the spread widened, indicating that market corrections were being constrained. The upsurge that began in 2009 was not a bubble as was widely claimed, but rather a thwarted correction.
According to this near-term trend, the silver price should be close to $45 by the end of the year while the long-term trend pegs it closer to $30. That is an enormous difference, and it is indicative of a market that is under strong upward pressure.

Further evidence of an impending breakout can be seen by comparing the long-term trend to that of the past few years:

Near Term Silver Prices Chart

Further evidence of that pressure is revealed by another key indicator: the gold-silver ratio.

The Gold-Silver Ratio

The gold-silver ratio is typically defined as the price of gold divided by the price of silver. It is more illustrative, however, to think of it as the number of ounces of silver it takes to buy one ounce of gold.

For centuries both gold and silver circulated as currency, during which time the ratio varied only slightly, between 10 and 12 to 1. In modern times the ratio edged up to around 16 to 1, roughly equivalent to their relative abundance in nature. It remained there until the early 1970s, when the gold standard was abandoned and price controls on gold were lifted.

This chart tells the rest of the story:

Gold Silver Ratio Chart

Initially it looked as though the gold-silver ratio was settling at 30 to 1, but it nosedived with the Hunt brothers’ notorious attempt to corner the silver market in 1980. Controls on silver trade were instituted to prevent a recurrence of the attempt, and from then on the ratio seems to have been dominated by gold’s wild ride.

However, the spike in silver prices resulting from the Hunt coup merely brought the ratio back its historical level. It is equally plausible – if not more so – that varying degrees of silver price control implemented over subsequent years is responsible for the volatility in the gold-silver ratio.

Regardless of that volatility, we see that the ratio is not only much higher than would be expected, its trend is climbing inexplicably.

At a ratio of 30 to 1, the price of silver today would be close to $45 – right where the near-term trend puts it. In all likelihood it should be much lower, as the fundamentals suggest.

Even the most conservative analysis must conclude that the silver price is far lower than that which the market demands. That creates an unusually promising opportunity for silver investment, and the silver products readily available today make it possible for every investor to take advantage of it.

A Summary of Silver Investment Products

As it is with all precious metal investment, maximum benefit can be realized only through possession of physical silver. For that you have the choice of either silver bullion or rare silver coins.

Silver Bullion Products

Silver bullion comes in three basic forms: bars, rounds, and legal tender coins.

  • Silver Bullion Bars. These ingots of pure silver are the most basic form of bullion and as such carry the lowest premium. Bars produced by the world’s most highly respected refiners such as Johnson-Matthey and Engelhard are extremely liquid worldwide. Bars are produced in a broad range of weights to suit every budget and investment goal.
  • Silver Bullion Rounds. Although the term bullion rounds is commonly used for everything from privately minted commemoratives to pre-1965 US coinage, only blanks produced for official mintage, such as those of Sunshine Minting, are deemed to be of investment grade.
  • Silver Bullion Legal Tender Coins. Nearly every nation strikes silver bullion coins, which are legal tender and guaranteed by the government for their weight and purity. Of those, the American Silver Eagle and the Canadian Silver Maple Leaf are the top choice of investors by far. The Eagle is favored for its exceptional beauty and the Maple Leaf for its purity of 99.99%.

Silver bullion products are ideally suited to short-term investment for profit. For long-term investments, rare silver coins present an attractive alternative.

Rare Silver Coins

Rare silver coins are those which have numismatic value in addition to that of their silver content. Numismatic value creates a second and independent avenue for investment returns, which both enhances their potential for long-term growth and insulates them from short-term market volatility.

Heavily traded coins are strongly recommended for investment. The US Morgan Silver Dollar and the Peace Silver Dollar have the ideal mix of liquidity and desirability necessary for optimal investment potential, which has made them perennial favorites worldwide.

A Trustworthy Conclusion

Today no other asset can match silver’s combination of bargain-basement prices and exceptional potential for explosive near-term growth. However, silver investment is not without pitfalls.

The first and most important decision you will make is the selection of an investment partner to guide you around the pitfalls and provide you with expert advice over the years to come.

The Certified Gold Exchange has led the household precious metal investment market for well over a decade. We earned our position through unwavering commitment to the success of our investment partners and we zealously protect our unblemished A+ BBB rating by dedicating ourselves to the total satisfaction of each and every customer.

There is no need to stay trapped in a cycle of empty promises and false hope. Let us help you break free so you can enjoy some well deserved peace of mind. Just call 1-800-300-0715 and ask to speak with one of our friendly staff or expert silver investment advisors.

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