Is the Value of Silver Being Overlooked? It Depends.
Recent events are showing that the value of silver is on its way up, pushed by more trading in the white metal as investors start to see something analysts have been pointing out for quite some time. Those investing in silver probably noticed how prices rose once the Bureau of Labor Statistics in the US released jobs figures for August 2012.
The precious metals market, while less volatile than stocks or currencies, responded to this news including the German Constitutional Court's ruling on how far Germany can go to bail help out the Eurozone. The resulting price of gold or silver is often tied to what happens not just in the US, but also in other nations. When big shifts happen, investors are ready to respond.
Some commentators believe that the euro is presently being debased and that the efforts to salvage its value are not going to be good enough or fast enough. When currency such as this drops in value, the value of silver should rise in response. Gold and silver investing are most often undertaken by investors because they add stability to a portfolio over the long run and help guard against the devaluing of currency which occurs during inflationary periods.
The precious metals market has a strong, well-documented historic tendency towards rising prices when currency drops in value simply because gold and silver are still needed not just to store wealth, but also for industrial uses. Supplies of gold and silver are dropping; this is especially the case with silver. Many analysts have come forward in recent months to state that silver remains highly undervalued and that a streak should continue.
Speaking in the Economic Policy Journal about the way the European Central Bank's President Mario Draghi is handling the Eurozone's rising debt crisis, commentator Robert Wenzel noted, "This is the serious magic trick in Mario's bag of magic tricks. His sterilized bond buying is smoke and mirrors. The new collateral rules create the potential for unlimited backdoor money printing."
For investors, this is a warning sign because it means that the Eurozone economy may be set to dive if there is not enough easy capital to keep commerce humming along as usual. Mounting debt continues to be a problem just as in the United States. Once the decisions made finally catch up with the banks and governments of the world, say a growing number of analysts and economists, then the effects are liable to be so severe that systemic economic collapses on the level of the Great Depression - or worse - could certainly occur.
No one can say whether this will end up being averted, but for those stockpiling gold and silver assets now while they can, the point is to have something they can use as currency even if printed cash has hit record low levels.
Every investor has to take the path that makes the most sense to them, but given the worldwide economic uncertainty of 2012, many are choosing hard assets such as precious metals. If the worst does come to pass, hard assets could ease financial pain.