Nobel prize winner Milton Friendman once said that the “major monetary metal throughout history is silver, not gold”
Silver is perceived as both a commodity and a medium of monetary exchange. It also acts as both a hedge against inflation and as a key player in portfolio diversification because of its ability to mitigate against political and systematic risks over time. Generally we say, silver retains its purchasing power. Let me explain: today, the public find safety in saving their hard earned money, but storing your money in cash doesn't protect you from financial troubles – inflation rates eat up savings and in a few years' time cash previously saved may not be able to buy as much at a later date – you have lost your purchasing power.
Investors over time have enjoyed the purchasing power protection property silver offers; why shouldn't the public also? However, Silver is not just a safety net – when times are good the expansion of economy demands the need for silver, whether it be in computer hardware or members of the public having spare money and hoping to purchase silver for both its class and investment. This demand drives up the price and for those of us that bought silver at a low price for protection now have an asset that has capacity to deliver a tasty profit.
Here are a few statistics to emphasise the above:
In the 70's during a bull market, silver price rose 3,800% compared to 2,500% for gold.
During the financial crisis silver price doubled from the start of 2008 to the end of 2010 whereas golds value only rose 70%.
Some investors argue that the growth of silver will outperform gold, some dictate that if the worst case situation were the world's economies collapsed metals like silver would become the currency once again.
Silver delivers the perfect opportunity to generate a rate of return from your otherwise risky low return cash holdings and due to the beauty an item of silver has it can additionally be a pleasure to own.
The biggest risk of owning silver is it being stolen not that it loses its value. Silver isn't like the digital tycoons of today that think they own the investment market – silver has and will continue to hold its value for the next thousands of years just as the past has proved.
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