Silver, an Industrial and Precious Metal Worth Investing In

A couple of years ago, investing in precious metals like gold, silver and copper came with the decidedly un-sexy label of “safety first.” Today, that moniker has been replaced and investing in the metals asset class is not just safe anymore, it’s downright essential. In this article we’ll look at some of the recent activity for silver and analyze reasons why silver, as both an industrial and precious metal, is a good fundamental bet.

The recent spot price for silver dipped Monday to $13.89 an ounce as an uptick in the dollar dipped the price of gold, the investment anchor for silver investors. Silver rebounded to $14.04 Tuesday, June 30th. For the rest of the week, the markets should be mixed because of the approaching U.S. holiday. A return from vacations could spell good news for silver.

To anticipate price changes in silver, it’s common to keep an eye on two things: the fluctuations of gold prices, and inflation fears. But to really focus in on the long-term direction of silver, instead be aware of financial indicators of a recovering economy, and copper. Some metals analysts believe more inflation means strong silver prices.

One could make a good living hedging silver, but if you’re serious about precious metals, you will want to always be responsive to supply, demand and the applications being employed for the use of silver in the marketplace. Silver is one of the scarcest metals on the planet, and yet it is also known as an “industrial metal.” It is used in everything from computers to tooth filings. This means that as the world economy recovers so will silver.

Not convinced? On its website, The Silver Institute, the “Worldwide Association of Silver Miners, Refiners, Fabricators and Manufacturers,” lists the most common and current applications for silver - www.silverinstitute.org/silver_uses.php. There are literally thousands of products manufactured each year that require silver. The Silver Institute divides silver demand into what it calls the “three main pillars” of demand:

1. Traditional – coinage, photography, jewelry, silverware
2. Industrial – batteries, bearings, soldering, catalysts, electronics
3. Emerging – medical devices, mirrors, solar, water purification

The Silver Institute should be a vital research tool for all metals investors. SI maintains extensive price history information and market trends analysis dating back to 1950. The understanding of historical pricing and the analysis that goes along with that pricing helps to sharpen your edge as an investor. What’s most notable from SI’s website is the fluctuations of silver prices in the 1970s when oil shortages and economic fears helped to create a panic for all commodities, including silver where prices spiked to over $20 an ounce.

Based in Washington, DC and as the lobbyist for the silver community, The Silver Institute identifies several time-honored reasons for investing in silver which include enduring value, precious metals status, industrial metals status and financial stability, all positive incentives for acquiring silver. Short-term speculators have their own reasons.

As mentioned, silver will recover in concert with the recovery of the global economy. If you look at price charts for the past few months for oil & gas, and other mineral indices, you’ll see that commodity prices are healthy in comparison to 2008.

Price changes for silver have historically aligned with gold during economic difficulties. However, this is because of silver’s status as a precious metal. But silver has evolved and its variety of industrial uses has vaulted its status as an “industrial metal” and giving it importance in the global economy.

This means that in the near future, silver will be less aligned with gold movements and instead track the price of copper more accurately, especially with the recuperation of world economies. So look for silver increasing in value as the world recovers from the freefall of 2008.