Commodities Silver Prices
Future of the Silver Market
Top Guidelines and Insights on the Future of the Silver Market as a Foundation for Investment Planning
The upsurge of silver bodes well for the future of the metal as a keystone for investment planning. The resource is an unusual asset in that it plays a vital role as a precious metal as well as an industrial commodity. On one hand, investors like to amass silver as a storehouse of wealth in times of inflation in the economy or turmoil in the society. On the other hand, silver also serves as a raw material in products ranging from trophies to microcircuits. This primer presents a coherent picture of the driving forces and likely movements in the marketplace over the decades to come. The pointers are accompanied by the insights of some of the brightest minds in the financial arena. In addition, a roundup of online content serves as a launching pad for further exploration and evaluation of the silver market.
The silver market has come to play an increasing role in investment planning. After wallowing in the doldrums for a couple of decades, the white metal perked up around the dawn of the millennium.
Granted, silver fell into a funk during the financial crisis of 2008 in tandem with a global recession. Even so, the metal has regained its mettle once more in tune with the general recovery in the global economy.
During a groundswell in the marketplace, the equities of large producers of silver, also known as the majors, are wont to recover first. The advance of the stalwarts is followed in due course by the uplift of smallish firms, otherwise known as the minors.
The investor ought to keep in mind that silver is akin to gold in a number of ways; yet the two assets exhibit a potpourri of distinct traits as well. Both the similarities and differences play crucial roles in the interaction of market forces over a prolonged cycle that spans the course of several decades.
Links between Silver and Gold
One common trait between silver and gold lies in the bondage of prices in the marketplace. More precisely, the white metal is wont to follow in the footsteps of its golden counterpart.
During an upswing in the market for raw materials, silver tends to lag the advance of gold with a delay of several months or even years. On the other hand, the upsurge of the white metal is apt to be more explosive in terms of the percentage change in price when it does finally arise.
Another point of distinction lies in the fact that silver plays a major role in the industrial segment as well as the financial arena. In commercial products, the applications of silver span the gamut from coatings in cutlery and fillings in dentistry to conductors in electronics and catalysts in chemistry. The white metal is also used as fodder for coinage and has served as a standard medium of payment since at least the dawn of history.
By way of comparison, the main function of gold is the embodiment of wealth squirreled away in a safe place somewhere. As a rule, the yellow metal is too valuable to be used in exchange for mundane transactions such as buying a glass of juice or a pair of socks.
Another distinction lies in the fact that the white metal is an industrial commodity that gets used up over time. As an example, the smidgen of silver that goes into an electronic device is destined for the trash bin - along with the rest of the defunct gadget - at the end of the product life cycle.
On the other hand, gold is largely conserved in the economy. More precisely, any scrap of gold in a pile of junk is likely to be salvaged and reclaimed by the owner.
Due to this custom, the total amount of gold in the global economy is largely conserved. In other words, the supply of the yellow metal is stable even in the absence of fresh supplies dug out of the earth.
In contrast, a given storehouse of silver dwindles over time as it is used up in industrial applications and cast away with dumped products. For this reason, a constant stream of production is required just to keep up with a stable level of demand.
To round up, silver resembles gold in a variety of ways but displays a bunch of distinct traits as well. Both the similarities and differences are crucial in grasping the interplay between supply and demand over a market cycle that spans the course of several decades.
Preview of the Silver Market
In a number of ways, the outlook for the silver market is even brighter than that of gold. One reason for the cheery presage stems from the use of the white metal as a raw material during the greatest build-out of infrastructure in the history of the planet.
Another factor springs from the retail end of the chain of production. Along with the bloom of the emerging regions, a horde of consumers is piling into the global marketplace for the first time. With bulging wallets, the newcomers by the billions demand their share of upscale products - ranging from fancy goblets to mobile phones - that contain the white metal.
It goes without saying that the market for silver will not vault skyward in a single straight line. Rather, the upward trek will be erratic and confounding. In sketching out the likely path of the market, the savvy investor has to keep track of the secular trends as well as the cyclic patterns in the forum.
This article presents a cogent picture of silver as a keystone of investment strategy for the decades to come. The guidelines are accompanied by the insights of some of the brightest minds in the financial forum. In addition, a roundup of resources on the Web serves as a launching pad for further information and analysis of the silver market.
Long Wave of the Silver Market
Silver is part and parcel of the market for natural resources. As with other raw materials, the white metal follows a lengthy cycle that spans the course of several decades.
The video below (Sept. 2009) spotlights the long reach of the silver cycle. Another theme is the recognition of the potential for growth by the heavyweights in the financial forum. An example of the latter is the celebrated investor Warren Buffett.
Demand for Silver via Consumption and Investment
Whenever the global economy blossoms, the surging demand for natural resources - including precious metals - drives up the price of silver. When the economy falters, the governments of the world prints up more money; the upshot is to prompt investors to seek refuge in silver as a store of value amid rampant inflation.
As noted earlier, silver is an uncommon resource in that it plays a vital role as a precious metal as well as an industrial commodity. As with gold, investors like to hold on to silver as a trove of wealth in times of inflation or turmoil. Unlike gold, however, silver is also used as an ingredient in products ranging from utensils to batteries.
The emerging nations of the globe will continue to pursue their programs of modernization and industrialization. The Great Buildup involves the sweeping expansion of infrastructure along with the wholesale transformation of lifestyles. Against this backdrop, the demand for silver will burgeon at an unprecedented rate during the first half of the 21st century.
Marc Faber of the Gloom, Boom & Doom Report likes to point out that China alone uses up more raw materials than the U.S. or other advanced economies. The take-up of resources is compounded by a similar upsurge in India, Vietnam and other countries.
