Silver Prices: Maximized, Marginalized, or Simply Manipulated?

By its very nature, silver is a maximized precious metal. It appears in greater quantity, provides greater versatility, and delivers a longer list of unique applications by far, than any other precious metal. For whatever reason, the market and its investor’s have provided the greatest source of marginalization to its prices. Although many suggest that central banks and/or governments are responsible for manipulating the price of silver, reality dictates that any manipulation could only be effective in the short to very short term. And in March of 1980, “irrational exuberance” cost the Hunt Brothers billions of dollars to learn a valuable lesson about trying to manipulate the silver market.

As with any commodity, supply and demand are the two factors providing the greatest effect on the price of silver. Sixty percent of annual silver usage is industrial (and mostly consumed), which makes for a reliable, constant, and growing demand. Conversion from film to digital caused a rapid decrease in demand for silver, but solar, electronics, and newly created medical applications have filled the void and increased demand even more. Micro economic trends like watches and fine jewelry contribute to demand in good economic times and macro economic trends resulting in global conflicts, trade wars, and other volatile economic events contribute to growing silver demand for asset protection, during times of economic stress and volatility.

It was reported by San Francisco Federal Reserve Bank President John Williams today, that he expects U.S. inflation to rise to the U.S. central bank’s 2-percent goal this year and stay at or above that goal for “another couple of years.” The simple fact of the matter is that silver prices increase when inflation rises and from a historical viewpoint, asset manager BMG reports that for every 1% increase in inflation, there has been a 2% increase in the price of silver. In spite of falling back from a 21st century high in 2011, silver still finds itself up 187% from November of 2001. As well as the stock market has been doing, it’s only up 77% over the same span of time and a great deal of that growth was during near zero interest rates.

There is no doubt about silver’s ability to protect assets from the ravages of global economic consternation, currency devaluation, or stock market collapse, any one of which or all could be in our closer-than-we-want-to believe economic future. Silver has proven itself, time and again, to be a valuable and even necessary tool in any financial portfolio. The question now becomes, “How much more than the typically recommended precious metal portfolio allocation is right for me?” It’s an important question and you’ll want to deal with an industry leader when you arrive at the answer. So call the experts at American Bullion at (800) 653-4653. They pioneered the Silver IRA, but are equally capable of assisting you with any aspect of physical precious metal ownership. Don’t get caught without a chair when the music stops. Call today!

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.