Silver – The Cinderella of Investment

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An increasing number of analysts claim that silver is undervalued and they are bullish when speaking about silver’s potential gains over the next few years. Six interesting influences that underpin the future status of silver are not commonly known:

  1. Natural Below-ground Supplies: A number of indicators that confirm that silver mining production appears to be reaching its peak. According to the U.S. Geological Survey, only 18 billion ounces of extractable silver may be left in the earth’s crust. If this is indeed the case, there will not be enough to satisfy the steady increase in global demand. Just last year, the demand rose to a record 1,081 million ounces according to The Silver Institute’s World Silver Survey 2014. Although the increase in production of silver is significant, it has not kept pace with rising demand. This means that not only are we running out but silver as an element is actually vanishing.
  2. Above-ground Silver Inventories: The supply of mined silver that is already being used and consumed is diminishing rapidly. In 1980, available above-ground stockpiles were estimated to be 4 billion ounces – today’s, estimates place these stocks at between one and two billion ounces – the result of annual consumption exceeding supply over a number of years. Furthermore, industry continues to finds new ways to use silver, meaning that the depletion of silver inventories will accelerate. Unless alternatives are found, this will result a continuing long-term supply deficit, further exacerbating the supply and demand ratio.
  3. Global Consumer Demand: As one of the world’s main industrial metals, the global demand for silver is already high and it is increasing. Despite historic production increases though the 20th century, silver has been so extensively used that for the last several decades the world’s total silver supply has barely been able to keep up with demand. Between 1998 and 2007, demand for silver ramped to the extent that it was in a fully-fledged global deficit.

As the world’s best conductor of electricity and heat, best natural biocide, and best reflector of light, silver is required in a multitude of industrial, electrical, consumer, health, and energy-related applications critical to today’s modern economy. Basically, if something is “high-tech,” it contains silver.

  1. Recyclability: Unlike other metals, silver is consumed in very small increments, making recycling very difficult. This means that once silver is used, it is virtually irrecoverable – and effectively, lost forever. So much silver has been used up by industry that there is now actually more gold in the world than silver.

This chart shows a breakdown of silver consumption by sectors:

  1. Substitutes: Generally, silver is a relatively incidental cost in the products that incorporate it. Consequently, a dramatic increase in the price of silver will not necessarily force it to be substituted with a different element. Furthermore, any hint of shortages could cause industry users to start hoard the metal thus further depleting remaining availability.
  2. Investment Demand: Investors are also influencing the global silver scene – their demand is surging. Between 1990 to 2005, investors had been net sellers of silver. But in 2006, the market witnessed a major change in demand as the public again became net buyers. Government and private mints around the world like Metcon, have been producing coins and bars at record-setting levels. Save for recent decades, silver bars and coins have been used as money throughout human history and is in the process of reassuming that role. As faith in fiat currencies diminishes, savers and savvy investors worldwide are embracing gold and silver as a store of value.

Owning silver in South Africa:

Charlotte Crosse, Public Relations Manager at Metcon says:

“Demand for silver is rising and globally, the supply is not keeping pace. So Metcon has created an easy and secure solution for investors to own the metal. For those looking for a wealth-saving hedge, Metcon offer silver bars in 100g and I kg. Investors can either hold these bars longer-term to witness their growth in value. Conversely, they can make use of Metcon’s metal buy-back warranty through which we will repurchase any silver bars bought from Metcon at the current spot price, less 2%. This allows investors to convert their silver into immediate cash at a favourable rate.”

She adds that Metcon will also purchase silver bought from other sources, also at the current spot price less 2%, once the purity of the metal has been assessed.

Statistics seem to support that Silver is rapidly becoming the Cinderella of investment metals.

Whether you want to buy or you have silver for sale, connect with Melynda Ward at Met

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