Why People are Buying Silver Today

The price of silver on January 1, 2000 was $5.34/oz. Today the price of silver is hovering around $32/oz., which is a gain of over 500% in twelve years!

Phoenix, AZ (prHWY.com) January 9, 2013 - The price of silver on January 1, 2000 was $5.34/oz. Today the price of silver is hovering around $32/oz., which is a gain of over 500% in twelve years! This dramatic increase in silver prices is creating a higher investment demand for silver every year which in turn pushes prices up even higher. So if you are considering buying silver for the first time or simply adding to a precious metals portfolio that you already have you may be asking yourself, why buy silver now, after prices have already risen so much?

There are quite a few reasons to buy silver but they basically fall into three main categories which are price speculation, fear and portfolio diversification. Once you have a strong understanding for why people buy silver then you can make decisions for yourself on what is best for you.

Speculating on Silver Prices

Buying silver now and hoping that the price will rise high enough to turn a decent profit is the main reason that people are buying silver online today. As previously mentioned silver is up over 500% in the past twelve years and we believe that silver prices have much higher still to go. Really smart investors understand trends in the market, and one trend that they are watching very closely is the bull market. Bull markets are not random and they do tend to follow a pattern. Bull markets occur in three phases, accumulation, awareness and panic/speculation phase.

In the first phase most of the buyers are institutional, hedge funds, Wall Street etc. In this phase the general public is not participating on a large scale, in fact the public will not even notice the price is rising. In the second phase the public is becoming aware that prices are rising but most are still not participating. We are currently in the second phase of the bull market for silver. In the third phase the public sees what is going on and rushes into the market and creates a buying frenzy which turns into a bubble and then prices come falling back down to earth. Because most experts put us in the second phase we believe there is still time to buy silver and make money doing it.

With some experts calling for $100 to $300/oz. silver in the future it is easy to see why many people are buying silver to speculate.

Fear Drives Silver Buying

The second major reason why people buy silver, or buy gold online for that matter, is due to fear. Precious metals thrive when there is chaos because people buy it as a hedge. The main drivers of this fear are:

1. Inflation
2. Dollar Collapse
3. Stock Market Drops
4. Interest Rake Spikes
5. Commodity Shocks
6. Banking Crises/Failures
7. Geopolitical Concerns

When these types of events happen people pile into silver to protect their paper assets from devaluation. Precious metals have long been held as a store of value and with all of the turmoil surrounding the U.S. Dollar these days many people are turning to silver not only as a hedge but also as a way to protect against a currency collapse. As long as our government continues to run deficits and print money to cover them, silver will prosper.

Portfolio Diversification

The last major reason people buy silver is for pure portfolio diversification purposes. Sure these investors are looking to make a profit on silver, but most importantly they are looking to lower the overall risk of their portfolio. Most financial advisors recommend diversification but they tend to focus on stock, bonds and cash while ignoring the fourth asset class, precious metals. Those that have added gold and silver to their portfolio over the last decade have been able to see gains while other areas may have seen losses. This simple principle can add strength and stability to an investment portfolio because precious metals tend to perform well when other asset classes are not. Many experts recommend between 5-20% of your portfolio be in precious metals. To buy gold and silver online and see special offers for gold and silver visit www.goldandsilveronline.com

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