Silver - The Poor Man's Gold
The idiom of putting all your eggs in a single basket is not considered to be a prudent proposition when it comes to investment planning. Portfolio diversification has always been the key mantra to mitigate the risks involved and minimize the volatility level. A galore of metals such as gold, platinum, copper and nickel have already gained traction in the league of prospective investment options, however, another alluring metal which is gaining rapid traction in this sphere is Silver.
With the virtue of being a moderately priced metal, it has emerged as a preferred choice of people both as an ornament and a bullion investment, thereby widely known as the poor man's Gold. In context to it, here we have compiled a list of significant reasons on why one should invest his funds in silver for yielding substantial returns.
An Affordable Source
Needless to say, Silver is highly affordable compared to gold, platinum and other precious metals and thus, investors can accumulate more amount of silver than other options by investing the same amount of money. This significant perquisite will certainly make it more acceptable for the small investors.
Positive Correlation with Inflation
Silver has earned wide fame as a potential hedging option against inflation. Inflation typically relates to a situation when the value of paper money decreases without any influence by the anatomy of metals. During this phase, the astute investors generally try to utilize their asset in the form of silver which, is known to hold their position unscratched against times of economic upheaval, while positively correlating with inflation.
Potential Option for Asset Diversification
Another key advantage of investing your funds in silver is it will work as a viable portfolio diversifying solution for mitigating various sorts of monetary, geopolitical and systemic risks. Alike gold, it boasts a store value and has successfully retained its importance in the financial market over a substantial period of time. Recent studies have underlined the fact that; silver belongs to a unique asset class which, features a negative correlation with other significant asset classes including government bonds or stocks. This, in turn, undeniably makes it a prospective investment option for the uncertain times.
Growth in Industrial Usage
Ranging from machines to jewellery, solar panels to batteries, a wide spectrum of industries deploy huge amounts of silver for manufacturing and production of goods. Certain advantageous characteristics of silver including high thermal and electrical conductivity, ductility, malleability, it is treated as a metal of high utility in the industrial sector.
The Gold-Silver Ratio Encourages More Investment in Silver
As recorded on 25th Sep 2018, the Gold-to-Silver ratio was been recorded at a high of 84.39:1. This piece of vital stats signifies that an investor can purchase 1 ounce of gold by spending 84.39 ounces of silver. Since the introduction of this measure, it has been considered as a crucial means of evaluating whether to invest in gold or silver at a given point of time. A higher ratio indicates that; silver was being undervalued than gold whereas, a lower ratio will indicate the vice versa. Thus, considering the aforementioned current rate, it can be comprehended that an investor can gain significant upside potential in purchasing silver at the present market price of silver.
An Explicit Hard Asset
Encircled by a myriad of trailblazing financial instruments including currency creation, paper profits and digital trading, physical silver stands as a valuable tangible hedge against all types of malicious cyber crime and hacking, as it can be kept absolutely private and confidential. It undeniably features a great deal of accessibility and can be carried all the time, everywhere and anywhere you want to (though ideally it's not recommended).
An Asset that Outplays Gold in the Bullish Market
Compared to other prized metals, silver represents a smaller market as because a little inflow or outflow of money within the industry can bring a significant price fluctuation in its market price. Thus, it features a high degree of volatility which, further emphasizes on the fact that, the price of silver reduces to a more extent compared to gold in a bearish market. On the contrary, its price will rapidly soar up in comparison to gold as well.
Growth in World Demand
Demand for silver in the global scenario is growing at a rapid rate. Typically, all the significant government mints have experienced a whopping record of sales, especially in India and China. Being noted as the behemoth silver markets worldwide, both these nations herald an enriched history of cultural inclination towards treasured metals and since, the population is growing, it is expected that their appetite will continue to grow indeed. As records have shown, the growth in demand for silver has increased to a rate of more than 600% during the period of 2006-2016 in India. Apart from the aforementioned, USA, Africa, Europe and countries in the Middle East are also experiencing a steep rise in demand for silver during the recent times.
The price of Silver depends on a series of factors including market speculations, currency fluctuations, purchasing power, current events and more. Considering the steady increase in silver prices for the past few years, investing in this metal has emerged as a profitable venture for the investors. However, before making the final call, it is certainly important to evaluate all its favorable as well as unfavorable aspects thoroughly as making a skeptical move would not only help you in gaining significant returns but, also pass over the pitfalls meticulously.