Silver Doesn't Glitter Like Gold - Or Does It? | Get Financial Freedom Tips | Transform Your Financial Future


Thursday, February 2, 2012

Silver Doesn't Glitter Like Gold - Or Does It?

From Europe to the United States, the economy in which we currently find ourselves is one of the most unpredictable world markets that has ever existed. This is not helped by the interdependence between countries, nor the fact that the credit ratings of so many nations have been reduced – credit ratings that many people thought were absolutely untouchable even 10 years ago. To many people, especially the average investor, the notion that a nation such as France or Italy or the United States even had a credit rating to be worried about was hardly something that was ever talked about or considered.

However, with new information and a new economy across the world must come a new way of thinking. Many investors are correctly going to more tangible assets, putting their money into things that people need such as commodities like wheat, corn and oil, and also moving money to the market of precious metals. This movement of money has seen the price of gold rise to record-breaking highs over and over again. Those people who invested in gold two years ago are definitely happy campers. Those people who saw this coming a decade ago may even have enough to retire.

Silver Doesn't Glitter Like Gold - Or Does It?
Unfortunately, no gold rush lasts forever, and such is the case with the current gold rush in which we find ourselves – the gold rush of the average investor. Gold prices in the latter half of 2011 and continuing to date in 2012 have ceased to bring investors in the precious metals market the incredible returns that they saw in 2009 and 2010. However, this does not mean that the rush of precious metals is over – only that the center of attention is changing, however quietly, for the investor who is in the know.

For those who say that silver doesn't glitter like gold, they definitely have not checked out the history behind this less popular but still potentially just as profitable cousin of gold in the precious metals market. Historically, a rise in silver prices usually follows a great rise in gold prices as precious metals continue to be in demand as a tangible, finite asset, but the emotion of the average investor that helped to fuel the rise of the gold price tends to put the ratio of the gold-to-silver price difference completely out of whack. Once this emotion has taken hold of the gold price, that means silver must then come up in order to match the historically close ratio between gold and silver.

As the average investor begins to take his or her gains after investing in gold, the only person that is left is the professional investor. These professional investors are usually much less emotional and much more technically minded when it comes to investing in the next phase of the precious metals rush. This next rush is usually silver, if you are to pay attention to historical data. However, this portion of the precious metals rush does not appeal to the average investor because the gains are not as powerful. However, there are definitely ways to take advantage of a silver rush while taking on much less risk, because you are not dealing with the emotion of the average investor which can make the market price of the precious metal fluctuate higher and lower in ways that are completely unrelated to the actual price of the metal itself.

With silver, you can invest not only in bullion and silver coins, but also in silver derivatives. Some professional investors, after looking at historical data and deciding that silver will move the same way again this time, choose to get involved in twice or three times leveraged exchange traded funds which have a basis in silver. These can provide the same type of gains that the fully stored large gold rush did, as well as added benefits such as higher dividends for holding a leveraged ETF for a longer period of time than is normal. Investors can do this because they are sure that the emotion of the average investor which makes short-term fluctuation in the market much more likely and, consquently, makes the holding of leveraged ETFs undesirable, will not be around to cloud the judgment of other investors and affect the price of the derivative and garner media attention. Quiet investments are always the best investments.

The bottom line is that silver is definitely an attractive option for the professional investor in the wake of an absolutely historic investment gold rush. If you have the time and patience to manage your own investments even a little, then you would be well served to look into the often-overlooked precious metal of silver. You can make a killing without having to take on the risk of the retail marketplace, protecting your assets and interests from the ever-increasing volatility of the market.

Another protection that consumers should certainly consider is protecting your expenses. Many markets have been becoming increasingly competitive in recent years, and this has provided consumers with better choices and values. 

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