Investing in Silver

A year ago, Silver was in the midst of a severe price correction, one precipitated by the global credit crisis and the massive rush toward liquidation of commodity futures contracts – at any price – that ensued. Silver plunged from nearly $21.00 all the way down to the sub-$9.00 range, causing many commodity investors to doubt that the Silver bull market had any chance of ever attaining such lofty prices again. Well, those doubts have all but been erased, and the technicals depicted on the following chart should be enough to convince all but the most hardened skeptics that Silver is alive, well and quite possibly enmeshed in what could be its most powerful bull market to date.

One of the first duties of any competent technical analyst is to determine the prevailing trend of a given stock or commodity, and one of the most effective ways to accomplish that is to look at the relationship of prices to a variety of key moving averages. On the chart above, pay special attention to the red and blue curved lines, which denote the 50 and 200-day exponential moving averages (EMA’s) for SLV, the exchange-traded fund that closely tracks the price of cash Silver. On the left side of the chart, witness the green oval, the location of a bullish ‘Golden Cross’ of the 50-period EMA above the 200-day EMA. For technical analysts and traders, this normally implies the likelihood of significantly higher prices to come. It’s not a ‘fail-safe’ technical indicator, but it does a pretty good job of forecasting the future trend of prices across many different markets. Currently, SLV is obliging with a period of sustained follow-through, despite having endured a sharp sell-off in the wake of the recent 50/200 Golden Cross.

As important as the Golden Cross is, it’s equally important that the moving averages confirm the trending moves by starting to slope upward; in this case, both the 50-day EMA and the 200-day EMA are both accelerating higher even as the spread between them is continuing to increase. Pro traders also know that both the 50 and 200-day EMA’s will frequently acts as strong support on pullbacks (especially when such EMA’s are flat or sloping upward), often providing relatively safe ‘re-entry’ points for experienced traders and investors. See the various colored ovals for a few examples of this phenomenon.

Technicians also have another reliable way to determine if SLV is indeed in a strong trend; plotted at the lower portion of the chart is the Aroon (14) trend intensity indicator. Similar in concept to the more widely used Average Directional Indicator (ADX), this indicator attempts to measure the power that underlies any given trending move. In the chart above, we see that every time that the blue Aroon (14) line crossed the red line that a meaningful trend move took place in SLV. While no one can be sure how far this particular move will go, if past Aroon (14) crossovers are any indication, SLV may yet have some room to move higher. SLV’s weekly chart has already moved into a similarly bullish Aroon (14) posture, which may be another clue that SLV (and cash Silver) may yet be destined to meet and possibly exceed the significant highs made in March 2008.

The Silver market also has some amazing fundamental factors going for it that are unique among all freely-traded commodities, and these factors also bode favorably for substantially higher Silver prices in the months and years to come:

o A long-term supply-demand imbalance in this critical industrial metal.
o The worlds’ largest short futures contract position in any major commodity.
o Possible repayment issues with ‘leased’ Silver and unbacked ‘Silver Certificates.’

There’s more, so much more to the Silver story, but savvy traders and investors are beginning to take notice – from early 2003 until early 2008, Silver increased in price by a factor of nearly five times, and the long-term fundamentals also seem to imply that far greater increases may yet lie just over the horizon. As we make the transition to a new decade, make sure that you seek wise guidance in the Silver market, as it could prove to be a very, very attractive market in which to deploy a portion of your trading and investment funds.

Silver is trading at $15.50 per ounce while it’s distant cousin, gold, is trading at $1100. At this price, silver seems to be an incredible investment. But is it really?

For more than six thousand years, silver has been regarded as real money. As a matter of fact, in many languages, the words ‘silver’ and ‘money’ are interchangeable. At one time, many coins, including the U.S. dime, quarter, and half dollar were made with a large percentage of silver. Today, they contain none. In fact, none of the world’s currencies currently contain silver because the value of the silver would out-value the denomination of the coin.

