Silver’s Price at a 5-year Low
Silver bullion has always been a favorite of many investors because it’s relatively low price as compared to gold allows investors to buy silver at a fraction of the cost of gold bullion. Today, silver’s price has reached a 5-year low of USD14. In fact, this is the lowest price level last seen since the Great Financial crisis in 2009, thus representing a good window of opportunity to buy silver bullion in Singapore.
Is it a good time for wealth builders to buy silver bullion? If so, should wealth builders buy gold or silver bullion? My perspective is that even though prices of gold and silver are expected to continue to slide moderately in 2016 due to the surging strength of the US dollars and improving US economy, precious metals still offer a form of asset allocation for individual investor’s portfolio.
In my previous article on investing in silver, I had touched on the risks involved. One of the key reasons why silver bullion is not featured in many professional investors’ portfolios is because silver can be very volatile. It can surge more than 5 percent in one day and therefore, not many people can stomach this kind of volatility. In fact, silver reached its peak during 1980, valuing about $50 per ounce. 34 years later, it is languishing at less than $20 per ounce while gold has more than doubled in value since then.
Of course, with volatility, there are opportunities to make money but then again, the difficulty in predicting the direction of silver prices had deterred many investors from buying silver. With silver, you stand a higher chance of losing lots of money if you are not careful with the price volatility.
Indeed, there are many supporters for gold and there were huge demands for the precious metal even during price corrections. In fact, when gold price dropped to record level last year, China and India governments took that opportunity to import more gold at bargain prices. However, this was not the case for silver. According to data collected by The Silver Institute, since 2000, governments had been net sellers of silver. This is because silver is not seen as an asset class like gold. Compared to gold and alternative investments like stock and bond, silver bullion has lower buying interests. There are simply very few financial gurus out there recommending investors to buy silver as a form of investment.
In short, my view of silver bullion is that it should be treated as a form of investment for short term gains instead of being a store of value like gold. The current price level offers investors an alternative means to make money from precious metals. If you want to trade silver bullion for investment gains, make sure you set a stop-loss or stop-gain level because its potential short term price swings.
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SG Wealth Builder