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Silver and Silver Prices in the Decade Ahead
Silver Outlook in the Years Ahead
Silver has a dual purpose in the eyes of those investing in it, and so, depending on how you look at silver, that will determine its attractiveness as an investment over the next decade.
For example, many people consider silver to be the cousin of gold in the sense of using it to battle inflation and a decline in value of the U.S. dollar, and so a number of people invest in it from that point of view.
On the other hand, a majority of investors will look at silver primarily from its industrial uses, employing the usual factors of supply and demand as they relate to commodities in order to determine whether silver prices are going to go up or down going forward.
When talking about inflation and the value of the U.S. dollar, keep in mind that it's referring to buying physical silver to combat that, and not primarily silver mining and production stocks, or even silver futures, which are a different type of investment, although still connected to silver itself.
If the price of silver is expected to go up, no matter which way you invest, you should enjoy some solid returns, especially in reference to directly investing in silver futures or options.
If it wasn't for the harsh recession we're in, silver prices would probably have already surged to much higher levels, as demand for most raw materials fell as countries and companies worked on surviving rather than growing, which means they tightened up their acquisitions.
Now that emerging market countries like China and other Asian economies seem to be growing again, that bodes well for silver, now and in the future. Even so, it'll have to be watched closely, as the economy continues to be at risk, in spite of the mainstream media attempting to announce the recession is over. In the Western world that's especially not true.
As far as how the demand for silver is concerning industrial use, it seems as solid as ever, and growing. The only sector I'm aware of where silver seems to be floundering is in photography, which of course has been going digital for a long time, eliminating the need for a lot of silver in that industry.
But other uses have emerged in other sectors, and easily makes up for the drop in demand of silver in relationship to the photography business.
Uses of silver continue to grow in demand in the medical area, paint, mirrors, batteries and solar, among a number of other products. There are products and sectors where silver is used in such a way that it can't be recovered, a new element in taking into consideration the long-term price of silver.
That won't impact near-term prices, but it does need to be considered over the long term.
Bullish on Silver
Silver deserves a bullish outlook in my opinion, and it seems that will continue into the years ahead.
For the short term, it is uncertain whether it'll make a big surge or not, as industrial demand should be the biggest factor. Even though emerging markets are starting to rebound a little, it's hard to tell how much that will generate increased silver demand, and whether it will push silver prices upward.
Over the long haul silver will be a big winner, but it has had a hard time pushing through the $17 mark in any meaningful manner or period of time (early 2010). That has changed as silver prices have hovered around the $30 an ounce mark for some time.
Also changing as of September 13, 2012, is the announcement by Federal Reserve Chairman Ben Bernanke that the Fed is initiating another round of quantitative easing, identified as QE3.
This time Bernanke said the American central bank will buy up $40 billion in mortgage-backed securities until he is satisfied the job market can stand on its own. That could take years, which could drive up the price of silver, as well as gold, to levels never seen before in history.
Silver Prices Going Forward
There's no doubt about the demand for silver for numerous uses, but because it's used across a number of sectors, it's more difficult to measure than copper, where you can more easily determine demand from the health of the housing sector.
One last thing to take into account is the supply side of silver production. Watch that closely in relationship to demand, as that could be a huge factor in price movements of silver in the years ahead. Supply has had a hard time keeping up with demand, and that appears to be the way it'll be over the next 7 to 10 years. That should drive the price of silver up.