Are American Silver Eagle Coins a Good Investment Now?
Like other precious metals, silver is often used as an investment
. Although no longer considered to be legal tender in the US, silver has been regarded as a store of value and a form of currency throughout the world for more than 4,000 years.If you compare the price of silver to the price of gold you would see that silver is considerably more volatile. That's because there are fluctuations in the way silver is used. There can be large fluctuations between store of value and industrial uses that affect its valuation. And, because silver has lower market liquidity than gold its volatility also is greater.Silver still often tracks the price of gold because of the intrinsic value of the metal. However, the gold/silver ratio can vary by quite a bit. The lower the ratio the more expensive silver is when you compare it to gold.In 1792 the United States fixed the gold/silver ratio by law at 1:15. This meant that you could buy 15 troy ounces of silver with one troy ounce of gold. During the 20th century the ratio was 1:47. In other words, on average, one troy ounce of gold would buy 47 ounces of silver.On September 22, 2010 gold hit a new high. At the close of the market one troy ounce of gold was selling for $1,291.20. At the close of the market the same day, one troy ounce of silver was selling for $21.30. On that day the gold/silver ratio was 1:67. In other words, one troy ounce of gold would buy 67 ounces of silver.Silver has been appreciating rather dramatically since 2005. To put things into perspective, the yearly cumulative average price of silver in 2000 was $4.95. In 2005 the yearly average cumulative price rose to $7.31. Throughout 2009 the average cumulative price of silver was $14.67.It appears that silver is rising in price very dramatically. Perhaps it's because people are concerned with the economy. Since the global recession began in 2008 investors have been increasing their demand for precious metals. That's because when inflation increases precious metals have historically increased in value.One of the most popular ways to invest in silver is to buy silver coins. One example is the American Silver Eagle bullion coin. The American Silver Eagle is the official silver bullion coin of the US. It is only struck in one troy ounce sizes and is guaranteed to contain one troy ounce of 99.9% pure silver.Theses coins sell for a very small premium over the spot price of silver. Because of that American Silver Eagle coins have become one of the most popular ways many people use to invest in silver.Are American Silver Eagle Coins a Good Investment Now?
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