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A Silver Comeback For The Year Ahead

Some analysts predict a severe rise in the value of silver this year. Silver has already gone up as high as $15.53 per ounce in the first quarter, while gold has gone up as high as $1,341+ per ounce. There is the new sentiment for silver, according to CME Group, that coincides with a move from bullish in 2018 to bearish in 2019.

Sales of US Eagle Silver Bullion coins were up in the early part of the year, as much as 48% from the previous year. Investors are off to a slow start in the purchase of silver but based on interest rate expectations and a weakening dollar, there’s a new pulse toward silver investments.

How Gold and Silver Ratio Works

The Gold and Silver Ratio (GSR) is simply an indicator of the price of gold as it relates to the price of silver. It is calculated by dividing the price of gold by the price of silver based on troy ounces. The answer: the number of ounces of silver that an ounce of gold is worth.

In the most recent years, the GSR range was 65.5–83.5. Today, consider that about 86 oz. of silver is equal to about 1 oz. of gold. That’s a 1,300/15 ratio or a difference of $86/oz. Often these precious metals trend at the same time even though gold is generally seen as a favorable global currency and a suitable hedge against inflation. Silver is catching up.

According to an author at SeekingAlpha.com, “The gold and silver ratio currently trading at 80/1 ounces of silver to gold is at record levels, indicating that the value has come back to silver.”

Silver has generally been more appealing as an industrial metal (as much as 50-60%). As a rule, silver prices are more sensitive to our global economic cycle. The GSR widens when gold prices have a more significant gain relative to silver prices, especially in times of uncertainty.

Silver prices are shown to outperform gold when the economy recovers since industrial demand increases and places the gold and silver ratio under pressure. Silver like gold is again becoming a suitable hedge against inflation.

Indicators for a Silver Investment

There are some good and poor indicators for making worthy investment choices. While nothing is certain in today’s market, making the right choice for your financial portfolio based on sound information and advice is critical. Below are some indicators for making sound investment decisions.

Media News. Relying solely on the media news when it comes to financial hedging and investments is not the best choice. News is essential, but don’t place your highest confidence in media outlets. Various sources report varying investment news stories, and they rarely align with each other.

Inflation Tools. Consumer price index (CPI) tools are primarily based on fiat money rather than precious metals and other tangible assets. Precious metals are not impacted in the same way. Consumer spending figures are generally based on the value of the dollar.

Industrial Metals Forecasting. While valuing industrial metals based on demand and forecasts is useful to review, making an investment choice should include additional research. An industrial demand impacts the market differently than a consumer or investment demand.

Price of Gold. The price of gold is generally one of the best indicators for valuing precious metals in general. History shows this to be accurate as silver typically follows gold over time in its decline or ascent.

Stability of The Euro. The Euro is shown to give legitimate insight into the expectations for precious metals, particularly gold. When the Euro resists, gold does as well. When the Euro is steady, so, are precious metals.

The COT. The Commitment of Traders (COT) report is based on the market position of large traders in terms of silver futures. This report offers an indication of the activity in the silver market and whether this metal is in a bull or bear market.

These indicators for adding silver to your investment mix are generally worthy and should be reviewed frequently, as the market fluctuates regularly. Today, silver purchases are on the rise and found to be an excellent hedge during times of economic and political uncertainty. Investors that choose silver will naturally drive the prices up soon.

Silver and Interest Rates

With interest rates on a slow rise, the bond market may drive stocks and commodities for many investors. This capital must flow from the US dollar, which in turn could lead to inflation. With a sudden rise in these commodities, silver prices are likely to go up and especially as debt continues to increase within our current fiat money system.

While this is good news for the precious metals industry, a time of inflation is not what consumers hope for. Investors should be prepared for a market downturn with an early investment in silver, and today’s low prices are incredibly desirable. They won’t last.

Silver a Hot Commodity

While gold still seems to have center stage, silver is, in fact, a hot commodity for many reasons. Consider the supply and demand for silver. There is a constant demand, and the supply level for silver is not as high as for gold.

Silver scrap is valuable in that it may be melted down and manufactured into jewelry, watches, coinage, and other valuable items. Even while new metals are being tested and found acceptable, technology remains a huge driver for silver. New applications such as solar photovoltaic components and modern computer devices require silver.

