Silver Market Volatility and When to Buy

silver--and-eolic-turbineSilver has been considered a precious metal throughout human history. It has been mined with zeal since ancient times. No doubt, many people say the silver market is sometimes volatile. They ask when is the right time to buy.

More than 877 million ounces of silver are mined each year. Importantly, new industrial processes continue to consume more of it. Silver analysts, such as those at JP Morgan Chase in New York, believe that demand from solar energy producers and others will drive silver prices much higher over the next decade.

Why Buy Silver Now

JP Morgan Chase’s precious metals “strategy” is based on Modern Portfolio Theory (MPT) asset diversification. Silver is historically inexpensive, supply is low, and silver demand is predicted to increase from today’s levels.

This simple story is compelling for investors in search of value. Long-term gains from financial assets like seek reinvestment, and silver is a prime opportunity for a portion of investors’ funds.

Silver and the Solar Industry

According to BRE’s IHS publisher in the UK, the demand for solar power is predicted to increase 30 percent year-to-year. China, despite fluctuating stock markets and reports of economic slowdown, continues to install solar energy components faster than others but people around the world see the long-term value of solar energy and they prefer it to carbon-based energy generation.

Most PV cells are made with silver paste. The solar industry predicts use of about 70 million ounces of silver, a bit less than 10 percent of the world’s annual production, in 2015 to 2016. PV production used more silver from 2014 to 2015 as appetite for solar increased about 7 percent.

World Silver Survey

The most recent World Silver Survey (Silver Institute and Thomson Reuters) reported that strengthening of the U.S. dollar and a move away from commodities by investors in favor of equity assets would temporarily depress both silver and gold prices. This has already happened.

However, longer-term prospects for both silver and gold should improve when the climate change summit of major countries are expected to reach an agreement at year-end 2015.

Silver Supply

Analysts on Wall Street continue to ask where new sources of silver production will be found. Unlike gold, silver is used by a number of manufacturing processes. Silver mining production grew about five percent in 2014-2015. Both silver and copper production increased as new mining projects in the Latin American countries came online.

New production accounted for slightly more than 30 percent of the total global supply. In 2014, Mexico was the largest silver producer in the world. Peru, Chile, China and Australia are also major producers.

New capital investment in silver mining could cause silver production to flatten or decline as silver use continues to increase at a steady rate. For instance, silver demand reached more than one billion ounces in 2014. This level is the fourth highest demand level since 1989-1990. Silver production actually declined by 4 percent in 2013 as industrial demand steadily increased.

Investor Acquisition

Investor appetite for physical silver coins and bars declined last year after a record 2013. In 2014-2015, the world’s stock markets continued to rise as bond and savings rates remained historically low. Money flowed into what investors considered was a “sure thing.” Fewer people purchased precious metals during the period. Precious metals prices, like all assets, rise and fall with supply and demand.

Silver may never reach gold’s popularity with investors. However, like copper, industrial applications and production statistics are solid predictions of higher prices.

Professional Investors

Elliott Associates, an eight billion dollar hedge fund, invested almost $200 million in private solar assets earlier this year. The investment manager believes that solar power will continue to gain popularity and is recognized as a firm that invests in “paradigm shifts” like solar vs. traditional electricity generation resources. Like other professional investment managers, the firm also recommends asset diversification for client portfolios, including precious
metals positions.

Many investment managers around the world now encourage stock market investors to re-balance portfolios and diversify. Stock market appreciation has caused portfolios to become imbalanced because, at current prices, equities may outweigh the original portfolio’s design. Imbalance can increase investor risk.

The best way to manage risk is to spread capital across asset classes, including gold, silver, and other metals. Investors typically keep some reserve cash position. If prices of any asset class decline from current levels, the investor may choose to purchase more to decrease cost basis.

Reasons to Own Silver

A properly diversified portfolio should include silver. Consider precious metals positions when rebalancing stock and retirement plan portfolios.

Central banks around the world have announced that interest rates will rise in the near future. Rising rates, China’s slowdown, or any number of political and economic woes are not the reasons to own precious metals like silver.

Silver prices are historically inexpensive. When silver starts to rise, it may do so quickly. Accumulating silver makes good sense now.




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Consider Adding Metals to your Investment Mix

physical-metal-silver-golden-state-mintHolding something of quality in your hands–there’s something about it that inspires confidence. A flawless leather shoe, an impeccable piece of Waterford crystal, a perfectly weighted knife, or a solid precious metal round can remind you that some things are meant to endure. Reading a list of numbers on an account statement can tell you things, but we don’t invest simply for the things we know. We seek that feeling of confidence that building wealth and providing protection against loss can bring. Any non-currency coin-like product is called a round.

You’ve heard the word: Diversify. That’s as much of a safety net as you can get when you try to invest and build wealth. Diversification often gets left off at the spread of funds available. Adding gold, silver, and copper into your mix of investments provides an additional layer of diversification you may not have considered.

