In spite of the fact that silver is often seen as gold’s less desirable sibling, the truth is that this precious metal may constitute a “golden” opportunity worth considering in the near future. From photography and electronics to medical equipment and tech industries, silver’s use is very prevalent. Keep in mind that similarly to all other precious metals, silver’s value is determined by its scarcity and that physical silver is one way a smart entrepreneur can expand his portfolio. Here are three of the reasons why investing in silver now makes sense.

The scrap silver supply is dropping at a fast pace

The principal arguments to why silver is said to have a brighter future compared to gold are not only historical, nor are given by the smaller market. In fact, one of the reasons entrepreneurs should consider investing in silver is the supply drop in 2013. To be more precise, according to the Silver Institute, the silver scrap dropped a substantial 60 million ounces last year. Although there was an increase in mine supply, people were reluctant to sell scrap silver.

Looking forward, the scrap silver supply will continue to decrease, thus forcing the market to compensate the deficit elsewhere; keep in mind that without mitigating the loss, the equilibrium of the market would be shattered. Because it’s impossible to fill in this large amount of silver from mine supplies alone, it means the market will see some loss of investment, which can be translated into more flexibility and higher margins for smart investors.

Silver is produced at under $20 per ounce

In 2013, the main silver companies reported a loss of between $1 and $1.5 per ounce of silver. To cut down production costs, mining companies were forced to high-grade their mines and invest in sustainable development programs. So far, their decisions proved to be efficient, especially considering that the ounce of silver costs less than $20 to produce this year.

While efficient for buyers and investors, the implementation of a Mining Tax in Mexico – the world’s largest silver production countries – means the mining companies will not be able to keep the prices this low for a very long time. In addition, the upgrading of the existing mines comes with a negative consequence, namely that of lowering mine life. All in all, silver price may be low right now, but it will result in drops in long term in the silver production.

Some financial analysts might argue that a large percentage of silver production comes as a result of mining for other metals. Let’s look at gold mining for instance, where a rough 23% of the production is said to be silver ore. For the time being, all experts agree that gold production is bound to drop in 2015, thus taking quite a bit of silver by-production with it.

A final thought

Current data and trends suggest a further plummeting of silver scrap as well as a decrease in silver production. What this leaves is the formula for a supply deficit, one of which investors can take advantage of via contrarian trades.