Silver has long been a popular choice among investors, particularly during economic uncertainty. And that is exactly where we are right now.
Money is being printed at record rated, debt is at an all time high, inflation is through the roof, and people are quickly flocking to both gold and silver...
We Are Expecting Silver Prices To Sky Rocket Because Of This
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People often diversify their assets and savings by purchasing silver, especially during an economic crisis and inflation. There is no wonder that speculation of a possible increase in the price of silver exists given that we are increasing the cost of the precious metals confronting such issues today. According to many financial analysts, there will likely be a major increase in the price of gold and silver during the next few years.
There are few more secure investments than a silver bar in the current economic climate. Since silver is debt-free, it relies largely on debt and money production. Because of the current state of the global economy and the accompanying inflation, central banks are creating a lot of money, which boosts the value of debt-free commodities like silver.
This is also a factor that has contributed to the extreme upward trends in gold and silver prices. The government cannot produce silver or gold, but several central banks worldwide have issued positive predictions for these assets.
In this article, we will explore the current market conditions and analyze the trends in silver investing to determine the likelihood of silver reaching $100 per ounce. We will look at historical price fluctuations, the factors that have influenced them in the past and the potential for future growth. We will also discuss the various ways in which investors can benefit from investing in silver.
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About Silver
Precious metals are greatly sought because of their scarcity. Silver's low price and versatile uses make it a popular metal, even if gold is still the preferred investment. The photography industry, which uses silver in film processing, also makes substantial use of silver. It's also a must-have in any technological device.
Companies dealing in silver sometimes own and manage mines from which the metal is mined. Most of these businesses also participate in silver production. In 2018, silver mining output was close to 26,600 metric tons.
Silver was mostly mined in China, Mexico and Peru then. On the order of 870 metric tons of silver, the United States contributed. In most cases, silver was a byproduct of mining for other metals including lead, zinc, copper and gold.
Silver has been used for industrial purposes for centuries and its properties make it a valuable metal in many industries. It is highly conductive, malleable and ductile, making it ideal for use in electronics, jewelry and coins. Silver is also antimicrobial and non-toxic, making it a great choice for medical applications like wound dressings and catheters.
Silver makes spark plugs, electric contacts and heat exchangers in the automotive industry. Silver is also found in the chemical industry, where it is used to make photographic materials, mirrors, batteries and semiconductors. Silver is an important component in solar cells and is also used in the glassmaking industry. Silver is an important component of many alloys such as sterling silver and it’s also used in paints, inks and dyes.
How to Invest in Silver
There are several ways you can invest in silver. Here are some of the most popular methods:
Silver Exchange-Traded Funds
Silver ETFs are backed by physical silver held in vaults and provide investors with an easy way to gain exposure to the silver market.
When investing in a silver ETF, you do not own the silver itself. Instead, you are buying shares of a fund that holds the silver. Investing in a silver ETF eliminates the need to store the physical silver.
Silver ETFs are typically traded on major stock exchanges. Examples include:
All of these ETFs track the spot price of silver, meaning that they aim to replicate the performance of the metal without charging investors any storage fees.
Mining Stocks
Silver mining stocks are shares of companies that produce silver from mining activities. These stocks are typically traded on major stock exchanges like the NYSE and NASDAQ, which provide investors with the liquidity and pricing information needed to make informed investment decisions.
Futures
Silver futures are a type of contract that allows investors to buy or sell an agreed-upon amount of silver at a predetermined price on a future date.
To invest in silver futures, you must first open a futures trading account with a broker. You will then need to decide how much capital you want to allocate to silver futures and which specific silver futures contract you want to purchase.
Many silver futures contracts are available, including those based on the London Bullion Market Association (LBMA) silver spot price, COMEX silver futures and ETFs such as iShares Silver Trust (SLV).
Once you have chosen your silver futures contract, you can place a buy or sell order with your broker. It is important to note that investing in silver futures is a leveraged investment, meaning that you will only need to put up a small portion of the contract's total value when placing your order.
