- Personal Finance»
- Investing in Stocks, Bonds, Real Estate, More
Why Silver Prices Will Continue to Go Up
The Future of Silver and Silver Prices
A large number of investors have been focusing primarily on the economy rather than the growing dangers of inflation, and that has been part of the reason silver prices have remained somewhat flat and not surged ahead like many projected for 2009, although there's still a lot of time left for that to happen, and has already started to.
Still, the economy, from the point of view of companies holding tight to their money and not willing to pay high prices for raw materials they need, has made a temporary impact on silver prices.
Why that won't go on for long is just about every product using silver in its process is increasing in demand, or is at least holding steady. The lone exception is in photography, which has been trending toward digital for quite a while.
That has of course happened as we move into 2011, with silver prices having soared, finding support at around the $30 an ounce mark.
An update from 2012: It appears silver continues to find support at about $26.00 an ounce after bouncing around throughout 2011. More quantitative easing will push it up far beyond $30.00 an ounce, as has happened on September 13, 2012, when Ben Bernanke opened the QE floodgates again.
Silver in 2013: Silver in a Weak Economy
Growing Demand for Silver
Even other traditional products which use silver like silverware and jewelry have been holding pretty steady in demand during these hard economic times.
A couple other major factors will drive silver prices in the future, and that will be growing demand from emerging products, and the inability to recover silver in some of those products, losing it forever.
Among those products increasing their use of silver include batteries, solar, eyeglasses, medical, mirrors and paint, among a number of others.
Silver Can't be Recovered in Some New Product Uses
Within some of these products, the minute amount of silver used cannot be gathered and recycled, so that will put even more demand on silver stockpiles, eventually driving prices up as well.
The plateau that silver now lingers at won't last for a long time, and as the economy improves and investors start to realize the dangers of inflation because of the outrageous and irresponsible government bailouts, along with the extraordinary growing industrial demand for the metal, makes silver have a future that will only be only growing for a long time.
Long Term Outlook for Silver and Silver Prices
As you can see, over the long term, silver looks to be one of the commodities which will be in the highest demand, while some of its uses will make it impossible to recover the metal to recycle.
The long term outlook looks tremendously bullish for silver, and investors should reap a huge reward from this metal which has temporarily been held back from soaring in price because of slowdown in demand, and ability or willingness of companies to pay higher prices for needed raw materials.
But a major underlying factor which will drive up silver prices is in industrial uses. Not just that it is being used and driving demand, but that in some cases it is now being used in a way that it cannot be recovered.
Some of the larger losses of silver in industrial use concerns surging demand in electronics, jet engine bearings (as well as other bearings), batteries, and as a chemical catalyst.
Many Uses of Silver
Demand in all the above areas for silver are either staying a current levels or increasing. But again, the silver used in them cannot be recycled, which will drive up silver prices going forward.
Even this isn't even the entire story though, as other emerging uses will put pressure on silver stockpiles, and, again, drive up prices. Sectors included here are solar cells, paints, mirrors (because of reflective properties), and medicine, where the extraordinary anti-bacterial properties of the metal can be used in a plethora of situations to reduce infection.
Related to the anti-bacterial use is its extreme value to water purification, where high demand for clean water drives the demand for anti-bacterial agents like silver.
Silver Use in Electricity
Silver is an excellent conductor of electricity, and consequently is used in a wide variety of related applications.
Among these are switch contacts in the home, fuses, television sets, phones of all types, electronic toys, dishwashers, washing machines, computers and microwaves, among numerous others.
The reason silver is so valuable in electronics is because it doesn't corrode. It does tarnish when exposed to the air, but that has no effect upon its performance.
Uses outside the home include a slew of contacts in vehicles, as well as switches used for industrial purposes.
Batteries are another growing area where silver is used, including those using silver oxide or silver zinc for stronger performance at higher temperatures. These batteries are used in things like watches and cameras. Other industries they are in demand for are in the defense and aerospace industries.
Batteries using silver-zinc are also used in electric cars and laptop computers, although not as much as lithium batteries are at this time.
Approximately 20 percent of silver use is employed in electronics of some type, with that percent sure to grow quickly as we move forward with growing demand for products using silver in emerging markets with increasing middle classes.
Endless Quantitative Easing
Now that Ben Bernanke and the Federal Reserve have implemented QE3 on September 13, 2012, it adds fuel to the already significant fire for silver, providing even more impetus for the price of the white metal to continue moving up.
What is important about this round of quantitative easing is it's open ended, meaning until jobs get to where the Federal Reserve wants them, it says it will continue to buy mortgage-backed securities to the tune of $40 billion monthly.
There are also no limits as to how much money they will throw into the U.S. economy over time.
What is sure is the value of the U.S. dollar will fall, inflation will increase, and interest rates will remain low. All of this is great for the price of silver, as well as many other commodities, including gold.
Silver the Best Investment over the next Decade
As you can tell, over the long term, silver looks to be one of the commodities which will be in the highest demand, while some of its uses will make it impossible to recover the metal to recycle.
The long term outlook looks extraordinarily bullish for silver, and investors should reap a huge harvest from this metal which has temporarily been held back from soaring in price because of short term slowdown in demand and ability of companies to pay higher prices.
Some analysts and investors see silver being the investment of the decade, like gold was in the last decade.