By Ron Meyers
Warren Buffet once talked about how extraterrestrials who were watching earth would be thoroughly confused about how we handle gold. First, we dig the this yellow metal up out of the earth, melt it into shapes, and then lock it back under underground and guard it with machine guns! It largely makes no practical sense, and provides no real value to the world.
Interestingly, that's not at all the situation with silver, which is an industrial commodity. An industrial commodity is something that is used for the production of real goods in the world. In other words, it has more value than just sitting in a locked vault underground.
Silver is used in everything from mirrors, to optics, to clothing, to cell phones, to photography, to water purifiers, and even to medicine. While silver is the least scarce of all precious metals, it is a widely consumed metal with uses that are wide-ranging and the metal is in high demand across all sectors of manufacturing.
The implications of this are highly favorable to investors of silver. Much like gold, you retain the value of the metal, take advantage of inflation, and protect against global economic risks. But in addition, the industrial uses drive up demand (since manufacturers actually NEED it), and equally important, it drives down the demand (since it's being mostly consumed (when the cell phone is dumped in a land fill, the silver isn't removed, causing it to be essentially "lost" from the world's supply).
The long term results of this are that the world's supplies of silver are being quickly depleted. Many geological associations agree that silver will be the first metal that we run out of and are no longer able to mine from the earth. Imagine what will happen to it's prices at that point! With silver in demand across the economy, it is simply basic economics to understand that a scarce resource in high demand is only going to increase in value over time. In many cases, investing in silver is a no-brainer for the majority of investors.
While it's not the perfect investment for everyone, these reasons make silver one of my personal favorite long-term investments. It provides a strong hedge against global economic depression, protects against inflation, and it's continually increasing in supply and decreasing in demand. Combine that with the current undervalued ratio of silver to gold and it has all the makings of a great investment.
Source: EzineArticles