In 1792, hundreds of years before a global economy was ever considered, the U.S. government declared that the price of silver would be 1/15 of the price of gold. In other words, 15 ounces of silver would purchase one ounce of gold. Today, the ratios are no longer regulated and at times vary wildly with the free market system. Precious metals experts still consider the silver-to-gold ratio standard to be approximately 1/16. This being the case and with gold as the measuring stick, silver should be trading at $68.75 per ounce. If you do the math, you’ll see that the current silver-to-gold ratio is 1/71.

Is this a buying opportunity or is it a sign that silver is fading from its status as a precious metal?

Most of the world’s mined silver comes from Mexico, Peru, and Australia and the above-ground supply of silver is estimated to be one-quarter of the above-ground supply of gold. Because of the way it is used on photographic paper and x-ray films, much of the silver that has been mined is lost. Yes, silver is in fact more rare than gold!

In addition to photography and x-ray, silver is used as an antibacterial in medications, mirrors, computers and catalytic converters. Because silver has the highest level of electrical conductivity of any metal, more uses for silver are being researched every day. Sterling silver, identified by the numbers 925, is 92.5 percent pure and is used in jewelry, silverware, bowls, platters, ornaments, and musical instruments.

Current worldwide industrial uses of silver are estimated between 700 to 900 million ounces per year. Total mine production has been 500 to 590 ounces per year, with a supply of 100 to 150 ounces from recycling. This leaves an annual deficit of 100 to 140 million ounces. In the past, these deficits have been made up by governmental and other reserves. For example, 60 years ago, the U.S. government held six billion ounces of silver in reserve. Today, it holds none.

Recycling of silver is becoming increasingly important. It can be recycled from catalytic converters, electronics, dental alloys, and jewelry scrap. This is the reason for the increase of neighborhood electronic recycling drives, as well as increasing cash for gold/silver offers.

With everything important comes a conspiracy theory…

Because of silver’s low supply, high demand, yet low price, it doesn’t seem economically sensible. It is suspected the silver markets have been manipulated for years to keep the prices low. If this is the case, the plan will soon fail due to the scarcity of the silver.

According to precious metals expert Philip Judge, silver is still sitting safely in stage one of a bull market. Stage two will be marked by the price of silver hitting $50 per ounce; when it begins to garner worldwide attention; and when the general public begins to move into silver at an aggressive pace. The price of silver will skyrocket and those that own physical silver (not exchange traded funds-ETFs) will prosper with an opportunity for wealth like no other time in history.

Now that you understand the basic facts surrounding silver, you should want to keep every piece of silver that you own. In fact, lock it in a safe! Don’t become a victim of silver (or gold) recyclers who want to buy your silver for a very low price only to sell it when the price escalates.

Although I am not an investment advisor, my research has uncovered the following information regarding the purchase of silver:

Silver is getting difficult to acquire but it’s important to own. Consider buying physical silver and not a promise for silver, like a futures contract or ETF. Be sure that it is certified, has 999.9 fineness, and comes at a standard weight in either a coin or bar.

It is a good idea to have non-government-issued silver. The reason for this is that government-issued coins ultimately belong to a government. It’s been said that it’s not likely to happen again, but silver can be recalled by a government or declared illegal to hold, therefore valueless to you. In the case of severe shortages (which is the present case), it is conceivable that a government could find it necessary to confiscate its silver coins from its residents.

As an added measure of safety, confirm that your silver supplier has a guaranteed repurchase program. This will ensure that the silver you are buying is legitimate. YOUnique Wealth(TM) is one such company that offers both 999.9 silver and gold and is certified by the London Bullion Market Association. Contact YOUnique Wealth(TM) at http://www.YOUniqueWealth.com/shift.

Still considered by many (including sovereign funds and central banks) as the ultimate store of wealth, gold and silver are traded globally on a daily basis.

Spot gold and silver is traded in an over the counter(OTC)market and based on supply and demand the price fluctuates fluidly. “Spot price,” is the price quoted for a metal to be paid for (including delivery) two days after the date of the actual transaction or “settlement date”. The spot prices are “fixed” in London, twice daily for gold and once daily for silver. This assists in setting reference points for prices throughout the day.

Spot gold and silver trades are conducted pretty much the same way as currency pairs are traded. Transactions in spot metals are often made against the U.S. dollar. For example, similar to currency trading, traders can take short or long positions in silver(XAG/USD)or gold(XAU/USD)while at the same time taking the opposite position in the U.S. dollar. Gold and silver is traded against other currencies as well.

