Though it is more volatile than gold, many believe that there is much more potential for growth in silver. This is down to its safe haven status, as well as a growing industrial demand.
1. Silver Demand
Demand for silver in the technology industry, and in many other industries, is increasing, and experts believe it will experience a sharp rise very soon. This means that not only will silver steadily increase in value, but it will likely balloon in price in the near future. Many industries rely on silver, because there is simply no other substitute for it, which means that there will always be a demand. This is because silver possesses the highest electrical conductivity of any element and the highest thermal conductivity of any metal. It is also very reflective, which is why it is used to create mirrors.
Also, the development of ‘niche’ silver uses will, albeit modestly, add to the growth of this precious metal.
Geographically, China has witness a growing demand for silver, accounting for 8 percent of global demand in 2000, and 18 percent last year. In the United States demand is expected to remain high, enhancing its position as a leading manufacturer of high-end silver materials.
There is also a strong demand in physical investment products such as coins, bars and silver exchange-traded funds, all of which can guard against inflation. Silver is also still used as a currency and is legal tender in the US state of Utah.
2. Gold/Silver Ratio
Basically, the gold-to-silver ratio is the amount of silver it takes to purchase one ounce of gold. This is one of the best indicators of how far silver prices can move and have far they have moved over time.
If you average out the historical ratio between gold and silver, you arrive at a number of 16:1. That implies that at $1600 per ounce for gold, silver should be $100 per ounce. Gold is currently trading at $1174 an ounce and silver is at $16, which projects the ratio is now 73. This means that silver is massively undervalued right now and could see huge gains in the near future.
There is absolutely no reason for silver to remain grossly under-valued in relation to gold, which is why experts are anticipating a big price-hike for silver.
3. Silver Price Manipulation
A small group of powerful banks have intentionally suppressed the price of silver through massive paper shorting for at least 15 years. JPMorgan has been identified as one of the key players in this price manipulation scheme, as it has, at times, owned more than 25% of all short contracts on silver. These contracts are called “naked shorts,” which means the banks do not actually have physical silver. In fact, there is not enough physical silver on the planet to cover these contracts.
Every time the price of silver increases, these banks try to push it back down. Price manipulation can’t last forever though. As investor demand grows, it becomes increasingly difficult for these banks to suppress the price of silver. For more info about precious metals prices manipulation visit Gata.org.