Silver Prices Are On The Rebound
When most individuals think about investing in precious metals, typically thoughts of gold come into their mind. Gold has been the traditional precious metal investment, with most investors having more understanding and familiarity with the shiny yellow metal. However, in recent years, silver has gained popularity around the world as being possibly the choice metal for investments. In spite of the down market for precious metals earlier this year, silver prices today have rebounded and are currently trading at around $23/oz. Many analysts expect the bullish trend for silver will continue into the $40/oz mark by the end of the year and even hit as high as $60/oz by 2014.
There are several catalysts for silver that make the metal even more appealing than gold. These include:
- Demand for silver coins: one of the major demands for silver is primarily within the coin market. This year alone in the U.S. there were 31 million ounces of silver coins sold compared with 2012 where only 33.7 million ounces were sold all/year. In the remaining months of 2013, silver sales are expected to well exceed those of 2012. The Canadian Mint has experienced silver coins flying out of their stores anytime the metal takes a slight dip in price. The managing director of sales for bullion, refinery, and Exchange-Traded products made the comment: “Year-to-date, after the second quarter, we’ve had record volume for silver Maple Leafs, the greatest we’ve had in the over 25 years that we’ve produced them.
- Covering Short Positions: In recent years, many hedge funds have anticipated serious downturns for silver and have taken a significant number of short positions in silver. As prices rise, they will be quick to cover those positions, which will give the prices an even greater catalyst to rise higher.
- Investor Interest Will Drive Silver Prices: Another significant catalyst for silver prices is the overall investor interest in silver. Not only here in the U.S. but also in India, we’ve seen investor interest increase. India has recently attributed their economies struggles to investor interest in gold. As a result they have tagged gold with restrictions and tariffs making it more difficult to import. Indian investors have since turned their interest towards silver as a replacement of gold. In second quarter, silver sales in India rose 259% to 857 metric tons. 857 tons is 1/3rd of the world’s silver production for a month. In July 275 metric tons were imported, which is the second-highest monthly import in the last five years.
- Solar Panels And Other Technology Creating Demand For Silver: One other very significant catalyst for silver is the rising manufacturing demand. For example, silver is a vital component to solar panels. From 2002-2011, the demand for silver usage in solar panels grew from one million ounces to 60 million ounces. As the world looks for greener and less expensive energy sources, this demand will continue to rise. China and Japan have recently caught the excitement, and have raised their targets for solar energy by 67%. The demand from the solar energy project in just China and Japan alone will consume 11% of the world’s silver supply. Silver is also a vital component in medicine for its antimicrobial properties, and in cell phones, clean water technology and other significant products, all of which will contribute to rising silver demand.
Due to silver’s many functions and properties, silver stands to be far more profitable than gold and many other investments in the very near future. For more information about the tremendous upside of silver as an investment, speak to a Redhawk Wealth Advisor near you today.