Since silver is a staple of industrial applications and commercial products as well as a precious metal, the material will be propelled by a tidal wave of demand over the decades to come. These and kindred issues are discussed in an interview. The following video (Oct. 2009) is the first of three parts.
Silver Trailing behind Gold
Silver tends to lag behind gold during an upswing in the commodity cycle. If gold is the king of metals, then silver must be the queen. Like the royalty of olden times, the queen bee is wont to follow the kingpin sooner or later.
In the wake of a surge in gold, investors and speculators alike cast about for additional engines of profit. An obvious target for their quest is the white metal.
The market for silver happens to be much smaller than that of gold. For this reason, even a couple of percent of the money funneled into the golden niche can set the white metal on fire. Not surprisingly, the upshoot of silver when it occurs in due course is apt to be explosive.
An incisive analysis of the relationships between the royal metals is given in the following article.
Explosive Potential for Silver
Although silver tends to trail behind gold on the upswing, its moves are more dramatic. For this reason, the cycles of feast and famine apply even more to the white metal than its golden counterpart.
Legendary investor Jim Rogers is bullish on commodities of all types including silver. In the following interview (Nov. 2009), he points out that silver is far below its peak of roughly $49 attained in 1980. By contrast, gold has already surpassed its peak in terms of nominal dollars.
For these and other reasons, the outlook for silver is even brighter than that of gold during the latest upswing in the commodity cycle. The clip below is the first of two modules.
Minor Impact of Scrap Silver on the Market
As the market for silver gathers steam, a fresh source of supply will saunter into the picture. In particular, the owners of existing assets such as silver jewelry will take advantage of the swollen price by selling off part of their holdings.
Based on prior run-ups in the forum, however, the amount of scrap silver streaming into the marketplace is apt to be limited. In that case, the impact of the lofty price on the supply of silver will be modest.
A benchmark of the mining industry is an enterprise named Silver Standard Resources Inc. Working out of its base in Vancouver, Canada, the company develops mineral properties containing silver as well as other metals in countries ranging from Argentina and Australia to Peru and the United States.
In an interview, Robert A. Quartermain - the head of Silver Standard - notes that a modicum of scrap silver will come on the market as the price of the metal rises. Even so, the amounts coming on stream will be too limited to have a major impact on the constrained supply in relation to the surging demand. The following clip (Aug. 2009) is the second in a set of 3 modules.
Silver to Outshine Gold
The price of silver tends to be more volatile than that of gold. If gold climbs, silver will soar even higher in relative terms as a multiple of the crunched price at the previous trough of the market cycle.
Unlike gold, large amounts of silver are consumed in a plethora of industrial applications. Moreover, roughly half of the fresh supply coming into the market goes toward industrial applications. In this setting, the demand is slated to balloon as the economy burgeons throughout the globe.
David Morgan, publisher of The Morgan Report, is a beacon of the market for silver and gold. In an interview (Oct. 2009), he talks about a number of key issues for the investor.
The topics include the benefits of low-risk vehicles such as physical silver. Another item is the advantage of high gain coupled with low risk afforded by the cash-rich majors in the mining industry. The clip below is the first of two parts.
Roundup of Pointers
A primary force behind the upsurge of silver is the far-reaching program of modernization and industrialization throughout the world. The Great Buildup involves the massive expansion of infrastructure and as well as the nascent tsunami of consumption by newborn entrants to the global economy. For these reasons, the demand for silver will continue to grow by leaps and bounds during the first half of the 21st century.
Naturally, the market will not soar skyward in a single lunge nor a straight line. Rather, the ascent is sure to be erratic and baffling for all the participants the bulk of the time. Yet the behavior of the marketplace will not be entirely random or whimsical.
In charting the likely path of the metal, the savvy investor has to consider the secular trends as well as the cyclic patterns in the marketplace. The guidelines and insights presented here should serve as a trusty foundation for thrashing out a cogent program of investment planning for the silver market over the long haul.
Further Information
An article at Wikipedia provides a survey of silver and its applications. The article is linked below in the Resources section.
Another write-up at Wikipedia offers an introduction to silver as a target for investment. One of the topics is a lineup of exchange traded funds: a class of instruments which could be the vehicle of choice for the majority of investors. The article is linked below.
As noted earlier, silver is part and parcel of the panoply of raw materials. For this reason, the white metal participates in the commodity cycle which plays out its role over the course of several decades. This phenomenon, along with related issues, is discussed at greater length in a set of articles titled, Market Cycles. A link to the suite is given below.
Ted Butler is known for his expertise in precious metals including silver and gold. His dope of choice is the Commitments of Traders (COT): a report issued in the U.S. by the Commodity Futures Trading Commission (CFTC). The bulletin provides information on the respective positions of speculators and other players that deal with futures contracts.
Given the thrust of his activities, the remarks by Ted Butler tend to focus on the short range. For this reason, the bulk of his insights are more applicable to the trader than the investor.
Even so, the analyst is sanguine about the prospects for silver over the long haul. In the following interview (Nov. 2009), he avers that when gold goes to the Moon, silver will fly beyond the Solar System. The salient remark is given in the clip below.
The excerpt presents the second half of the interview. It would be helpful for the listener to begin with the first half of the session; the starter module is accessible from the Web page shown below.
A grasp of the forces and waves in the marketplace is all fine and good. However, most people would also want to know how to take advantage of the movements in the forum.
Happily, a practical approach to the forum is available in an article called "How to Invest in the Silver Market: Guide to Investment Planning". A link to the write-up is provided below.
Resources on the Web
How to Invest in the Silver Market: Guide to Investment Planning - Article at eHow.
Market Cycles - Collection at Knol.
Silver - Article at Wikipedia.
Silver as an Investment - Article at Wikipedia.
Ted Butler - Silver will Leave the Solar System, Part 2 - Video at YouTube.
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