We live in uncertain times. There is no telling which direction the market’s winds will blow against the sails of your investment portfolio. The key is to anchor your wealth in commodities with time-tested intrinsic value and buying power, including Precious Metals from APMEX. A growing number of investors are turning to Silver as a hedge against inflation and financial volatility.
As you begin growing your Silver investment, one of most important factors to consider is the premium over spot price.
What are Silver premiums?
Silver’s daily spot price, along with historical data, is easily accessible through APMEX. This number represents the market value of pure, unrefined Silver. Imagine this as Silver extracted directly from the mine.
Of course, Silver trade depends on mints and dealers to convert Silver into coins, rounds, bullion, bars and jewelry, adding distinction and collectibility to Silver products. You’ll notice that APMEX carries a range of products, from Silver American Eagles, the United States’ only official investment-grade Silver bullion coin, to highly collectible Silver Chinese Panda coins.
Mints and dealers are responsible for ensuring the purity of their products, verifying their authenticity, and adjusting and maintaining their inventory through fluctuations of supply and demand. The customer pays price over the cost of the Silver, also known as the premium, to accommodate these costs.
What is causing the rise in premiums?
Silver has recently experienced a significant rise in premiums. National premium averages have risen between roughly 14 percent of spot price per ounce in May 2015 to more than 18 percent in August 2015, as reported by Gold Charts R US. Some analysts predict the rise will continue.
The cause is simple. As Silver’s spot price has fallen to record lows, more customers are demanding Silver products. Premiums have risen as demand has significantly outpaced supply of finished goods, like precious metal bars, rounds and coins. Meanwhile, mints and dealers are facing lower physical supplies. Mining and minting additional Silver products is no small task. It takes time and advanced manufacturing to replenish inventories.
How can I capitalize within the current market?
Understandably, higher premiums may be intimidating to individual investors, but there are strategies for continuing to maximize your Silver investment.
First, investors can minimize the premiums they pay by purchasing larger quantities of Silver. For most products available at APMEX, premiums are lower when buying 500 or more coins, as compared to buying fewer than 20. As you decide how much of any Precious Metal to purchase, consult APMEX’s extensive educational resources.
Also keep in mind that as spot price continues to fluctuate, some analysts predict the best time to buy is sooner rather than later. Silver is widely underappreciated, but there are signs it may jump drastically again. The last time Silver prices made such extraordinary gains was from 2009 to 2011 when Silver nearly topped $50.00 an ounce.
The Silver-Gold price ratio is a key indicator that foreshadows Silver price gains. The two metals tend to move as a pair over the long term, but if they fall out of sync in the short term, it often means one if the metals in incorrectly valued. Every time the Silver-gold price ratio gets too high, it means Silver is undervalued.
History indicates that rises in Silver prices are all but guaranteed when the ratio tops 70. Currently, the ratio is 75. The last three times we saw the ratio cross 70 was in 1997, 2003, and 2009. This resulted in enormous gains on Silver prices. Investors who bought when the ratio peaked could have made an easy 70%, 200%, and 420% respectively.
This ratio is sounding the alarm again, implying Silver prices are headed sky high. While premiums may scare away the average investor, it’s important to remember long term gains and get in now while you still can.
Regardless of how you decide to move forward on your Silver investment, be sure to sign up for Silver price alerts, the most efficient way to precisely time your purchases according to your investment goals.