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Most people know silver has been used extensively as a medium of exchange throughout history. In fact, silver was the very first metal to be used as currency. Silver ingots served as money in Ancient Greece more than 4,000 years ago.
It’s said extensive use of the Athenian Empire’s silver tetradrachm in trade throughout the Mediterranean makes it the first genuine example of truly international currency.
For modern day investors, silver offers much more than its longstanding record as a store of value and its status as one of the world’s great currencies:
There are, in fact, a multitude of reasons for investors to consider silver for their portfolios, including the three important reasons below.
Many investors instinctively see silver as subordinate to gold in its investment utility and value, but that’s not necessarily the case. As a matter of fact, during key periods of economic upheaval when precious metals have entered a bull phase, silver historically has outperformed gold by a significant margin.
Two of the most prominent precious metals bull markets in modern U.S. history occurred during the 1970s and again from 2001 to 2011. From January 1970 to January 1980, a period marked by double-digit unemployment and inflation as well as tremendous geopolitical upheaval, gold soared 1,500% while silver skyrocketed a stunning 2,100%.
From 2001 to 2011, when a precious metals bull market was energized by worldwide economic and geopolitical stresses (including the onset of the Global War on Terror), gold’s move upward in value by an impressive 650% percent was trumped by silver values, which climbed 900%. (See chart below.)
Gold typically receives the lion’s share of the attention when the subject of precious metals investing arises, but the reality is that silver may be likely to deliver an even greater return than gold when precious metals prices are climbing.
The demand for silver is on the rise around the world, driven chiefly by its near-irreplaceability as a key component in a wide variety of products. Silver is generally considered to have no peer when it comes to the conduction of heat and electricity, so there is really no end in sight to the continued demand for silver by industries the world over.
In fact, the industrial demand for silver accounts for about half of the metal's global market.
This ongoing, growing worldwide industrial demand for silver means it can be a useful investment asset during periods of economic prosperity. Even during periods of economic stress, silver is likely to still be in demand for the necessities of life. This quality works alongside its benefit as a true, time-honored store of value to help it serve as an market hedge.
Right now, the price of silver makes it an especially attractive investment. The closely-watched gold-to-silver ratio (indicating the ounces of silver one ounce of gold can buy) is over 80. This suggests silver currently could be very undervalued, which provides a healthy margin for potential growth.
Before the year 2000, shortly after not just one but two occasions when the gold-to-silver ratio approached 80, the price of silver climbed substantially. The ratio has been rising steadily since silver’s previous high in 2011, and the current 80-plus ratio is among the highest levels ever reached for this precious metal.
This emphasizes silver’s significant undervaluation and provides an exceptional opportunity for investors to accumulate it at what could be a price well below its true value.
It is silver’s particularly stunning historical rates of return during financial chaos – even better returns than gold – that makes it such an important portfolio asset.
When the gold-to-silver ratio is considerably lower than 80, silver still represents an incredible bargain because of its tremendous dual potential as both a fair-weather investment asset and as a hedge against economic troubles.
And don’t forget about silver’s timeless value as currency. In addition to its notable characteristics as an investment asset, silver is so much cheaper than gold that it’s easier to accumulate in large quantities and use as a universally accepted medium of exchange – even in modern times.
Take a few moments to learn more about the potential of silver to enhance your investment portfolio. Call Augusta Precious Metals at 855-242-4121 and share your goals and concerns with one of our knowledgeable gold and silver specialists.