Silver prices have been steadily increasing over the past few years.
By Jennifer Edelman
Silver prices have been steadily increasing over the past few years. The price of silver has increased about 84% in 2010 and then up another 20% in 2011. According to analysts, the value of precious metals will continue to rise in the future. If you are planning on investing on coins, then you must do it now before the prices get too high.
The longer you wait, the smaller the profits you get from investing in silver. If you don't believe that the price of silver will only continue to rise in the future, read this list of some of the reasons why the price of silver is continuously rising.
Reasons Why Silver Prices Are Rising
For decades, central banks have been selling their reserves of silver in order to meet excess demand. This has kept silver prices low for many years but it also made mining unprofitable. As a result, there is now a shortage of the mined capacity of silver developing over the next two to four years.
Most of the mined silver is consumed for industrial purposes. Therefore, most of the mined silver is consumed quickly instead of being stored. Silver is a previous metal that has a store value quality similar to gold, but it is used as an industrial metal. This gives it a useful value in growing industries such as chemicals, computers, and cell phones.
Since World War II, the United States government has sold over 5 billion ounces of this precious metal. The U.S. government currently has no reported silver in storage.
The above-ground available stores of gold have by 600% since 1980, while the above-ground available stores of silver have decreased by 90% since 1980.
Silver prices are also rising because starting and operating a mine costs a lot of money. A significant silver mine needs requires about ten million dollars (in some cases it might need 100 million dollars) in capital to get started. It takes about 3 to 5 years for a single silver mine to produce a significant amount of silver.
Most of the mined silver did not come from silver mines. It is found while mining for other minerals like zinc, lead, copper, and gold. Therefore, silver is not the focus of new investments in the mining sector. Only 30% of mined silver comes from silver mines. They are very few because there are few places that can sustain silver mining.
Silver has hundreds of industrial uses in today's modern economy. IT is used in water filtration, wound care, health care, solar power, mirrored glass, DVDs, cell phones, smart phones, tablet computers, and computers. It is also used as a catalyst for chemical reactions in order to produce products such as plastics.
Silver is the preferred metal by the average investor when the prices of gold are more than $1000 per ounce. When gold prices become higher, silver becomes a good substitute for investment for gold because of its lower cost and its similar qualities.
China, one of the world's significant producers of silver, has limited its silver exports and ended the tax rebates that they give to silver exporters.
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