Gold is well-known as a hedge against inflation. To a somewhat lesser extent, that also applies to silver and copper. Most financial advisors encourage holding metals in your portfolio, and there are several ways to do it. Metals can be traded on a stock exchange in different notes and funds. However, these vehicles carry the same caution as other exchange-traded entities: Don’t invest in something you don’t understand. The trading of metals as commodities involves understanding all the factors that cause the price volatilities, and that can take years. If you need to get started sooner, consider holding physical metal.

Physical metal is a broad category and includes bars and rounds of precious and semiprecious metals, most commonly gold, silver, and copper. Holding physical metals in your investments can reduce the anxiety produced by watching the market price fluctuate and wondering what the right next move would be. Somehow, looking at a bar or round in your hand makes it possible to say, “I have this” in a way that a line item on a brokerage statement just doesn’t. If you aren’t comfortable having the bars or rounds in your home but still want to own them, they can be stored at a depository for you.

Don’t overlook physical metal when working out your retirement plan. Physical precious metals can be held in an IRA and provide the same tax advantages as any other IRA. There are special rules in place that must be followed for your physical metals to qualify for inclusion in an IRA, but they are not difficult to understand, and they are not particularly burdensome. For a clear explanation of the process, take a look at Golden State Mint’s explanation of the steps.

If you decide to hold your metals yourself, you can choose bars or round rounds. (The US Government mint sells rounds only.) Both bars and rounds are offered in multiples of ounces and in fractions of ounces. Bars are bars–they are stamped with the name of the mint and the weight of the bar. If you are going to buy metals and hold them yourself, why not enjoy owning something beautiful? Both the US Mint and private mints offer rounds commemorating many events and celebrating a variety of interests. Here are just a few examples offered by Golden State Mint:

Your group can also design your own custom round. This could be an innovative way to reward excellence, or promote unity in your group, while encouraging investment and fostering an interest in collecting.

You can probably start adding metals to your investment mix sooner than you thought, and have items you can enjoy as well.

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Be a Successful Investor in Silver Bullion and Gold Bullion

When many people think about investing in gold and silver coins, they really think about coin collecting. While coin collecting involves finding interesting and unusual coins for the abstract-business-concept_mJOwe-purpose of creating a group of great variety, investing in gold and silver is more focused on buying coins, rounds and bullion for their monetary value.
Coin Investment Categories
There are four main areas of coin and bullion investment:
1. Rare, certified U.S. coins – Focused primarily on gold coins, these are very different from bullion. Today, many investors purchase American Eagle coins or Silver Buffalo rounds, but these are not rare coins. Items such as a $2.50 gold piece dating back to 1946 are hard-to-find and certified, making them worth thousands of dollars.
2. Certified ancient coins – Expanded to include more than just the coins produced in the U.S., these ancient items can be worth thousands as well, especially for those who are interested more in the value than in collecting.
3. U.S. coins that are “key dates” – In every series of coins, there are key dates that are produced in fewer quantities and that are more difficult to find. These become even more valuable because investors look for complete sets to bring full value.
4. Bullion bars and rounds – Many different artistic and representative iterations of adored designs are now freshly created by private mints. These genuine-article bars and rounds are securely ordered directly from these locations and are a great addition to private collections.

Reasons to Invest in Gold and Silver
The values of gold and silver bullion are at a significant low, fetching 43 percent less than it did in 2011. This makes these bullion options a steal. Investors know that eventually these rock-bottom prices will take a turn upwards, adding significant value to those pieces of bullion. Many investors are taking this opportunity to buy silver bullion online or to find gold bullion to buy online. It may seem like poor timing right now, but this is actually the ideal opportunity to get into the investment game.

For those individuals who are not interested in purchasing and storing bullion, another investment opportunity is to purchase collectible coins. In fact, many people are turning to this method of investment, as evidenced by the exponential growth of coin sales since 2014.

The U.S. mint makes many collectible versions of bullion available for purchase as coins, including the American Eagle gold coins and the Silver Buffalo rounds, two of the most popular coins used for investment. Likewise, private mints are able to recreate these designs, as well as other popular options such as the Walking Liberty and the Incuse Indian rounds and bars, in a variety of sizes. The benefit of collectible coins’ value is that because only a limited quantity were created, the demand often exceeds the supply, making these coins even more valuable.

Be a Successful Investor
The true secret to any good bullion or coin investor is to be sharp and always on the lookout for good deals. It is very easy for investors, especially those who are new to the operation, to get sidetracked by the look, shine and potential value of their purchase rather than to carefully examine each and every specimen that passes their way. A truly good investor enjoys the coins and bullion, studies them in depth and is ably to quickly and accurately assess the potential value.

This is especially true for gold bullion buy online and for those who buy silver bullion online. Internet purchases are much more difficult to investigate, and it takes some patience to find the right investment overall.

The best thing that any potential bullion or coin investor can do is to not be in a rush to complete an investment collection. Giving each new piece proper time for research and investigation will help investors to find the best specimens at the best prices, and the knowledgeable and helpful staff of GoldenStateMint can provide this guidance for new investors. With over 40 years of experience in coins, bullion and bars, GoldenStateMint can lead the way through the process of purchasing its inventory.


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