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Why to invest in silver? How price of silver is determined?


Why to invest in silver?
Silver is the old precious cousin of gold. As compared to shares, bonds, forex or any other financial instruments, silver is often a safe haven like gold and there will always be a value in it. So if you invest in silver, the risk is going to be reduced in contrast to owning stocks or any other financial instrument. Silver is a good investment option if you look at the long run perspective to expand wealth.

Why you should have silver in your portfolio?
Unlike stocks, bonds, forex or any other financial instruments, silver has an intrinsic value and unlike gold, silver has also various industrial applications and it gets used up. It is the least expensive of the precious metals because when it comes to status symbol, people still prefer owing gold than silver. But fact cannot be ruled out that silver is the poor man's gold and is popular only among the relatively less well-off i.e. lower middle-class people. So, it still have demand as a jewellery apart from its industrial usage.


The demand for silver is continuously rising fast due to increasing demand for the raw material for the manufacture of jewellery and silverware.

It is inevitable that there will be unprecedented demand array for the silver. With high inflation concerns in Asian economies, sovereign debt risk in Europe, America's financial instability, Japan's crisis, etc. investors are quite bullish about the silver trend as it's an alternative investment.

They think there has never been a better time to invest in silver. Silver is currently trading at dips in comparison to gold and global demand for this precious metal has kept growing over the past three decades and will only increase further as long as it has industrial consumption.

How price of silver is determined?
Unlike gold which is valued more as an investment, silver is valued as a commodity also along with an investment. Supply-demand factor plays a major role while determining the price of the silver. More the supply, lesser the price and vice-a-verse. The buyers and sellers come from the commodity trading market, various industries, photography, jewellery and silverware. Silver is often more volatile than gold.


Bottom Line:
The low margins associated with silver always make it a great investment for investors looking for diversification in their portfolios. Because silver is the least expensive and most readily available of the precious metals, the values tend to fluctuate depending on market conditions. So you can make your investments in silver using different strategies to reap profit.

(If you want to know about how to invest in silver, click here)

OneIndia Money

Read more about: investment silver gold commodity
Story first published: Friday, June 17, 2011, 14:58 [IST]
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