Education Centre

'Thanks to your education pages I quickly got up to speed before making my gold investments.' - Mark Darnell

Silver as an investment

Reasons to invest in silver

The reasons to buy silver typically differ from those associated with buying gold, and are described by some as a little more speculative. Silver prices are indeed more volatile than gold prices, silver being a smaller market and thus more sensitive to investment demand.

Nonetheless, since the Great Financial Crisis, investment demand for silver bullion remains strong with individuals often buying the same amount of silver – in dollar, pound or euro terms – as gold. This 1-1 gold silver buying ratio is difficult to sustain without rising spot silver prices, given available physical silver stocks being only 6 odd times larger than gold stocks. Nonetheless, the gold silver ratio sits close to 50:1, apparently not reflecting how individuals are buying silver on the ground.

Investment demand for recognised silver coins has become so strong that the major mints in the US, UK, Canada and Australia are simply unable to service demand. The larger physical silver bullion market has benefitted as a result and is a more liquid and transparent market for silver investing.

The future of silver investment looks bright, with positive phenomena comprising:

  • Rising current industrial demand
  • Growing range of industrial uses
  • Inelastic silver supply
  • Increasing silver investment demand
  • Small physical silver market