Price of silver soaring

The price of silver continues to increase, despite slight fluctations in the price, the trend continues to be upwards. The average silver price for the month of August 2011 (as at 26 August) was £788.28 per kg. On 26 August 2010 the price was £395.49 per kg.

The reason for this?

Well there are a number really, all combining to make silver very desirable, and of course resulting in the continuing increase in price. The following points all help illustrate why the price just keeps on going up. Its in laymans terms, and this list is not a definitive one, but I hope makes interesting reading.

1. For years Central Banks have been selling off their reserves of silver, to meet excessive demand. As a result the mining of silver has not expanded, as it was deemed unprofitable. Demand is now exceeding supply.

2. The digital age is increasing the demand for silver. Your plasma TV, some of the components are silver,
like wise your smart phone, DVDs, computers, solar power. Injury yourself  - silver has healing properties and is used in medical dressings.

3.Tying in with point 2, because most of the silver mined is for industrial purposes, it is not hoarded like gold and stock of it is used very quickly. So although it has an investment value like gold, unlike gold the above ground store of silver is decreasing - because of the demand in growth industries.

4. Investment in silver is now available to the average investor - and is an attractive option in todays volatile investment market. (It is also a more affordable investment, in a market where gold is priced at over £30 per gram). Currently, it is seem as a less volatile investment to the traditional stocks and shares market. Your pension fund may well be investing significant amounts of money in the precious metal markets too. All increasing demand on an already limited stock.

5. Most mined silver is a by product of other mined minerals - gold, copper, lead and zinc. Only 30% of  newly mined silver is sourced from devoted silver mining.

6. China has always been a significant player in the mining and export of silver. It is now exporting far less and also importing far more (various tax rebates have been withdrawn which previously made export an attractive option). China is also encouraging its citizens to personally invest in silver and gold. This suggests that China is now both purchasing and storing silver and gold - suggesting China want to make its currency the new reserve for the world.

As mentioned earlier, this subject could cover pages, and be far more indepth, but I hope this is an interesting over view.

On a final light note for silver jewellery lovers, your collection is growing in value - and as i've always thought silver is no longer the poor relative of gold. (And as already discussed silver has so many worthwhile uses - gold is only really used for jewellery and investment, it has no use in industry). So although your jewellery purchases may now be more costly - see it as an investment! Any excuse hey!