It’s just the tip that won’t go away. Precious metals continue to be touted as a safe haven in the current economic climate. Gold is back to being so sort after that there has even been a resurgence of panning for it in the historic gold fields of Victoria!

But now industry experts are suggesting silver may yield even shinier rewards than its famous counterpart. 

Indeed last week gold hit a new record, reaching US$1,913/oz on Tuesday, yet by Thursday it was back to US$1,714/oz. The rapid two-day free-fall spooked many investors into promptly selling their gold, while others saw the market plunge as their window of opportunity.

Dealing in gold can be a wild and rocky road, and for many the stress of it all is too much to be bothered. Yet it is precisely the sheer volatility of the market which has directed Dr Alex Cowie, commodities analyst Diggers and Drillers, to recommend buying silver bullion.

He makes an interesting case for it too. Consider this:

  • With the knowledge that any kind of stock, bond or paper cash carries counterparty risk, Cowie says the precious metals comprise a small asset class with values not dependant on rocky global economics.  
  • Silver is currently trading at around the US$40 mark, and already this year we’ve seen the price double. Cowie says seeing it reach US$100 is firmly within the realm of possibility.   
  • In the absence of a gold standard comparison for currencies, buying physical metals can mean safeguarding your assets against currency devaluation.  
  • For those wanting to leverage their investment gains, Cowie suggests taking shares in silver producers listed on the ASX.  
  • Buying into silver producers could be a wise investment as there is currently “an epic shortage of silver bullion”. Cowie said that in light of industrial uses for silver, global stocks are being depleted unlike gold. Despite gold being 15 times rarer than silver, nearly all gold that has ever been mined has been stored, unlike silver.  
  • Consumption affects silver and doesn’t affect gold. With silver being a bi-product of other mining operations, it is rarely dug up exclusively. This means, “the primary silver supply is not as responsive to as gold to changes in price.”

Cowie says that as an asset, silver has been proving itself in big way and despite what some have said it’s not too late to move a portion of your investment capital safely into metals. He says ideally one would choose to invest in both silver and gold, but “if I had to pick one over the other right now, I would choose silver”.

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