Although silver
prices took a beating the past week or so, it’s still a great time to invest
in the precious commodity. For the week ending March 1st of 2013, “silver ETFs added nearly
68 metric tons (mt) to their position. That brought the total silver held
within 110 metric tons (mt) of an all-time record.” Changing investor
preferences are displayed in these reports of physical movements. The high
demand for American Silver Eagle coins from the U.S. mint also continues at a
rapid pace. February’s sales, although not as strong as January’s, were still
a very strong 3,369,500 ounces. Silver is seen to be on the rebound once
again, bouncing back from last week’s lows of $22 an ounce to $23.49 an ounce
and rising. Silver investment is more speculative than gold investment, but
there are a number of reasons that silver remains a better buy than ever
before, and therefore worth the tumultuous “ride.” The following are some
good reasons to invest in silver now:
Silver is cheap – it’s down more than 40% from its high of one year ago.
More quantitative easing – as the Federal Reserve prints, devaluation of
the dollar will make precious metal investment more valuable.
Silver is indispensable – its unique properties make it a major input to
industry.
Another indicator of silver’s value is shown by observing the present
“Bull Market” and its general patterns. Recurring economic cycles can help to
provide a roadmap to savvy investors indicating when it is advisable to buy,
to sell, or when to “sit tight” and hold steady. These cycles are often
referred to as the “3 Phases of the Bull Market.” In many types of
markets, the bull market is an “up market,” resulting from “prosperous economic conditions, such as higher
incomes, low unemployment, high profitability and productivity, and strong
consumer confidence.” Conversely, a precious metals bull market usually
occurs on the downside of economic conditions – during times of high
unemployment, low wages, high price inflation, and low consumer confidence.
People tend to be in “panic-mode” during these times, and often they turn to
precious metals such as gold and silver as a manner in which to “preserve and increase wealth conditions” when outside
forces seem determined to rob them of their wealth and security.
Generally, the first phase of the bull market begins at the bottom of the
“trough,” or the time period following a major economic downturn, as that
which occurred worldwide in 2008. Most people at this stage are “shell
shocked” by recent catastrophic economic conditions. This is the time when “smart money gets into the market, while few have
the stomach for it.” Those who enter the market at this stage are often the
ones who reap the highest rewards. During the second phase, economic
conditions begin to brighten, and the more cautious members of the public see
an upward trend and begin investing again. This phase is historically the
longest-lasting phase of a bull market and the phase in which prices increase
the most dramatically. The third phase is when the market “shoots for the moon.” This is a relatively brief
period when the masses “pile on” to what they think are the best investments,
eager to reap the rewards of the next greatest thing. “A lucky few may catch a quick ride up; the sad reality is
that when the fall begins, few will realize it’s time to get off but will
instead cling to futile hope for a return to past highs.”
Many analysts are putting the current precious metals bull market squarely
in the second phase, the phase when many in the public are just beginning to
become aware of the really good “deals” out there. “Phase 2” alone is an
excellent reason to buy precious metals, most notably, silver. As the demand
for silver currently rises, its value will greatly increase, and investors
who have the perception to buy silver now should do very well. Silver is
relatively cheap, and is also an excellent safeguard against any impending
inflation. As previously stated, the Federal Reserve is currently printing
money at an unprecedented rate, which is an activity that historically is
always followed by runaway price inflation. If the crash does come, gold and
silver owners will be in possession of “real money” as paper currency becomes
worthless. Now may be the best time to buy silver!
