It was a bullish third quarter for silver prices as the white metal rose 25%.
Of late, silver has been outperforming gold, trading with greater volatility and producing healthy returns for silver exchange-traded funds (ETFs).
While investors who typically favor gold investments have started eyeing up silver, they're joined by another classic gold lover: India.
India sees silver as an undervalued investment with strong upside potential. This bullish view comes from a country that accounts for 12.6% of total world-wide silver demand, according to the precious-metals consulting firm GFMS.
With a weak Indian rupee, gold prices (in rupees) have reached an all-time high in 2012, while silver prices have not surpassed their April 2011 record. Rupee-denominated silver has been quoted around 20% lower than its record, according to FX Street.
In September, silver futures contract volume traded on India's largest commodity exchange, the Multi Commodity Exchange, rose 30% as compared to July's numbers.
Meanwhile, gold futures volume declined 10% in the same time frame.
Silver dealers in India said most return-focused investors have chosen to hold on to their purchases in anticipation of rising prices over the next three to six months.
Indian investors also have slowed silver buying because the two-week period that ends Oct. 15 is considered inauspicious, but are expected to resume their purchases as soon as the period ends, according to The Wall Street Journal.
Indian silver demand will pick up after that as the country prepares for the Hindu festival of lights, known as Diwali, on Nov. 13.
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Interest from India Will Keep Silver Prices Rising
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Investing in Silver: Double Down on the White Metal's Gains
Gold remains the favorite of precious metals investors, but silver is now a strong number two...with a bullet.
That means you should consider investing in silver now before it goes even higher.
In case you haven't noticed, after wallowing around in the mid-20s for months, silver prices have shot back over $30 an ounce.
And thanks to wildly bullish technical and fundamental indicators, silver could soon retest its 2011 high, or even blow through it.
If that happens, silver's run-up will hand investors a fortune, so here's how you can cash in.
But over the past decade, gold has taken off, trading as high as 60-70 times the price of silver.
That is, until last year. As silver prices rose to nearly $50 an ounce, the ratio fell to 30-1.
But as prices for the white metal settled near $27, the ratio has skyrocketed back up.
Right now, you get 55 times more silver for your money than gold.
But it would still have to triple in price to even sniff where it should be in relation to gold.
And there are signs that this is just what's going to happen.
You see, the silver futures markets are in what's known as "backwardization."
That means you should consider investing in silver now before it goes even higher.
In case you haven't noticed, after wallowing around in the mid-20s for months, silver prices have shot back over $30 an ounce.
And thanks to wildly bullish technical and fundamental indicators, silver could soon retest its 2011 high, or even blow through it.
If that happens, silver's run-up will hand investors a fortune, so here's how you can cash in.
Turnaround in Silver/Gold Ratio
Historically, the price of silver per ounce has usually been equal to around 1/16th of an ounce of gold,meaning it took 16 ounces of silver to equal the value of a single ounce of gold.But over the past decade, gold has taken off, trading as high as 60-70 times the price of silver.
That is, until last year. As silver prices rose to nearly $50 an ounce, the ratio fell to 30-1.
But as prices for the white metal settled near $27, the ratio has skyrocketed back up.
Right now, you get 55 times more silver for your money than gold.
But it would still have to triple in price to even sniff where it should be in relation to gold.
And there are signs that this is just what's going to happen.
Strong Signals for Silver Price Rally
From a technical viewpoint, the rally in silver may be just beginning.You see, the silver futures markets are in what's known as "backwardization."
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Investing in Silver: States Support Move to Metals as Dollar Weakens
Investing in silver and gold has become more attractive since the U.S. dollar just doesn't have the clout it once did.
Fears over where the dollar is headed - especially with continued money printing from the central bank - has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.
The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable.
In fact, worries that the U.S. dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.
Rep. Glen Bradley, R-NC, who introduced a currency bill in 2011, told CNN Money, "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System... the State's governmental finances and private economy will be thrown into chaos."