Physical Metal
When it comes to investing in physical metal, there are three main types of silver investments: coins, bars and rounds. Coins are the most popular option for small investors, as they are easy to buy, store and transport. Silver coins come in various sizes, ranging from 1/10 oz to 1 oz.
Standard options include the U.S. Silver Eagle, Canadian Maple Leaf and Austrian Philharmonic. Silver bars, which come in sizes ranging from 1 oz to 1,000 oz, are more cost-effective than coins and often more attractive to more prominent investors. Silver rounds are similar to coins but are not considered legal tender.
Historical Silver Price Movements
Silver prices have seen significant movements over the past decade, hitting all-time highs in 2011. Since then, silver prices have been relatively volatile, increasing and decreasing.
In 2012, the price of silver dropped to a low of $26.15 per ounce due to lower demand and increased supply. However, in 2013 the price began to grow again, reaching a high of $32.19 per ounce by the end of the year.
The price of silver continued to increase throughout 2014 and 2015, reaching a peak of $20.42 per ounce in early 2016. After that, silver prices started to decline again, reaching a low of $14.84 in late 2016.
During 2017, the silver price began to increase again and peaked at $18.35 per ounce in early 2018. However, prices have since declined, dropping to a low of $14.47 per ounce in late 2018.
Since the start of 2019, the price of silver has been increasing steadily, reaching its highest point in 2020. Since then, the price has decreased slightly, but overall, the trend is still up.
Looking to the future, the price of silver is expected to continue its upward trend in 2021 as the economy rebounds from the impacts of the Covid-19 pandemic. Increased industrial demand and global manufacturing and production improvements could further buoy this.
Analysts also expect silver prices to remain strong due to increasing investment demand driven by a surge in ETFs and other silver-backed investments.
In 2023, the price of silver is expected to continue its upward trajectory, although there may be some fluctuations due to changing economic conditions or geopolitical developments. Demand for silver is expected to remain strong and the metal could benefit from increased industrial usage or increased demand from investors.
Additionally, any changes in the supply of silver, such as closed mines or discoveries, could significantly impact the price.
Specific Considerations for Silver's Spot Price
The amount an investor pays for one ounce of silver available for immediate delivery is known as the spot price. For each transaction, investors are usually required to pay a premium on top of this amount. Silver is valued on a per-ounce basis.
Even though gold's price fluctuations receive the lion's share of market coverage, silver is often regarded as being just as pivotal in gauging the likely actions of commodities markets and the entire market.
Supply and demand, inflation and the dollar value all have a role in the ups and downs of silver prices. When supplies are low, prices tend to go up. When the dollar value drops, investors seek silver and other precious metals as a haven for their money.
Silver's price per troy ounce peaked at about $20 in the early 1980s but dropped in the 1990s. As of 2014, one ounce costs about $19. In 2020, the average closing price of an ounce of silver was $20.69.
What Forces May Cause Silver to Reach $100 Per Ounce?
To reach $100 per ounce, silver prices would need to increase by approximately 400%. The following factors may cause silver to reach new highs.
Uncertainty of the Stock Market
Silver's price is often independent of what's happening in the stock market, but traditionally precious metals have gained when equities values have fallen. The price of silver may increase if the stock market has a downturn.
In December 2021, stock indices hit an all-time high, but in early 2022, they dropped, indicating that equities are overvalued. The Buffett Indicator, a ratio of the stock market's value to the country's gross domestic product, backs this up.
When investors lose faith in stocks, they often turn to commodities as a haven for their wealth, driving up the price of those commodities. Silver is particularly attractive because it is seen as a more affordable alternative to gold and other precious metals. In times of economic hardship, investors may flock to silver to protect their assets from market volatility.
Compared to Gold, Silver Is Cheap at the Moment
Compared to its all-time high, the price of silver is now meager. Silver's relatively low price compared to gold indicates its value. Savvy precious metals investors and traders regularly monitor this ratio, known as the gold-to-silver ratio, to anticipate where the market will swing next.
