Many people are looking for ways to protect their assets and generate additional revenue in uncertain financial times. One of the best options for investors is to invest in silver. Being one of the cheapest precious metals, investors are flocking to silver for its potential for promising returns.
This blog post breaks down 5 key factors to consider when deciding whether silver is worthy of your investment. First, let’s take a look at the history of silver investment.
History Of Silver Investment
Silver has been used as a form of currency and investment for centuries. The first silver coins were minted in Lydia in 640 BCE, and since then, silver has played an important role in economies all over the world. In the past, silver was often more valuable than gold. For example, during the height of the Roman Empire, one silver denarius was worth four gold aureus.
From an investment standpoint, silver usually tracks gold prices. However, there are certain periods where silver outperforms gold. One such period was from 2003 to 2011, when silver prices rose more than 400%, while gold prices only rose approximately 150%.
Cheap Price
Silver is currently trading around $22.00 per ounce, making it a cheaper option than gold. This is one of the main reasons investors are turning to silver to earn a higher return on their investment.
Investors often turn to silver when looking for an affordable option in the precious metals market. For example, platinum is currently trading at $940 per ounce, and palladium is trading at $780 per ounce. This makes silver nearly 50% cheaper than its closest competitor.
Therefore, this makes silver an attractive investment option for those with little cash. You can buy a larger quantity of silver for the same price as a smaller quantity of gold, which means you have the potential to earn greater profits.
Growing Demand
Additionally, silver has a range of uses across various sectors. Consequently, this means that demand is consistent and most recently, growing.
For example, silver is used to produce various products such as batteries, water purification systems, jewelry, flatware, and silverware. In fact, silver is so versatile that it is even being used in new applications such as nanotechnology.
According to The Assay, a key part of silver’s rising demand is due to its use in solar panels. As the word moves towards a greener economy, investors are predicting that the demand for silver will correspondingly rise to produce solar technologies.
A report by the Silver Institute demonstrates that year on year demand grew by 19% in 2021 and is expected to grow a further 5% for 2022. This increasing demand, coupled with a dwindling supply, is likely to lead to higher silver prices in the future.
Dwindling Supply
The world’s supply of silver is diminishing at an alarming rate. According to the Silver Institute, global silver production has declined for three consecutive years. For example, in 2017, global silver mine production fell by approximately 100 million ounces (nearly 5%).
This is largely because silver deposits are becoming increasingly difficult to find and mine. As a result, silver production costs have risen, which has led to many mines shutting down or reducing operations.
The falling supply of silver is likely to lead to higher prices as demand grows. Investors who buy silver now are likely to see their investment pay off in the years to come as the price of silver rises.
Outperforms Gold
Silver bullion has outperformed gold bullion over the last few years despite being the cheaper precious metal. This is mostly due to silver’s growing industrial demand, as discussed above.
From 2003 to 2011, silver prices rose by 600%, while gold prices only rose by approximately 150%. In the last 5 years, silver prices have risen by nearly 60%, while gold prices have only increased by about 20%.
While gold has always been a strong investment, silver is now emerging as a better option for those looking to profit from the precious metals market.
Shrinking Inventories
Finally, silver inventories are shrinking at a rapid pace. In recent years, governments have dramatically reduced their silver holdings, and silver ETFs have seen net outflows for nine consecutive months.
The shrinking inventory of silver is mostly thanks to the reduced use of silver in modern currency. Consequently, this has helped anchor the price of silver and make the precious resource accessible for everyday investors.
In addition, the reduced silver inventory has helped to increase silver’s price volatility. This makes silver a more attractive investment for those looking to profit from short-term price movements.
Final Thoughts
Investors looking for a precious metal with upside potential should consider investing in silver. The cheap price, growing demand, dwindling supply, and outperforming gold prices are all reasons to invest in silver.
Now is a good time if you’re thinking about investing in silver. Prices are relatively low, and there are several reasons to believe that silver prices will increase in the future. Alternatively, if silver isn’t for you, check out other profitable investment options for 2022.
