Silver is the poor relation of of the precious metal family. So why should silver investment be a great investment in 2007?
First, in times of uncertainty people pull out of paper currency and invest in commodities. 2007 looks like a bad year for economic stability and certain supply. Therefore, silver prices look set to rise because of:
Demand Silver is used primarily as an industrial metal, not just for silver jewellery and ornaments-a lesser consumption in ornamentation and photography has been more than offset by upward demand in electronics, and for coins and medals. Unlike gold, a lot of silver is lost in use and cannot be effectively recycled or recovered.
Also remember in industry, silver is generally used in relatively small quantities - as in reliable non corroding contacts, motor controls and circuit breakers - so a price rise wouldn't flatten industrial demand.
Furthermore, there is no sign of industrial need for silver tailing off. Silver usages as varied as water purification, superconductivity, solar cells, and batteries continues to show upward trends.
Usage Because nearly all the worlds silver is being gobbled up or stashed away by governments, there less and less left for private investment. This will drive prices sky high.
Competition The two main industrial giants, China and the US need more and more silver and cannot get enough. They cant reclaim enough silver from scrap or photographic waste, so they will be competing with each other - and the rest of the world - for new silver. Not just for immediate use but to stockpile.
Dwindling Supplies. There are few pure silver mines. In fact, 70% to 80% of all silver mined is a by product of copper, lead and zinc mining. This means that a sudden increase in silver price will not lead to extra output from these mines, and a price hike may make companies carrying out new exploration extraction and recovery techniques for silver some of the best new investments for 2007 and beyond
Also look out for companies re opening silver ore mines, not forgetting news of serious delays at silver refining sites,or mining disasters that again would tend to shoot silver prices upwards.
Upward Trend Silver prices follow gold, rising and falling over 22 year peaks, and the latest peak has not been hit yet. The average annual increase for gold has been 26% over the last five years, but silver prices over the last five years have achieved better annual gains, averaging 36%. In 1984, silver peaked at over $48/oz, so it is still far below its previous peak!
In fact, silver is at present chronically undervalued and the combination of uncertainty/increasing demand, competition and shrinking silver supply could push silver prices up to $17.38/oz.
Most experienced silver traders like Jason Hummel and Israel Friedmann seem to think silver has the potential to go much higher.
Billionaires like Bill Gates and George Soros have huge positions in silver. As gold rockets, silver prices look relatively more attractive, and again up go silver prices as investors buy in.
So how do you trade in silver? The safest -and most physically awkward method-of holding sterling silver, is as silver bullion (bars and coins of certified purity like the Silver Eagle), followed by easier but potentially more volatile silver 'paper trading' - silver certificates, exchange traded funds (ETFs), shares in silver mining companies, or derivatives like futures contracts and spread betting on the future price of silver.
While there are no absolute guarantees in the market anytime, it does look as if some spare investment cash could make you a successful silver price surfer. The sky's the limit!
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