Should You Keep Buying Silver If The Price Drops?

Great question and despite the naysayers, the silver market still has more potential for growth than Gold and other precious metals.

The following article will give you some insight to ponder if you are considering cashing in your silver coins. What’s so special about silver? The most plentiful and least expensive of the precious metals, silver has been used in jewelry and as hard currency for centuries. From ancient Greece and Rome to the old silver dime in the US, a silver coin has historically been the equivalent of a day’s wages.

For five hundred years until the mid-19th century, it took between 15 and 20 ounces of silver to buy one ounce of gold. Now that ratio is 58:1. With that sort of benchmark in mind, some analysts argue that silver is distinctly undervalued. Silver has some heavyweight fans too. Warren Buffet bought 130 million ounces of real silver in 1997 - as much as he was legally allowed to buy - and has since been joined in the market by George Soros (who owns a large percentage of Apex Silver) and Bill Gates (who is said to own more than 10% of Pan American Silver).

Why invest in silver?

Supply and demand: every year we are using more silver than we mine. Demand has outstripped mined supply for the past decade, with an average annual deficit of 133 million ounces. Silver bulls say that makes investing in silver a no-brainer: if the dollar continues to fall and the financial markets suffer, both silver and gold will rise as investors make the flight into quality. Equally, if the global economy flourishes and China continues to grow, then more silver will be needed, and the price will rise.

How has the price of silver performed?

As well as being known as “poor man’s gold” and “the white metal”, silver is sometimes called “the restless metal”, because of its volatility. It is a small and thinly traded market, and hence prone to dramatic movements. April, 2003 having risen sharply over several months to $8.29 an ounce, it plummeted 32% in a month. At the end of 2004, it slid 17% in seven days from $8 to $6.50, and has since risen back to over $21.00 in March! Over the long-term, though, the trend is up. In my opinion, Eric Roseman the Investment Director of the Sovereign Society, sums the issue up best when he stated

"Don't let temporary corrections and conflicting headlines fool you: The biggest precious metals bull market in history is now underway! Gold, silver, palladium and platinum are all headed towards record highs in the next few years...and there's more than half a dozen ways to profit from the upswing. Before it's over, mark my words, we'll see $2,500 gold...$75 silver...and more.But it's not just about profits - it's about protection. Soon, your paper money may not be worth the cost of the trees it's printed on. Precious metals have always been - and will always be - the last bastion of value storage available to wise investors."

The moral of the story is…Hold On To Those Silver Eagles if you have any!