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.
