Investing in Silver

I first starting learning about investing in silver back in 2002 before it started making its major leg up. The reason for investing in silver was because of little it had appreciated relative to other commodities over the years. I did a great deal of research and found that silver is an industrial commodity and also serves as a monetary investment. I found that companies did not exclusively mine for silver and that it was a by-product of base metals mining. I understood that the demand for silver wasn’t there because there was a great deal of supply.

The fundamental reasons for silver to gain strength presented themselves through the population booms in China and India. I’ve read stories how there is an extremely high short interest in silver (upwards of 300%) because it was so readily available for so many years and central banks have a direct incentive to keep the prices low to control prices. While there are still many long-term reasons to be bullish on the metal, only time will tell if the “Silver Bull Market” will continue its move.

If there was some major cause for a massive short squeeze in silver, prices could go up to $65/oz US based on inflation-adjusted price appreciation for gold. During bull markets silver actually tends to outperform gold, but expect volatility. Older silver dollars like Morgan Dollars, Peace Coins, Silver Eagles are great ways for passive investors to preserve value and diversify their assets. We will see how the dollar performs and if silver can decouple its performance from the dollar.