"silver is the new gold"You've grown tired of hearing words like "inflation", "national debt", and "credit crisis". For years now, it's been hammered into your brain — the fact that your government has been writing checks it can't cash, and in the process, diluting every cent you've managed to store away in your savings account.
And for almost as long, you've probably been hearing financial advisors and so-called economic gurus telling you about how certain investments can protect you during these times of uncertainty.
Maybe you've even started to view the jewelry in your house more as currency than personal possessions.
Perhaps you've even thought about buying some gold yourself...
Well, let me stop you right there.
Gold is the most common method of storing and transferring wealth.
Although gold is historically the most prominent method of storing and transferring wealth, there's a reason why men like George Soros, Warren Buffett, and Bill Gates have invested heavily in its slightly less glamorous cousin...
I'm talking about silver.
Actually, there're a few reasons why right now — more than ever before — silver is not just the superior hedge against inflation… But a serious profit vehicle in its own right.
Looking for the best returns on your hard-earned money? Call up any market player and the advice you are likely to get is to invest in silver.
The precious metal has emerged as the best-performing asset both over the last 12 months as well as over the last five years, comfortably outpacing gold, the traditional favorite.
Over the last five years, silver has given a return of over 240%. Similarly, if you had bought silver worth Rs 100 a year ago, it would now be worth more than Rs 200. In contrast, gold has given a return of 150% over five years and 25% over the last 12 months.
Though it is off the highs seen, most analysts are predicting a further rise in prices over the next few months. Economic recovery has pushed demand and prices of commodities globally. But silver has outperformed almost all significant metals and has given returns that are higher than what the Sensex or crude petroleum would have earned over one year as well as over the last five years.
Why the silver price is set to soar
Supply demand mismatch
This is a very basic point, which is behind every price rise. Silver demand is more than silver supply, and thus the prices have been on a run. The Silver Institute, which tracks silver supply, reports that from 2000 to 2009 (the latest data available), the supply of silver went up to 709.6 million ounces, up from 591 million ounces. This shows an increase of around 2% per year.
Silver demand in 2009 stood at around 889 million ounces and the difference between supply and demand was largely met out of scrap sales. Given this, nearly 19% of silver demand is being meant out of scrap sale.
No recycling of silver
One way to increase supply is to recycle silver like gold has been over the years. Silver is largely used as an industrial metal. It is a very good conductor of electricity, the best heat transfer agent and reflector of light, a very good lubricant, catalyst and alloy. But it is used in very small amounts as an industrial metal. Given this, it is not easy to recycle silver.
New uses of silver
As mentioned earlier, silver has lots of industrial uses, given that it is the most malleable and ductile metal, after gold. Silver is currently used in electrical applications like conductors, switches, fuses etc. It is also used in photography, and silver alloys are used as cathodes in batteries. Interestingly, the new uses of silver keep growing.
As a bactericide, silver is used in water purification and air handling systems. Silver is also a natural biocide and is very effective against bacterial infections. New products using silver's biocidal qualities are being developed each year. Clothing, bandages, toothbrushes, door-knobs (flu-protection), keyboards, the list goes on growing.
All this will ensure the demand for silver keeps growing.
Significant and increasing investment demand
Investment demand for silver has also been rising rapidly the past few years with investors hedging themselves against rising inflation, possible currency devaluations and geopolitical and macroeconomic risk.
Moral of the story: BUY SILVER
How to Speculate in Silver
• Silver options and futures
• Silver ETF
• Silver mining stocks
• Spread bet silver