As with any commodity or investment, the rules of supply and demand make the biggest impact on price.  Today's precious metals investors have only seen the ground floor of an explosion in the popularity of gold and silver as an investment.

New Consumer Level Products

The growth in metals as an investment can be seen easily through any media outlet.  Firms are lining up to sell gold and silver coins directly through television on popular newscasts.  Local coin shops are frequently sold out of consumer grade metals investments, as people flock to trade in their cash for real wealth.  In addition, in the past two years, the number of companies offering to buy your gold and silver has surged.  Each day, we see more and more into the future – a future of silver as a popular investment.

Mid-Range Offerings

The popularity of gold and silver as an investment isn't just seen on TV or in the local coin shop.  Wall Street is also jumping on the bandwagon, offering new “paper” gold and silver products that allow you to “own” gold or silver without ever taking delivery.  While these options aren't the best for investors looking for wealth preservation or the ability to actually hold and touch their investments, they are certainly raising awareness, as well as demand, for gold and silver through the futures markets.  Even platinum and palladium, two rare industrial metals, are attracting attention as people look for anything resembling a metal for an investment.

Buying Makes Sense

In just one decade, from 1999 to the end of 2009, investors watched as the stock market entered a free-fall and ended the decade just where it had left off.  All the while, gold and silver were pushing higher and higher, up more than 400% from the beginning of the decade, while not grabbing a single look from most investors. 

Warren Buffett was one of the most prominent silver investors during the last decade, but no one seemed to notice.  After a short time, he exited his position, taking a hefty profit, but missed out on the boom that was still yet to come. 

A New Investing Philosophy

With the US stock markets showing what is very similar to Japan's “Lost Decade,” investors do not need to be reminded about how important it is to grow your wealth while simultaneously protecting it.  Today's investors aren't looking for the next complicated financial derivatives trend or the fastest way to make a million on the newest dotcom.  Instead, investors are looking to growth their wealth over time, protect against inflation, and be invested in an asset they can hold and see with their own eyes. 

Investors are no longer on the offensive; they want instruments that can play offense and defense, growing wealth while also protecting it.  They're looking no further than metals to accomplish just these goals.

A Normal Cycle

The shift into metals is a phenomenon we've seen over history.  Hot stocks fizzle, bubbles come and go, but silver always remains as a popular investment.  In fact, in the depths of each big recession, the stock markets value, as calculated by the price of the Dow Jones divided by the price of gold, always comes within 1.  Throughout history, gold and silver have been the representation of wealth, and it requires very little investigation to find out why.

Dr. Jeffrey Lewis

www.silver-coin-investor.com

-- Posted Tuesday, 5 January 2010 | Digg This Article