Future Silver Prices

Introduction

Wouldn’t it be great to know what the true future silver prices will be? Armed with such knowledge you could easily gain fantastic wealth, secure your financial future and that of your kin as well. But no one possesses such insight into the future prices of silver or any other commodity, however we do have historical data on silver prices and knowledge of how to analyze markets. Using these tools we may observe the current silver price trends and charts, then project the likely price of silver in the future.

Historical Silver Prices

In the past decades silver has had some very interesting and drastic price changes. The metal itself is valuable not only as a store of wealth, but also as a material used in industry, health care, science and electronics, just to name a few. This broad usefulness of silver may account for its constant value over time, and perhaps may even explain the drastic rises in value that have occurred in recent years.

The precious metals like gold and silver are commonly considered a safe-house type of investment, and investors may at times flee from stocks or other commodities into these metals when the other devices appear to be unstable or even toxic. The gains that stand to be made in precious metals are typically low, as compared to stocks, because of their safety. But when the stock market becomes scary then people like to get their money into those safe places like silver and gold. Just take a look at the historical silver prices in a chart showing silver’s skyrocket in 1982, and again but to a lesser extent just this month (May 2011).

Silver spot price remains fairly tame most of the time, but when demand becomes high because of a mass exodus of capital from stocks into safer things then the price can rise rapidly. So why do investors look to silver when the markets get shaky and uncertain?

Silver as a Safe-house

Savvy investors, professional asset managers, and just about anyone who puts money into investments, typically believe that purchasing precious metals is a safe way to go. This begs the question “why is silver considered safe?” Most people, even though they agree with the rationale, cannot answer this question. Let us take a look at why silver might be viewed in this way.

The first aspect of silver that helps it feel safe is that it has been used for thousands of years as a medium of exchange, real money throughout the centuries. The intrinsic value of silver virtually guarantees that it cannot ever lose permanently its purchasing power relative to other goods, and for this reason it has been used as money, a store of value, all this time. This history seems to have ingrained in the thinking of today’s modern investor a sense of silver as a real investment with a long and solid history of reliable savings and purchasing power.

Silver is also useful as an ingredient in creation of some medicines, in the making of electronics and of course in jewelry and household items such as flatware and dishes. These easily identifiable valuable uses of silver help to maintain its importance and significance. This might tend to create the psychological perception of heightened value in the minds of most people, thus keeping the relative price of silver in strong correlation with its actual intrinsic value.

Silver Price vs. Paper

Being that silver coins and bullion have their own built-in value their price will vary in relation to items that do not have this built-in value, things like stocks and paper money (a.k.a. fiat currency). For instance, a single share of stock in a company represents partial ownership of that company, and that share’s value is tied directly to the value of the company and that company’s percieved ability to earn profits. That company’s reputation, financial health and other factors will affect the value of the company and its ability to pay out profits as dividends to the owner of that share of stock. This value can, in certain circumstances, drop to near-zero and become virtually worthless, and in some extreme cases it can actually become completely worthless. Therefore stocks have no true intrinsic value, unlike silver and other precious metals. The “Dow in Gold Dollars” or DiG$ is an index of the current DJIA versus it’s real value in gold, but more about that later.

Another more disturbing example of this comparison of value is silver vs. paper fiat currency. Since all major currencies in the world are now fiat, we are holding and using unbacked paper notes as the primary store of value when holding cash “in the bank” or otherwise keeping money in savings. This paper money actually can lose its value, and when it does you’ll see the “price” of silver rise. This is because silver’s value remains effectually constant, while the value of the paper money rises and falls. This was not the case in the days when the US dollar was backed by actual silver, but once that backing was removed the dollar was allowed to fluctuate in value versus silver. If any fiat currency becomes widely untrusted by overprinting or other travesty then it can lose much or all of its value (see: Zimbabwe)

Silver’s Future

The price of silver stands to remain constant in relation to any currency that is properly managed by the government or central bank that controls the printing and issuance of that currency. However, the future silver prices will rise when that currency is over-printed or otherwise mismanaged, or if people’s faith in the currency is degraded. When this happens, the relative value of silver rises in relation to that currency. This scenario can happen in any part of the world and to any fiat currency including the US Dollar, the Euro, the Yen, the British Pound, and every other major currency in the world today. And with almost all nations dealing as debt as part of their financial strategy, these currency notes have become nothing more that a virtual “stock share” in that nation’s ability to repay its debt.

In light of all this, and the general atmosphere of financial uncertainty across the globe, the future silver prices stand to rise, and rise quite significantly in some cases. Holding silver that is purchased now while silver is relatively low-priced compared to its true intrinsic value is a recommended strategy. Don’t buy when silver is peaking in price like it did in at the end of April this year when it rose to challenge the $50 mark. It was just $15 a year earlier.

Conclusion

Future silver prices stand to rise, significantly. The best advice we can give you is to buy right now, unless there is a frenzy like late-April, and hold on to that silver. If you’re considering buying when prices are rising rapidly and to record-highs, please consider whether-or-not the future silver prices will stay at or above that mark forever. Anyone who bought during this last frenzy anywhere around $35 are still happy and have a solid investment today.

So, in our opinion it is always a good idea to buy and hold silver. The more you own, the better. And don’t sell when prices take a dip, because they stand to recover because of all the paper money out there. Keep in mind that future silver prices are almost guaranteed to rise in the long run.