Thanks to its growing demand as an industrial metal, silver’s future looks shiny.
All the reasons to invest in gold also apply to silver, and often silver’s value is magnified compared to gold.
The difference between silver and other precious metals is its growing demand as an industrial metal. Each year, more and more uses are discovered for silver’s unique chemical properties, ranging from biotech to electronics, and there is growing concern that in less than 15 years, there will be no silver left.
There’s simply not enough silver to meet this growing demand, which makes physical silver an attractive investment.
Growing demand as an industrial metal
After silver is used within industries, like medicine or photography, it becomes useless. Where small quantities of silver remain present in discarded electronic items, it is difficult (and prohibitively costly) to extract. Consequentially, the market is starting to realise that if silver supply falls to zero, this metal will become the most precious of them all.
Affordable and undervalued investment
For many centuries from Roman times, the ratio of gold to silver was historically around 12/1, meaning 12 ounces of silver would buy 1 ounce of gold. But this ratio began to fluctuate in the 1900s. Over the last 100 years, the ratio has been lower than 20 and higher than 100, shifting up and down on the back of rises and falls in the price of both commodities. When the gold/silver ratio is high it is often taken as a good time to buy silver, indicating that the silver metal is undervalued in relation to its pricier relative.
The ratio in January 2024 was 87:1 implying that the silver price is massively undervalued. Many analysts and experts believe that silver should be trading at five times the amount it’s trading at the moment.
Demand is underpinned by industrial uses, investment buying, jewellery, tableware and photography. While the muted economic growth expected in 2024 may not propel industrial demand, silver’s value as a store of wealth, bolstered by its use in many and varied applications, provides long-term investment assurance.
The benefits of silver
- Private investment: Unlike shares or banking, there is no requirement to register ownership of silver. Physical silver is one of the only forms of private investment left today
- Inheritance & legacy: Over the long term, silver’s value has tended to increase in line with other products and commodities, providing a measure of hedging against inflation.
- To diversify your portfolio: Silver tends to increase when other commonly held assets fall in value, which is why experts recommend investing in precious metals as part of a diverse portfolio.
- Sits outside the banking system: Individuals who buy silver are essentially removing it from the banking system and any counterparty risks associated with it.
- Universal currency, easy to liquidate: Physical silver is recognised and sought after all over the world and as such can be exchanged for global currency, goods or services and can be easily liquidated.
Article courtesy of The Pure Gold company
