Why Is Silver So Cheap? - Blog - International Precious Metals

Decline of Silver Prices

Silver prices have fallen 70 percent since the shiny metal reached its peak in April of 2011 when it pulled $49.82 an ounce. October of 2013 saw silver prices decline 36 percent to their lowest level since 2010- taking it below $25 an ounce and sparking the sale of 1.4 million ounces of silver American Eagles at the U.S. Mint in one day alone.

Investment demand dropped 42 percent in 2013 due to both investor disappointment in the ability of silver prices to reach the highs of 2011 and a recovery in the certain markets. Today’s silverspot price hovers right below $16 an ounce. Analysts predict that silver prices in the next few years will continue declining due to the expectation that Equity markets will firm up. Silver is forecast to drop as low as $8 per troy ounce in the coming months.

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The Rarity of Silver vs Gold

Gold and silver are the most popular of the precious metals, mostly due to their functionality in both industrial and commercial applications. But the difference in their availability lends itself to vastly different spot prices. The average occurrence of gold in igneous rock is 0.004 parts per million. Silver shows up at a rate of  0.07 parts per million. There is no question that gold is simply much rarer than silver and will therefore always command a higher price.

 

Global Economic Effect

Because 70 percent of the supply of silver is a byproduct of the production of copper, lead and zinc, global production affects the price of silver. Global mine production of the gray metal is about 671 million troy ounces annually. While the current low price of silver will maintain production for a while, it has created a decline in further mining investment. This has experts forecasting a peak in silver mining over the next couple of years.

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Different Forms of Silver

American Eagle Silver coins are America's only official investment grade silver bullion coins.

Why buy silver? Because they act as building blocks for your precious metals investment and are backed  - weight and purity – by the U.S. government. Silver Eagles are legal tender and can be sold for cash and coins at precious metal dealers the world over. Silver Maples are another popular option for adding silver to a portfolio.