Will You Find a Silver Lining in the Commodity Market this Month?

Silver
is sometimes considered as being a less attractive commodity than gold. Yet,
this precious metal has long been regarded as being a smart investment. Is
February 2020 the right time to buy some?

Why Is Silver a Popular Commodity?

Silver
meets all of the criteria to be viewed as a valuable, sought-after commodity. For
a start, it is extremely rare. Only around 1.5 million tons of this metal have
ever been mined.

In
fact, it is estimated that there is now less silver to be mined than there is
gold. Part of the reason for this is that silver
is more widely used in the likes of dental implant, mirrors, LED chips and
for soldering purposes.

What
this means is that silver has a tendency to be more volatile than gold. While
the majority of gold is used for investment purposes, silver is largely used
for industrial applications.

Because
of this, its price rises and falls according to economic progress around the
planet. More technological progress leads to a greater demand for silver.

The Recent History of the Price of Silver

At
the time of writing, silver is valued at around $17.65 per ounce. Following a
strong start to 2020, it has tailed off slightly in recent days.

Silver
started this year at just under $18. However, if we go back to January 2019, we
can see a price of $15.50. A year further back and it was just over $17.

In
between these dates, there have been lots of peaks and troughs. The lower value
of silver compared to gold (gold is currently at $1,485 per ounce) is certainly
one of the reasons for this increased volatility.

Choosing Between Gold and Silver

Around
a billion ounces is the
total annual supply of new silver each year. This compares favourably to the figure
for gold, which is 120 million ounces. However, the far lower value of silver
means that the market is ultimately smaller and more subject to fluctuations.

It is also
worth noting that the market cap of silver is a lot smaller than that of large
companies such as Apple and Microsoft. So, any substantial movement in the
market can lead to large price movements.

This means that
the reasons for choosing silver or gold are very different. Gold is usually
seen as a safe haven. This is a steady sort of investment that is viewed as
being particularly useful in times of economic crisis.

On the
other hand, silver gives you the chance for larger gains. You need to be prepared
to ride out some price drops if you choose this metal. Investing in silver also
means having to choose the moments for buying and selling wisely.

Of course,
the lower prices also means that it can be a more affordable investment for
someone who wants to start off gently in the commodities market. It is probably
also best for someone who is happy to sit on it for a while, with no urgent
need to cash in.

What Are the Price Predictions Like?

As we have
seen, silver prices rose at the turn of the year but have dropped a little
since then. Taking advantage of these frequent downturns is vital for silver
investors. Since it has such a wide range of uses, the price can be expected to
bounce back, as a look at the history of its value will show you.

Price
predictions for silver vary widely. The number of different factors that
influence the price make it extremely difficult to predict the future. Yet, a
look at the market and the long-standing
value of the metal means that now is a good time to look into it fully
before making your mind up.