The narrative around silver has changed. Last year supply shortages pushed demand higher while in 2018 both supply and demand are falling. Some say there’s a “silver surplus” which could be keeping prices down, but the price of silver may in fact have more to do with a surplus of paper silver compared to existing silver bullion supplies.Despite the change in trends, most investors still have bullish views in the long-term for silver and that’s because silver remains under-priced. The average silver-gold ratio for the past decade has been around 65:1, meaning the cost of 65 ounces of silver would equal 1 ounce of gold. The historical ratio has been closer to 14:1, but right now, it stands at 75:1. Increased demand from the energy sector and a market correction could step in to change the direction silver’s going.
Demand for silver from industry has been falling, but so has supply. There’s also a very good chance that solar power could be key to growing silver demand from the energy sector. Fossil fuels are running out and both governments and industry across the globe are investing heavily in renewable energy. A key part of the renewable energy mix is solar power. Silver, which already plays an important role in electronics, is essential in the manufacturing of solar panels. Silver is one of the best metals for electrical and thermal conductivity, which means it’s ideal in photovoltaic cells. A typical solar panel requires 20 grams of silver, or two-thirds of an ounce of silver. Unless a suitable silver substitute is found, solar panels are just one more source of demand on a shrinking supply of the precious metal.
Silver to Bounce Back in Market Correction
The first few weeks of 2018 alone proved investors are jittery about the market. The S&P and Dow Jones have been rocky since and it shows that investors are expecting a long-term correction. When markets go through turmoil, investors seek out fear assets, i.e., options that resist inflation or that don’t lose value when markets crash. The flight to precious metals drives the price of silver and gold upward.
Investing in Silver Coins and Bars
With all signs pointing to silver’s undervaluation, it’s time to find out how to make money off silver coins and bars. Physical silver bullion is the safest and most straightforward way to invest in silver. You can buy silver coins individually or in stacks or you can buy silver bars. There are a few things you should know about buying silver coins for investments:
1. Buy silver coins from sources like the Royal Canadian Mint or U.S. Mint. Mints won’t sell them directly to consumers, but you can buy them through silver dealers like Silver Gold Bull. It’s the safest way to avoid counterfeit products and buy silver coins that are strictly silver bullion.
2. Avoid silver collectibles if you’re an investor. There are hundreds of silver coins out there for silver collectors who enjoy buying real silver bullion and collecting rare or artistically interesting silver. These will cost more for the same amount of silver and you will only be able to sell them to other collectors if you want to recoup your costs.
3. Work with a silver dealer with deep liquidity. One online silver dealer with deep liquidity is Silver Gold Bull, which both sells and buys silver. You know that as an investor, sometimes you also need to sell your assets to rebalance your portfolio. Make sure it’s easy.
Silver is on track to correct its undervaluation. You can earn big if you invest in silver at the right time.