By Dane Thompson
Since 2008, the price of silver has increased significantly. At the time of writing, the cost of silver was $30.82, which is notable when compared to the material’s average price of about $11 in 2008. Many analysts now consider buying silver a safe investment, and savvy investors should consider the potential advantages of the highly conductive metal.
In order for a precious metal to be considered a good commodity and a worthy investment, it needs to be both useful and uncommon. Silver fits both of these requirements. It is a popular industrial material, and over the last decade, demand for silver in industrial applications rose dramatically.
Many manufacturers use silver in computers, cell phones and other high-tech products, so most analysts expect demand to rise steadily over the next several years. Because of silver’s excellent conductivity, it is highly unlikely that another material will take over demand in the same markets and industries.
While silver is not as scarce as some other precious metals, most notably gold, it is sufficiently scarce to create an investment opportunity for buyers. Mines currently produce about 751 million ounces of silver each year according to the Silver Institute.
About 256 million ounces of scrap silver are repurposed every year, and total demand exceeds 1040 million ounces. As demand continues to increase, manufacturers will likely face slight scarcity issues, which should increase the price of the material for investors.
Finally, investors should take the current state of the economy into account when deciding whether or not to invest in silver. During times of economic hardship, people often buy precious metals in order to protect themselves from sudden inflation, since precious metals keep their value fairly well.
While part of the increased demand for silver can be attributed to this type of protective buying, gold is a much more popular investment, and considering the increased demand for silver in industrial and commercial applications, many analysts believe that the current price of silver is not artificially high.
Ultimately, this means that silver is a potentially strong investment. The versatility and functionality of the metal makes it a valuable commodity, and investors should see a growing value over the next several years.
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