Let’s find out!
Silver sold off sharply earlier this week, prompting many to ask: Is now the right time to buy silver? Today, we’re diving into the world of silver investment, a topic increasingly requested by our readers. It’s not surprising given recent market activities. Silver took a while to join gold in its recent rally, but it did eventually get involved. Typically, silver lags behind gold, but both metals have pulled back in recent days. So, is silver still a good investment? And how can you add it to your portfolio? Let’s explore.
Should You Buy Silver?
In short: yes. Deciding to buy silver bullion to hold in your investment portfolio is likely one of the best strategic decisions you can make. When we talk about bullion, we’re referring to investment-grade bars and coins. However, determining the right time to commit to silver bullion can be tricky. The price of silver fluctuates significantly, making the decision stressful for many.
Understanding Silver Price Movements
As of now, the price of silver is $27 per ounce. Both JP Morgan and Commerzbank forecast it will reach $30 by the end of the year, marking a 10-year high. The Silver Institute expects physical demand to hit 1.2 billion ounces this year, the second highest on record.
But what drives the silver price? It’s not just about interest rates and US Treasury yields. Silver’s price has been on a journey in recent years. In the early 2000s, silver hovered around $3 an ounce. Since then, it has approached $50 an ounce and fallen as low as $9.
Factors Influencing Silver’s Volatility
Silver is more volatile than gold due to its smaller market size and its status as an industrial metal. For example, between March 2020 and August 2020, silver climbed 142%. This volatility is influenced by industrial demand and global events such as financial crises and pandemics. Despite these events seemingly passing, silver remains strong because the systemic risks they introduced continue to support its demand.
Silver’s Industrial Demand
Silver is unique compared to gold due to its substantial industrial demand, accounting for nearly 50% of its use. It’s the industries of tomorrow where silver’s role gets exciting. As the best electrical conductor and highly reflective, silver is crucial for the renewable energy market.
Renewable Energy and Electric Vehicles
Global investment in the low carbon energy transition surged 17% last year, reaching $1.77 trillion. Wind farms and solar parks, which heavily use silver, accounted for nearly half of this investment. Additionally, battery-powered vehicles contain 25 to 50 grams of silver each, and the transition to electric vehicles is expected to attract $860 billion in investment globally by 2030. The International Energy Agency predicts up to 220 million electric vehicles on the roads by 2030, up from just 26 million now.
The Silver Market Deficit
The silver market is forecasted to remain in deficit this year, marking the fourth consecutive year of structural market deficit. This high demand, coupled with limited supply, supports the argument for investing in silver.
Government Support and Economic Transformations
The global shift towards sustainability necessitates significant investment, with governments playing a crucial role. For instance, President Biden has pledged $174 billion to support the electric vehicle industry. Over $50 billion in public funds have been committed to low carbon technology projects across major economies.
Inflation and Economic Risks
Unprecedented government spending has put enormous inflationary pressures on the global economy. The US debt alone grows by $1 trillion every 100 days. This creates systemic risks, making silver a valuable hedge against economic instability.
Why Silver is a Safe Haven
Hedge Against Risks
Silver bullion, like gold, is a hedge against systemic and geopolitical risks, inflationary, deflationary, and economic crises.
Independence from Governments
Silver exists independently of government or central bank policies. It cannot be devalued by printing presses, unlike currencies. This makes silver a reliable store of wealth over thousands of years.
No Third-Party Liability
When you own physical silver bullion, you own the asset directly, unlike futures, ETFs, stocks, and shares, which are managed by third parties.
Liquidity
Silver is a very liquid market. With the right dealer, it’s easy to enter and exit the market. The price is set by the market, not by government policies.
Protection Against Uncertainty
Silver acts as insurance for your financial portfolio in uncertain times. Given the recent global crises, climate disasters, and geopolitical tensions, now is the time to consider this insurance.
Is Now a Good Time to Buy Silver?
Given the challenging economic landscape, including potential wars, recessions, and the aftermath of the pandemic, future-proofing your portfolio with silver is a sound decision. The industrial demand for silver and the economic issues at hand make it a valuable addition to any investment portfolio.
How to Buy Silver
If you’ve decided to invest in silver, you might wonder whether to choose silver bullion coins or bars. For more guidance on taking your next steps, visit gore.com or check out our videos on investing in precious metals.
Investing in silver offers both industrial demand benefits and a hedge during uncertain times. The factors pushing silver prices higher are likely to persist, making now an opportune time to buy.
Watch more here: https://www.youtube.com/watch?v=pgkzG_Bt7so
Article and video courtesy of Gold Core.
