Investing in Silver - The Precious Metal That Will Protect Your Wealth

In these sad days of global economic destruction, financial bailouts and huge stock market losses it can be scary to think of what could happen to your money and wealth.

As major governments like the United States and the United Kingdom print dollars and pounds at world record speed one may wonder whether the paper money in their pocket is worth as much today as it was yesterday. Will my paper money be worth as much tomorrow as it is today?

The answer is NO.

Paper, or fiat, currency is worth only as much as the confidence society has in its issuing government. Do you believe that people around the world have a high degree of confidence in paper currencies right now with wave after wave of trillion dollar bailouts?

And more importantly, how high is the confidence in countries like the United States and the countries of the European Union in their abilities to pay off the TRILLIONS of dollars (or euros) of accumulated national debt that has been generated so far in the twenty-first century?

The only way that you or anyone else can protect the money you have worked so hard to save for yourself is to invest in assets that cannot be printed at will by a printing press (or produced by the stroke of a key on a keyboard). Precious metals in the form of coins, bullion, jewelry and assorted collectibles have a centuries old tradition of wealth preservation.

Up until the last few decades most transactions in the modern world were done with currencies backed by gold and/or silver. While the use of gold as money has been documented quite a bit over the years the use of silver both as money and as an asset to preserve wealth has not gotten as much attention.

Silver as an investment has an unfortunate history as a metal whose market price was often artificially manipulated. The most infamous episode occurred starting in 1973 when the Hunt Brothers of Texas unsuccessfully attempted to corner, or control, the silver market causing a steep spike in its spot price per ounce in 1980 to $49.45 per ounce.

Those days are over chiefly for two reasons. One, most markets (especially commodity markets) are now too big and liquid for any one entity to dominate. You can thank the mutual fund and exchange traded fund markets for this. These funds did not exist in nearly the same depth and capacity 30 years ago and the money that has been placed in them now amounts in the tens of billions of dollars.

Secondly, commodities (which include all precious metals) are considered a normal part of the portfolios of smaller investors. News and information about silver, for example, is provided throughout the day by dozens of financial websites and also by financial newspapers and magazines. Thirty years ago the Wall Street Journal and a few other professional sources were all an investor had to glean information about precious metals and commodity trading.

The Canadian Silver Maple Leaf is a 99.99% pure silver coin. Fine silver and junk silver make up the two types of minting processes for silver coins. Junk Silver is used to describe older silver coins that are not as pure as the 99.99% fine silver coins available today. U.S. silver coins that were minted in 1964 or earlier are twenty five grams per dollar of face value and ninety percent silver. These coins are half dollars, dimes and quarters. The coins that are clad in silver alloy include the 1965 - 1970 San Francisco proof set. Also the 1975 - 1976 Bicentennial San Francisco proof and the Kennedy Mint set half dollars are clad as well.

Silver prices can often be seen tracking the prices of gold. Traders use what is called a gold/ silver ratio to analyze fluctuations in the prices of the dual precious metals. Ever since 1792 (when the United States stopped fixing the price of silver to gold) the gold/ silver ratio has rarely fell below 1:20 (one ounce of gold = 20 ounces of silver).

One major difference between gold and silver pricing is the ultimate practical use of the two metals. Gold is used around the world almost exclusively for two reasons: storage and jewelry.

Gold has limited industrial uses in dentistry, chemistry and manufacturing but the flucuations in the demands of these industries do not reflect volatility in gold prices.

Silver, on the other hand, has many industrial uses and a recession or boom in related industries can significantly alter spot prices. Silver is important in the manufacturing of batteries and also in various medical manufacturing fields.

(A third precious metal, platinum, is used primarily in the auto manufacturing industry. A recession in this industry can impair platinum prices to a severe degree.)