Monday, April 22, 2024

Value in Gold and Silver Investments

June 15, 2010 by  
Filed under Silver Investment Basics

Precious metals, most especially gold and silver, are very good investment options especially during these trying times of economic climate. You may have observed how unstable the market can be, no matter how stable it may seem outside, and it can crash down with barely a warning. Gold and silver trading can narrow down the risk.

No one can really tell the future, but while it seems that the economy is ‘recovering,’ there still seems to be a potential for a long-term inflation, with currencies plummeting down to dangerous levels. It is up to you to decide whether to play it safe by learning how to invest in precious metals, or take the risk of getting a huge damage in your portfolio, and your future, when another economic crisis strikes.

Gold is a rare resource that is continually being depleted. It has been used as a currency all through out the centuries, and has proved itself to be resistant to economic crisis worldwide. When the market crashed, gold was able to avoid having its value from crashing down together with it. This stability is why government and many others that have the capacity to retain gold hoard it for their own security.

How about silver? Is silver as special as gold, or is it only second when it comes to value? Similar to gold, silver has also been used as a currency and was able to weather through economic crises through out the centuries. However a key difference between the metals is that silver is consumed through its many industrial uses. While the global supply of gold has remained almost constant, the global supply of silver has dwindled from an estimated 30-40 billion ounces to only a few billion ounces over the last century.

While there are many options when it comes to trading gold and silver, the best option for most investors remains physical bullion. Futures trading requires a large amount of risk capital and can introduce risks from using leverage. Mining stocks can also be very profitable for you and usually the first step most beginners take to trading precious metals, but it is not always secured since it is dependent also on decisions of corporate regulations. This can be either good or bad for you. During the 2008 crash, miners fell much further and faster than gold and silver bullion.

Silver is a lot more practical in trading for several reasons, including:

First, and perhaps most important for many people who are beginners, silver costs less than gold. This makes it easier for you to purchase a lot more to trade for later.

Second, silver, as mentioned previously, is used in a variety of industries, making it more in demand than gold, which does not really have any practical application, except as ornaments. In the last few years, demand for silver for many industries increased. It will be easier to trade silver because it is needed, than gold that is simply wanted or desired.

Third, silver, like gold, is also a rare commodity. The increase in demand without enough supply will increase the value of silver far more than gold. Add to that the fact that silver production mines are starting to decrease and you can see the vast potential.

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