The gold-to-silver ratio is the number of silver ounces needed to buy one gold ounce. The ratio of gold to silver has been volatile throughout the previous century, averaging roughly 50. So, silver would have to be valued at $34.40 to reach the mean, which it will eventually do; this is a significant return for anyone who invests in silver now.
Growing Demand for Eco-Friendly Electronics and Power Sources
Silver is used in many modern electronics, such as solar cells, batteries and circuit boards. As more people become aware of the environmental impact of traditional energy sources, they are turning to renewable sources such as solar energy.
This increased demand for silver to produce renewable energy is expected to drive its price. Silver is also used in various medical applications, including wound dressings and dental products, which may increase demand.
Rising Inflation in the US
Inflation is when the prices for goods and services rise and consequently, the purchasing power of each currency unit, such as the US dollar, falls. As the US dollar weakens in buying power, commodities, including silver, become more attractive investments due to their ability to hedge against inflation. When investors perceive that inflation is on the rise, they may turn to commodities like silver as a safeguard against the devaluation of their currency.
Global Political Unrest as A Result of Russia's Invasion of Ukraine
Throughout history, periods of increased worldwide unrest have been associated with rising silver prices. The conflict between Russia and Ukraine impacts the economy of the entire world and the United States is already beginning to feel the repercussions of this conflict.
Russia is a significant contributor to the global supply of precious metals, accounting for approximately 2.6 percent of the world's supply of silver, 15.1 percent of the world's supply of platinum, 9.2 percent of the world's supply of gold and an incredible 45.6 percent of the world's supply of palladium. As a result of their supply being cut off from the United States, it is anticipated that the price of silver would rise.
Although China considers Taiwan to be a part of its territory, Taiwan views itself as a sovereign nation in its own right. If the confrontation between China and Taiwan continues to escalate, the price of silver per ounce may shoot through the roof as political tensions extend worldwide.
Mined Silver Supply Continues to Decline
Silver mining supply has been declining in recent years due to lower-grade ore reserves and the cost associated with extracting silver from the ground. As silver mining becomes more difficult and costly, the limited amount of silver available for purchase will drive up prices.
This can be seen in the current market, where the price of silver has steadily increased over the past several years. Additionally, as demand for silver continues to rise, this could further spike the price of silver to $100 per ounce or higher.
Global Supply Chain Challenges
After the devastating effects of COVID-19 were fully felt in 2020, nearly every aspect of life changed. The difficulty of shipping commodities worldwide is one effect of the epidemic. Due to the global silver supply chain disruption, many companies may have to pay higher costs for silver to maintain their production levels as they had before the outbreak.
When Will Silver Price Reach $100/oz?
To reach $100, silver's current price would need to increase by 400%. Three possible timeframes are discussed here.
Out-Of-Control Inflation Hits in 2023
If inflation exceeds 10% in 2022 and 2023, silver will reach $100/oz the quickest. Inflation is forecast to get close to 5% in 2021. The pace has been unprecedented since 2008. More people will look to precious metals as a haven from inflation, which is likely to increase.
US Debt Causes Inflation to Rise in 2025
Investors should still be wary of US debt even if inflation is contained. At now, the debt of the United States is $29 trillion. Someday, bondholders may be able to coerce the United States into paying them a higher interest rate. This might lead to a rise in interest rates, a drop in stock market returns and a stampede into precious metals.
By The End of the 2030 Decade, Precious Metals Will Have Outperformed Stocks
And last, if the stock market gets hot, investors may be enticed to buy things that have lagged behind the market over the past decade. This may pique the interest of potential silver buyers. The silver market may be repeating the 1970s and the 2000s when it outperformed the US stock market.
Final Thoughts
The silver market is expected to climb to unprecedented heights, with a $100/ounce price being reached before the decade's end. Many factors could lead up to this price point, including political events and economic instability. Though these events are still a way off in the distance, investors should be prepared for the future and add silver to their portfolio before prices reach their peak.
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