Silver: The Best-Kept Secret in the Investment World?

Silver: The Best-Kept Secret in the Investment World?

You already know that gold is a great investment, especially considering recent talk of possible negative interest rates.

But have you considered silver?

We tend to think of silver as second best. After all, nobody says “Go for the silver” when they’re encouraging you to do your best! But when it comes to investing in hard assets, silver shouldn’t be considered second-rate.

In fact, experts predict a dramatic increase in the price of silver in 2020.1 Silver tends to lag behind gold, and the price of gold went up by 18% last year.2 Since silver tends to follow its gold counterpart, there is good reason to expect a similar jump in silver prices in the near future.

Not only that but there are several factors that play into the projected rise of silver prices, many of which don’t have anything to do with gold:

  1. In a Precious Metal Bull Market, Silver Outshines Gold. During the bull market of 1970–80, silver gained 3,105% and gold gained 2,328%. Again between 2008–2011, silver gained a whopping 448% compared with gold’s 166%.3

  1. Global Demand for Silver Is Growing. The demand is increasing worldwide but China and India are particularly silver hungry. In the year 2000, China’s silver demand was less than 50 million ounces. In 2016, the demand had risen to over 200 million ounces!
  1. Global Supply of Silver Is Shrinking. While demand is growing, the supply of silver is doing the opposite. Government stockpiles of silver topped 170 million ounces in 1996, and in 2015 they weighed in at under 50 million ounces. In addition to that, after a fall in the price of silver in 2011, silver mining was cut dramatically. Today, there is considerably less silver being mined than there was a decade ago.
  • Industrial Use of Silver Is Skyrocketing. While we often think of silver as being used in jewelry, its use in industry has been steadily increasing. It’s used in touchscreens, batteries, LED chips, semiconductors and solar panels. With the rise in demand of electronic devices, silver will continue to be a necessity.
  1. The Gold/Silver Ratio Currently Favors Silver. The gold/silver ratio is calculated by determining how many ounces of silver it would take to purchase an ounce of gold. Anything over 70 makes silver a good buy, and at the time of this writing, the ratio was 88.24.

Silver is a far more volatile commodity than gold, which is an important consideration. However, it’s an exciting possibility for anyone who wants to invest in hard assets… and the fact that its price does vary means that there are some excellent opportunities to acquire it at “bargain basement” prices.

In fact, Robert Kiyosaki says that he began investing in 1964 when he started collecting silver coins. Although his collection of silver coins met with a bad end (his mother unknowingly spent them at face value while Robert was away at college), he is still a huge fan of silver… he and his wife bought their first home with silver ingots. Today, he’s been announcing to everyone who will listen, “I am investing in silver.”4 It’s a window, he says, that’s open for the time being and an opportunity that won’t always be this good.

How do you invest in silver? Generally speaking, the same dos and don’ts that we outlined in this article about investing in gold apply.

As always, do your research and act prudently… but when Robert Kiyosaki5 says, “In my opinion, silver is the most undervalued, lowest-risk, best investment of all asset classes,” I for one am inclined to listen!

With purpose,

Patrick Gentempo