The Price of Silver — The Investor’s Dream

What every investor is looking for is something that will hold its own in bad times and forge ahead in good times. That’s easier said than done, but silver fulfils both criteria.

Silver’s Not Just for Jewellery

Silver has uses in a wide range of manufacturing components, from the wiring in your computer to developing film and photography. Manufacturing industries are hungry for silver, and that keeps the supply scarce and the price high.

The industrial demand for silver remains high even in a recession, since it’s used in many things we can’t do without. When the economy starts booming, manufacturing booms with it, and both demand and price climb even higher.

The Cure for Recession

The normal solution for recession in most countries teds to be one of two: to take on more debt, or to pump more money into the economy. Both solutions cure the short-term deflation caused by a recession, replacing it with an inflationary environment.

This is significant because, while banks can print more money, there’s no way of magically creating more silver. The result is that the currency is devalued against silver.

The Velocity of Money

The speed at which money moves through the economy is crucial in setting the price of everything from commodities to your weekly groceries. High velocity creates the illusion that there’s plenty of money around, leading to high spending and inflation.

This is crucial during the process of curing recession explained above. The infusion of cash speeds up the economy and raises the price of everything — including the price of silver.

A Reliable Investment

Unlike stocks and shares, metals such as silver tend to be seen as safe investments in poor economic climates. This means that they remain in demand, keeping their prices steady.

Although there may be some fall in the price of silver, it tends to be slight and short term. In the 2008 economic crisis, stocks dropped steadily to nearly 50% below their previous level, while silver only experienced a brief dip of 20% and recovered quickly.

Not bad for something that looks beautiful too.

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