Spot metals trading is conducted 24 hours a day between Sunday at 6:00 pm ET to Friday at 5:00 pm ET. The major centers for metals trading are Zurich, London and New York. There is no central market for metals trading. When the European market hours overlap with New York trading, market liquidity is typically at its highest. For U.S. traders this is more or less a four hour trading window daily during the morning hours with liquidity potentially dropping off near the close of the U.S. Market.

This 24/5 trading is being conducted worldwide with sometime massive trades being made almost instantaneously. Consequently the spot price is a fluid and dynamic creature. The OTC metals markets are free markets in their wild and natural state. Supply and demand is king.

The world’s largest gold transactions on any given day are conducted at the London P.M. “fix” price.
This “fix” in London is like the bell in a boxing match which sets the spot price. Quoted daily in U.S. Dollars it is the “spot” price that we are all so familiar with.

Most people are unaware that individuals can trade precious metals online through many Forex brokers. There are several to choose from and it is very easy to get started. You must be aware that each broker has their own fee structure and trading platform so shopping around is always a good idea.

Just as in the currency market, trading spot metals is a high risk endeavor. Traders must take the time to learn the ins and outs of the market before risking large amounts of cash. If you are considering getting involved in online precious metals trading it is important that you spend a lot of time making trades with a risk free practice account before going live with an actual cash investment. Like currency trading there are numerous strategies employed by traders. Trading strategy is a science unto itself and is beyond the scope of this article. You can find a tremendous amount of information to study online.

There are different methods employed by spot gold and silver traders. Some choose to trade manually. These traders watch the charts throughout the trading day and apply trading strategies based on their particular understanding and intuition about the market. Others prefer to use automated trading methods and employ the use of an Expert Advisor(EA). An EA is a software application which is also referred to as a “forex robot”. Forex robots will pick, enter and close trades automatically. Many experienced traders create their own custom robots based on their own personal trading strategies.

Trading Metals can be difficult and tough for both new and experienced traders. Let’s analyze the point to know the fact about Future Metals. If you are traders and investors, you should know the basic things about Silver and Gold. There are some arguments about Trading Silver and Gold. It may confuse the traders and investors about Trading Precious Metals. Investing in Silver or in Gold? Which one will be safer?

First of all, let’s analyze the properties of Silver. Due to the unique properties of Silver, new traders and investors are inclined to put their money in Silver rather than in Gold. Here are some simple reasons that can explain why this happens.

In Precious Metals Markets, Silver is also classified as Precious Metals after Gold. And this is one of the most simple reasons that can explain why Silver is attractive to many investors and traders. In addition, due to the unique properties of Silver, Silver is easy to be stored physically without any major problem, and to be achieved with security. It is obvious that the value of Silver is lower than the value of Gold, so it is simple, easy, and safe to store Silver without any fear in comparison with Gold. When Trading Silver, traders and investors can easily buy Silver by using spot trading that is the purchase and sale of real output. The low prices of Silver will be easier to be accessible for the average investors and traders in Silver Future Markets due to the low value of Silver While Gold is not easy at all. Like Gold and other commodities, Silver can be traded as private investors can actually take a receipt. And because the value of Silver is not high in Metals Markets, Silver prices are possible and attainable in Metals Markets.

And finally, the basic situation of Silver Supply and Demand can be an easy way for new traders and investors in Metals Markets to access. Trading Silver Coins is the basic investment in Trading Metals; it is both safe and easy for new and experienced traders and investors.

In contrast, Trading Gold in Metals Markets can be risky due to the fluctuation in prices of Future Gold. This means that it will be complex and complicated option for trading and investing in Gold. However, there are some choices for investors and traders to consider before investing and Trading Metals in Future Metals Markets. First, investing in Gold coins is easy for new traders and investors who don’t have any experience in trading Gold. This is an easy way for investors to put their money into investing Gold. This is the basic investment that the new traders and investors can start with and they obtain a good understanding about Precious Metals Markets by holding the Gold coin.