Investors have long found both silver and gold a safe hedge against inflation, and now is a time when this is especially true. It is an excellent time to consider an updated portfolio mix that includes 20% silver. Protect your investments, secure a hedge against inflation, and invest in a precious metal that is excluded from a vulnerable, government-run fiat money system. In many ways, it is a time of tumult across the nation and abroad. A silver investment may be the best choice you make this year. Prepare for the unexpected and weather the storm with a solid investment in beautiful silver.

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Market News

Understanding Inflation and How It Impacts Your Investments

Investors across the globe are concerned about inflation due to fluctuating markets and continuing political unrest both at home and abroad. At a time like this, it is critical that investors understand how inflation impacts the economy and their assets.

Inflation takes place in every country, not just those countries experiencing political dissension, market challenges, poverty, and crime. Developed markets are not exempt from currency risks that lead to economic downturns.

As you know, inflation is a sustained (inflated) price increase that leads to a fall in the purchasing power of the dollar, this is generally due to excess demand and supply issues, and may trigger other economic or market events.

Inflation is primarily measured by the consumer price index (CPI), which is based on the rate that prices increase for household goods and services consumed. The CPI omits specific non-applicable spending for items like energy prices that are impacted by factors outside consumer control; those that do not directly impact inflation.

When inflation rises—consumers may purchase fewer goods, prices may go up, and profits may go down. As a result, the economy slows down and becomes less stable than average. There is no question; inflation has a concerning impact on your investments.

Inflationary Impact on Bonds

When it comes to investment bonds prices, inflation generally has the most impact. Heightened increase generates higher yields, which in turn leads to lower bond prices. Then inflation negatively impacts the value at maturity or the principal payment.

The impact on bonds is visible in nominal versus real returns. For example, nominal returns are “actual” yields. Real returns, on the other hand, represent inflation-adjusted yields that are paid to lenders by borrowers. As inflation compounds with time, these sums add up and adversely impact investors.

International investors are concerned about sovereign debt—the money or credit owned by a government to its creditors, according to Justin Kuepper, the author at the balance. Inflation, in this case, impacts not only bonds but also securities and bills with short-duration maturity dates. Sovereign debts may also include long-duration contracts such as pensions, services, entitlement programs, and more.

Inflationary Impact on Stocks

When interest rates hike, and companies raise their prices, investors become concerned about their financial portfolios. Stocks are generally a good hedge against inflation since company revenues can show growth at the same rate as inflation. However, investors may overpay for stocks. If companies raise prices during a boom, global sellers find it difficult to remain competitive since foreign producing companies may not need to raise their rates. Inflation means most are paying more and receiving less. Financials are overstated due to inflation.

Some economists believe that inflation of 1-3% offers a substantial return in stocks, and others believe inflation of 6% or more produces negative returns for stocks. In any case, it is difficult to determine real cause and effect analysis. Most agree that out-of-control inflation results in a lower return on equities.

What Happens When Inflationary Prices Go Back Down?

When prices go back down after inflation so do the inflated revenues, making it difficult to assess value, the primary tool by the Federal Reserve for fighting inflation is to apply short-term interest rates.  If money costs more to borrow, the Federal Reserve can remove some excess capital from the market and thus slow the price increase cycle. The goal is to reach lower, controlled inflation in which employment can increase, consumers have more to spend, and the economy grows. In most scenarios, this approach is not always easy to assess or to achieve.

Hedge Your Financial Portfolio With Precious Metals

There are many ways in which investors prepare for inflation. It is critical to reducing risks, and one of the most attractive ways to hedge your financial portfolio is with substantial assets such as precious metals. By investing in non-inflationary security such as gold or silver, investors weather the storm of economic downturns. Gold bullion, a gold-backed individual retirement account (IRA) or silver are some of the most sought-after securities in a market such as the one the US and national economies are facing.

The question is, should investors be concerned about today’s inflationary threats when it comes to their investments? A diversified financial portfolio is one that is planned to withstand uncertain times in which inflation is imminent. Gold and silver monetary assets are the answers.

Keep in mind; inflation destroys purchasing power. Whether your financial future is well balanced or you are a retiree on a fixed income, you need secure assets to withstand whatever the market bears. With a diversified portfolio that includes stocks, bonds, and tangible precious metals to hedge against inflation, you take a step in protecting your assets and those of your family for the future.

Cash assets are always recommended, but inflation works against this type of fiat money. Consider that an item valued at a specific dollar amount will be worth less after a period of inflation. A purchase in gold or silver is a substantial addition to any portfolio and one that is stable and free from government regulations. Hedge yourself from inflation now by purchasing protected security in precious metals. Invest in gold or silver today. You may not want to wait until another round of recession.