Fears over where the dollar is headed - especially with continued money printing from the central bank - has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.
The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable.
In fact, worries that the U.S. dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.
Rep. Glen Bradley, R-NC, who introduced a currency bill in 2011, told CNN Money, "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System... the State's governmental finances and private economy will be thrown into chaos."
Investing In Silver: How to Buy Silver Coins and Bars
For investors who want to capture the coming move in silver, buying silver bars or coins is still one of the best options.
Here's why...
Like gold, investing in silver is a great hedge against inflation and financial turmoil alike. It's why demand for silver is increasing at an astonishing rate.
In fact, says Money Morning Global Investing Strategist Martin Hutchinson, "If silver were to match its 1980 peak, adjusted for inflation, it could climb as high as $150 an ounce."
For savvy investors who hold physical silver in bars or coins, that move would deliver roughly a 328% gain from today's spot-prices.
But while rare collectible silver coins are often attractive and sometimes bring in big prices when sold, their value is quite subjective, as they are tied to a number of largely intangible factors like scarcity, wear and quality of appearance.
Rather than becoming a rare coin collector, most investors would be better off purchasing bullion coins if their intent is to ride the silver bull market.
Here's why...
Like gold, investing in silver is a great hedge against inflation and financial turmoil alike. It's why demand for silver is increasing at an astonishing rate.
In fact, says Money Morning Global Investing Strategist Martin Hutchinson, "If silver were to match its 1980 peak, adjusted for inflation, it could climb as high as $150 an ounce."
For savvy investors who hold physical silver in bars or coins, that move would deliver roughly a 328% gain from today's spot-prices.
Investing in Silver Coins
Of the two, buying silver coins is a bit more challenging because there are so many different ways to purchase them - including rare coins.But while rare collectible silver coins are often attractive and sometimes bring in big prices when sold, their value is quite subjective, as they are tied to a number of largely intangible factors like scarcity, wear and quality of appearance.
Rather than becoming a rare coin collector, most investors would be better off purchasing bullion coins if their intent is to ride the silver bull market.
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We're Closing In On a 70% Dividend
Lately, it seems billionaire precious metals investor Eric Sprott is grabbing headlines almost daily.
Sprott believes in silver and gold as money, and he has little faith in paper currencies.
That explains his recent acquisition of a chain of currency exchange outlets, which he aims to gradually build into the safest kind of bank - one that makes no loans, and could eventually offer gold- and silver-backed checking accounts.
Leave it to Sprott to flip a long established business model on its head.
And now he's at it again.
Ever the investing activist, Sprott's latest move involves a "call to action" for silver producers, challenging a business practice typical of most - saving in cash.
Sprott has sent a letter to silver producers, suggesting that they reinvest some 25% of their earnings back into silver, rather than in cash at the bank.
On the surface, it doesn't look like such a dramatic step.
But after deeper analysis, it's clear such a move will accomplish two significant things for shareholders:
And as I keep digging, I realize that the implications go well beyond these two shareholder advantages.
Sprott believes in silver and gold as money, and he has little faith in paper currencies.
That explains his recent acquisition of a chain of currency exchange outlets, which he aims to gradually build into the safest kind of bank - one that makes no loans, and could eventually offer gold- and silver-backed checking accounts.
Leave it to Sprott to flip a long established business model on its head.
And now he's at it again.
Ever the investing activist, Sprott's latest move involves a "call to action" for silver producers, challenging a business practice typical of most - saving in cash.
Sprott has sent a letter to silver producers, suggesting that they reinvest some 25% of their earnings back into silver, rather than in cash at the bank.
On the surface, it doesn't look like such a dramatic step.
But after deeper analysis, it's clear such a move will accomplish two significant things for shareholders:
- It will heighten exposure to a commodity that the investor initially bought those shares for.
- And it will protect the investor from the risk of devaluing currencies the company would have held instead.
And as I keep digging, I realize that the implications go well beyond these two shareholder advantages.
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