Guide to Investing in Silver – Chapter 13: Investment in Silver versus Gold

This is chapter number 13 out of 15. Read the rest:

Read Guide to Investing in Silver – Chapter 1: Introduction
Read Guide to Investing in Silver – Chapter 2: Starting out as a Silver Investor
Read Guide to Investing in Silver – Chapter 3: Silver as an Investment Vehicle
Read Guide to Investing in Silver – Chapter 4: Methods of investing in Silver
Read Guide to Investing in Silver – Chapter 5: Investing in Silver Bars
Read Guide to Investing in Silver – Chapter 6: Silver Coinage as an Investment
Read Guide to Investing in Silver – Chapter 7: Silver in Exchange Traded Funds (ETFs)
Read Guide to Investing in Silver – Chapter 8: Silver Mining Stocks
Read Guide to Investing in Silver – Chapter 9: Silver Mutual Funds
Read Guide to Investing in Silver – Chapter 10: Silver Futures
Read Guide to Investing in Silver – Chapter 11: Silver Certificates
Read Guide to Investing in Silver – Chapter 12: Comparison between various forms of Investment in Silver

The most common question among precious metals investors is whether to invest in silver or gold. Many prefer to invest in silver because silver has always provided a higher return than investment in gold. While on certain bull runs in the precious metal market, investment in gold might double whereas investments in silver had tripled at the same time. Furthermore, silver have a high industrial demand as compared to gold. The demand for silver is predicted to increase as more and more uses for this metal are being developed.

Industrial demand is one of the main reasons why the price of silver has remained strong. Since 1990, there has been a shortfall between industrial demand and production of silver. Even when you take into account secondary recovery of silver, there is a serious deficit on the supply side. Based on analysis conducted by the Group, aNew Yorkmetals consultancy, there was a 1.899.9 million ounces of shortfall between 1990 and 2003 between supply and demand of silver. When you take into account silver used for coinage, this shortfall increased to 2,214 million ounces.

With current shortfall in production and critically low above ground reserves of silver, analysts are predicting higher prices over the next decade as supply will continue to fail to meet demand for this versatile metal. There are also more gold reserves in the vaults of central banks around the world than the aboveground reserves of refined silver.

In 1995, Comex (the New York based commodity exchange), had 260 million troy ounces in its stock whereas today, the stock stand at around 100 million troy ounces. On the other side of the Atlantic, the silver inventories of London and Zurich was estimated to be 350 million troy ounces in 1991. Today, that inventory has fallen to 50 million troy ounces. In addition, the world governmental stock in 1980 was around 350 million troy ounces whereas today most Governments hardly hold any silver stock. These scenarios show how serious the shortfall in production had depleted the silver holdings around the world.

Lastly, when we talk about “real money” or “hard money”, gold will be the thing that comes to mind. Many are unaware that silver has been the more circulated form of “hard money” among the two precious metals. In theUS, gold has ceased to be circulated as legal tender since the 1933 Roosevelt’s call-in whereas silver coins were still minted as money until 1965.

Read Guide to Investing in Silver – Chapter 14: How to invest in Silver
Read Guide to Investing in Silver – Chapter 15: Conclusion