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Wednesday, March 10, 2010

Silver a better investment then Gold

The essential dispute 'tween gold and silver is that gold is held by most any area as a stabilization device for their currency. thus, gold has a unique status; governments tend to proceed the gold monetary value stable or shape it by keeping or trading deposits. Moreover, gold is treated differently for taxation, being tax free in some countries. In the event of silver in some properties the buyer has to pay up taxes when buying silver - an sum that will be lost when selling. This has to be seen in profit deliberations.

As gold is a great and tried shape of investment, and there is still a huge price difference between gold and silver, it could be suspect if silver really could become an efficient investment to return profit. Only one kilo of gold today is worth as much as about 50 kilos of silver.

The serious is in how much silver and gold will be available in the upcoming, and thus if increasing silver and gold prices could persist in the same relationship as today.

The important difference compared to gold is that silver is used every day in numerous areas, from stamp batteries to space shuttles, from pharmaceutics and medicine to solar panels and simple electric switches, a great numerate of wares in our every day's life require and use silver. Also there is a very low silver left in deposits and natural sources.

In contrast, gold is barely utilized for industrial functions. National banks still retain large amounts of gold in order to check international gold trade and gold pricing. In the case of silver, western governments have reduced their deposits so far they won't be able to have a major determine on price stability or development. During coming years, silver prices will mainly depend on the market laws of supply and demand. As we have seen, demand is increasing with the growing ask of high end electronics and highly-developed wares which contain silver and supply is reducing.

Silver, as we've learned, largely is not held in governmental deposits as money coverage, so price is almost totally regulated by the market.

Both silver and gold are very reliable attractive investments during crisis. Silver, as the "low man's gold" is much more attainable for small investors. Not every investor is able to buy reasonable amounts of gold. Silver can be bought by almost anybody. So, demand of silver coins and smaller bars will increase in times when people seek to save the value of their money. Both silver and gold save values in an inflationary process, so both are attractive in those times.

Although we're used to quite low silver prices, there have been historical silver peaks of about $806 dollars an ounce and gold price raised up to $2400 - a ratio of almost 1:3. The lowest gold cost has been listed in the year 1919 at $20.70 an ounce. So it is not impossible at all that silver prices could explode with an increasing demand of industry, small investors looking for value, and new investors looking for the signs of the times. Considering the true accessible amount of silver compared to gold, it is possible and very likely that silver prices could overtake gold.

In the 18th century, the silver cost ratio had been fixed to gold by some governments, such as the USA and France: at that time, the ratio was 1:15, which meant one ounce of gold equals fifteen ounces of silver.

In the 20th century, gold prices increased far faster than silver prices, and the ratio became about 1:50. Since 2004 silver prices are rising constantly because of economic demand by industry and investors.

So obviously, today's monetary value structure of gold and silver has not been historically stable nor can it expect to be in the future.

For the last 15 years, silver demand is above production. So far, governmental deposits have been feeding the lack, but are close to or already exhausted. Nowadays, countries are holding very small quantities of silver, and probably won't be able to balance the market for long.

Let's have a deeper look into today's silver demand:

In the year 2007, world silver demand has been detailed as follows (Silverbook 2007):

ETF's (Exchange Traded Funds): 2,147t
Coins: 248t
Jewelry and Silverware: 8,801t
Industry: 25,561t

So we can see, the great demand is from industry; silver crafting, funds and the coin market together don't consume even half of the silver which industries use every year. As highly-developed branches like solar energy, electronics and other important silver consumers are increasing, demand will probably be even higher in the near future.

There are very some reasons why you should focus on silver and not on gold when it comes to investing in precious metals. In this chapter I'll talk to you more about that, and we will cover a few lessons that will hopefully explain to you why silver is a bargain right now and you should bias your investments towards silver and less gold. Obviously, if you have a chance to buy gold at a really good cost, then go for it. We will not talk in this chapter about the exceptions where someone just gets a enlarged bargain in gold or digs up nuggets for free. Instead we will focus on general principles and rules that should be predictable.

More expensive.

The first reason why I think you should go for silver instead of gold is that gold is simply more expensive. Sure, your profit margin is going to be greater, but right now you will get a lot more silver for your money than gold and we've already suggested that silver is likely to overtake gold in value at some point probably during your lifetime.

Less scarce.

I know that when you invest a lot of money into something the reason that "everyone is doing it" might not be a strong enough reason for you. But that's not why I'm telling you that everyone is buying silver. The reason why I'm mentioning this is that as more people look around and realize the reality of the current situation they're starting to see this opportunity and buy silver now, and that means that the price of silver will go through the roof very dramatically and very quickly. Silver will become more and more wanted and people will just go crazier about it. many of the big investment companies as well as wealthy individuals that people listen to, numerous thought leaders in the industry encourage people to go out and buy silver.

What do you think is going to happen if everyone starts buying silver? You are right, they're just going to increase the prices.

The great affair right now is that silver is very cheap, and you can get it at pretty much bargain prices. Silver is a worthy metal and it will get high-priced sooner or later. The thing is, the sooner you realize that, the sooner you're going to start committing in it and the sooner you'll be taking money with it. Of course it's not my aim to convert you to spend your money on , only I want to make a point that you picture the situation so that you can make an wise decision as to how to use your money to the highest degree effectively.

Silver prices grow more speedily than gold.

Other matter that is really main to visualize when it falls to silver prices is that they grow more rapidly and more steadily than the monetary value of gold. For instance, it was accomplishable to buy an ounce of silver for $7 in 2005, now an ounce of silver prices anywhere between $17 and $18. That is the cost for it as of now. In merely 5 years, silver increased its value by 100 percent. I 'm unaware of numerous chances to commit money that will generate 100 percent profit after five years of essentially doing nada. Remember, that you don't have to do work to increase the value of silver. All you have to do is purchase when it's cheap, and deal in a few years.


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