At the time this is blog post was written, the top silver headline was: “Silver Hits Lowest Price Since March 2010.” Not a very comforting piece of news for you silver bugs out there, we know—but also, unfortunately, not that surprising either.
We aren’t going to sugarcoat it, silver—as with the rest of the precious metals market—has taken quite a beating the last few weeks thanks to the rallying U.S. dollar and the eminent threat of the Fed raising interest rates sooner than expected. In spite of September being a historically strong month for precious metals, not to mention global tension in the Middle East and Ukraine, silver traded at a low of $17.07 an ounce on the last day of a brutal quarter.
But before you lose heart, we wanted to point out a few optimistic indicators that, while times may seem tough for precious metals investors right now, the outlook on silver actually doesn’t look so bleak after all, and may in fact be outshining gold in some areas.
Nowhere to Go But Up
Since there is always the possibility that gold will keep dropping, many investors are speculating on whether or not silver will be dragged down with it. It has been so far, and certainly could continue to do so. However, market analysts think not—the primary reason being because silver has already been crunched, leaving little room to fall further.
The international price of gold currently sits at 69 times the price of silver—significantly higher than the 10-year average of 58:1. What’s more, while gold has fallen nearly 35% since its high, silver has plummeted almost 60%. Domestically, gold’s decline by about 6% pales in comparison to silver’s more severe correction of 10.48%.
The bad news: silver may be bottoming out. The good news: there’s only one way left to go!
Rising Industrial Demand
Another factor that many analysts believe will cushion silver from taking as big of a hit as gold is industrial demand. Unlike gold, which is primarily used as jewelry or for investment purposes, silver is commonly used in a wide range of industries, from common household electronics to medicine and energy.
In particular, silver is a fundamental component in manufacturing photovoltaic solar panels—a sector that promises substantial growth in the coming years (see our prior post on silver’s use in solar energy). As industrial demand rises and production decreases, the scales are expected to tip in favor of silver.
A Buying Opportunity
In summary, we are facing record low silver prices amidst unprecedented industrial demand. So what does this mean? The discerning investor will immediately see a buying opportunity, since these factors make the appreciation potential of silver much greater than that of gold.
So for those willing to take a chance on silver, now may be the best time to take the plunge. The only way to ensure that you can acquire silver at today’s prices is to buy it sooner rather than later.
Peruse our inventory of silver bullion coins, bars and rounds to take advantage of these exceptionally low spot prices.
My reaction is the opposite of the “silver bugs”–I want silver to go down in price. Silver is silver. What? You want to pay more for it?
My father for years used to buy silver coins in Mexico, he was paying about $3 dollars per coin, he used to tell me buy silver, because one day the price of silver is going to double NOW we paying for one oz $16 dollars, I have been buying silver for while and I believed the price of silver is going to double soon every nation is printing paper just to get out of death
Silver going to 10 or lower over next 5 years DEFLATION will kick its ass and everything else!
Deflation??.. When China, Russia and India are done purchasing all the gold they can get their hands on, and the world drops the petro dollar… All the fiat printed dollars will be coming home to roost, and we’ll be lucky if we can buy a loaf of bread for $50.. And then we’ll get to see the real value of precious metals.
With the cost of mining silver at roughly $18.50 per ounce, the decline has to stop! There are already like 6 mining companies that stopped mining and selling their supplies till silver rebounds.I am putting all my marbles in the silver basket!
I’ve heard the saying, “gold will protect your wealth, but silver will make you rich!” I don’t have wealth right now, but I’m definitely buying silver, and you should be too. This is a great post, and the bottom line is that silver has no choice but to go up. Not to mention that the gold-to-silver ratio points to silver all the way! This is a no-brainer, buy silver even if its just 1 or 2 oz a week. All of my birthday and holiday gifts to my family will be silver rounds. Happy stacking!!