Guide to Investing in Silver – Chapter 2: Starting out as a Silver Investor

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Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 2 out of 15. Read the rest: Read Guide to Investing in Silver – Chapter 1: Introduction The majority of people are unaware of how

Guide to Investing in Silver – Chapter 2: Starting out as a Silver Investor

This is chapter number 2 out of 15. Read the rest:

Read Guide to Investing in Silver – Chapter 1: Introduction

The majority of people are unaware of how healthy silver as an investment has been during the last few years. Its value has increased over 400% since the turn of the new millennium. Although the value of gold has also increased as well, its percentage increase in value is not as great as silver. Due to this fact, many investors are turning their interest to silver now.

It also costs more for an investor to begin investmenting in gold. Your initial capital for gold is substantially more than for silver. In order for your investment to be lucrative, your gains need to be as high as a few thousand dollars an ounce- whereas with silver, the cost to gain ratio is comparatively more attractive. Thus, if you are a novice trader in precious metals, it would be best that you consider silver first. With the favorable cost to rewards ratio, silver is an ideal investment for a novice to protect his wealth against inflation.

Nevertheless, you have to bear in mind that as with all investments, there are no guarantees. You still need to know what are your limits and the silver market before jumping into it.

Silver, unlike gold, has a high industrial demand. It has diverse uses in the electronic industries, film-making industry, tableware and jewelry. For its numerous uses, its demand is more flexible and hence also offers a more elastic price. Gold prices due its limited global demand have more limited price elasticity.

Thus, while the prices of silver may trail that of gold as items of “storehouses of wealth” (Investment demand), the industrial demand for silver plays a strong part in influencing its price as well. Technological innovation has always been one of the main factors which cause the demand to increase or decrease. For example, the role which silver plays in the making of photographic films has been made obsolete by the emergent of filmless digital cameras. This has directly caused the demand of silver to drop.

At the same time, as countries around becomes more affluent, this has caused a rising middle class whose appetite for electrical products is insatiable. As mentioned earlier, silver is used in the electronic industries and naturally the demand for silver goes up. Today, as the world becomes more environmentally conscious, the demand for clean energy has fuelled the growth of energy efficient batteries. This has also influenced the demand for silver as it is one of the components used in batteries.

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Table of Contents

Intro

Intro