This is one of the main reasons why investors are looking at gold and silver right now. If inflation continues to go up and exceeds expectations, silver and gold will perform extremely well. Anyone who has been watching the news recently will know that there are a lot of them right now. Gold and silver have been around since the dawn of civilization so it’s no wonder that investors flock to them when they are worried and want some safety. That’s another reason why we have seen a big jump in their prices in recent weeks, too.
- We’ve seen that there are inflationary pressures and geopolitical tensions around the world.
- When it comes to silver, industry accounts for almost half of all demand!
- Most recently, silver prices were floating around $22.5 dollars, but the war in Ukraine has pushed silver prices back up to almost $26 dollars.
Silver is the second most popular precious metal after gold and one of the go-to inflation investments. When I’m looking at everything that has been happening over the last few months, it feels like it’s a good time to talk about silver again. What drives the price of silver and is silver a good investment right now? When it comes to silver, there are a few things that influence the price.
If you are not sure why that’s the case, let me break it down for you. Inflation is basically the decline of the purchasing power of a currency. Essentially, the same amount of money buys less of a specific good, commodity or service. Therefore, in times of high inflation, investors buy more commodities to preserve some of their purchasing power which is why these commodities are referred to as a store of value. Really, any asset that maintains its value over time can be a store of value which includes real estate, stocks, even currency when inflation is low.
The US, UK and Eurozone are hitting record inflation levels that we have last seen 30 or 40 years ago. In January, US Inflation hit 7.5%, UK inflation hit 5.5% with the Retail Price Index going up 7.8%, while the Eurozone and Canada’s inflation rates both hit 5.1%. What’s more, the current economic conditions are set for more volatility and even higher inflation. Banks have started to raise interest rates to stabilise inflation, but by the looks of it, it could be out of their control. The more these commodities go up, the higher costs will be for companies and the more expensive it will be to produce goods. This will put a pressure on inflation and it will likely continue to rise over the coming months.
Plus, silver demand is growing because of industries like renewable energy and electric vehicles. Just in 2020, 101 million ounces of silver was used in solar panels! Electric vehicles also require several times more silver than normal vehicles. Silver is also widely used in electronics and also during brazing and soldering.
It’s a small deficit of only 20 million, but it still shows that demand has started to outpace supply. In 2021, silver demand was just 1.033 billion ounces compared to a supply of 1.056 billion ounces. Essentially, demand has gone up by 7.6% whereas supply has only gone up by only 3.4%. Again, there isn’t a massive difference between supply and demand right now, but if the trend continues, this could really start pushing the price of silver up!
I’m slightly intrigued by the idea of investing in gold, but how easy would it actually be to liquidate it and get your money’s worth at a later time? Obviously you’re not gonna pay directly with gold at the grocery store or anything like that.
If you invest in Gold/Silver, how do you actually liquidate it?
What makes silver different from gold is the fact that silver is much more important for the industry. Gold is mainly mined for investment purposes with only 10% of the demand for gold coming from the industry. When it comes to silver, industry accounts for almost half of all demand!
What are the pro’s and con’s when buying Silver over Gold?
Now, the most popular commodity as a store of value is gold, followed by silver. The funny thing here is that, actually, gold and silver are not as strongly correlated to inflation as other commodities. However, they are still one of the classic picks for inflation hedging or safe-haven during volatile or bad market conditions. The current inflation levels around the world are record-high.
We’ve seen that the demand for silver is going up and will continue to go up while the silver supply is shrinking. We’ve seen that there are inflationary pressures and geopolitical tensions around the world. Still, the current gold-to-silver-price ratio is just under 80 which means that silver is relatively bytecoin price prediction 2020 2025 cheap compared to gold right now. Plus, it is important to remember that assets like silver and gold are long-term investments so you should be prepared to be patient if you are buying in. Commodities and precious metals are real, physical goods and as such their price is positively affected by inflation.
Interested in having a discussion about investing in gold vs silver (or maybe neither). I do not invest in either, but I’m curious about the historical price https://www.topforexnews.org/investing/5-best-stocks-to-buy-for-2021/ of silver and whether it makes sense to buy physical silver. My impression is that the current price of silver is kind of low, and gold is kind of neutral.
Investing in gold vs silver
Demand for silver jewelry and silver as a physical investment are also going up by more than 10% so that’s yet another trend that can positively influence silver prices. I’ll add the link to the resources in the description below for you take a look, too. Obviously, that is not great news for silver investors and stackers, but I think that the analysts are a bit pessimistic in their price forecasts.
Now, I guess the question on everyone’s mind is how high can silver prices actually go? In March of 2020, silver skyrocketed to almost $30 dollars and has been moving between $22 and $28 dollars since then. Most recently, silver prices were floating around $22.5 dollars, but the war in Ukraine has pushed silver prices back up to almost $26 dollars. Well, some analysts expect silver prices to remain the same for most of the year, before falling down to $22 dollars in December. Other analysts are more bullish and are seeing prices around $26 to $28 dollars, but they also lean towards lower prices by December 2022. Then, we’ve got the diehard fans of silver who are seeing silver prices of $500 to $1,200 dollars, but I think the chances of this happening are pretty minimal.
Basically, there is a constant, growing demand for silver in the industry. In fact, this has led to the first silver market deficit https://www.day-trading.info/15-stock-market-investing-news-websites-that-you/ in 6 years! In 2022, silver demand is expected to hit 1.112 billion ounces compared to a supply of only 1.092 billion ounces.
