The price of gold and silver typically trade within a range of 20-70 ounces of silver to one ounce of gold. This ratio is often used by traders as a determining factor in deciding when it is best to move from gold to silver or from silver to gold. When the ratio nears 70, investors begin buying silver and selling gold. When it nears 20, investors begin to sell silver and buy gold. Call National Gold Group today for an in-depth analysis of the current gold to silver ratio.
Benefits of Silver
Many investors are beginning to diversify with silver
Silver is often overlooked as a possible investment because it is overshadowed by gold, but in actuality, investors who invest in silver enjoy many of the same benefits as those investing in gold. Like gold, many have turned to silver as a hedge against inflation and the declining dollar. Although silver currently isn’t as valuable as gold, it still has a similar history of both stability and growth. The fact that silver is currently far less expensive than gold also gives investors the unique opportunity to invest relatively small amounts of money and receive substantial quantities of metal.
Silvers bright future
Unlike gold, silver is an industrial metal with an abundance of uses. Because gold is hardly used for any industrial purposes, it is well known that almost all of the gold that has ever been extracted is still around. On the other hand, much of the silver that has been mined has been consumed and is irrecoverable.
The industrial demand for silver is so great that since 1990, silver production has consistently fallen short of demand. As such, western governments have greatly reduced their holdings of silver, so much so that they can no longer be a major influence on its price. Whereas national banks can still control worldwide gold trade and gold pricing, the price of silver will come to depend mainly upon the laws of supply and demand.
Not only have production and secondary recovery failed to meet demand each year for the past fifteen years, but aboveground reserves are also in critically short supply. Some analysts say that supply will fall far short of meeting demand over the next decade, and that the price of silver will rise drastically as a result. According to accepted statistics, there is more gold in the vaults of the world’s central banks than there is silver aboveground.
Uses for silver
Demand for silver is built on three main pillars: industrial and decorative uses, photography, and jewelry & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2007, 455.5 million ounces of silver were used for industrial applications, while over 128 million ounces of silver were committed to the photographic sector, 163.4 million ounces were consumed in the jewelry market, and 58.8 million ounces were used in the silverware market.
Why is this indispensable metal in such demand? The reasons are simple. Silver has a number of unique properties—namely, strength, malleability, electrical and thermal conductivity, sensitivity and high reflectivity of light, and the ability to endure extreme temperature ranges. Silver’s unique properties restrict its substitution in most applications.