Is Buying Silver a Good Investment?
Recently you may have been asking yourself ‘should I buy silver?’ or “should I buy silver now?’ or even simply ‘is it worth investing in silver?’
Deciding to buy silver bullion to hold in your investment portfolio is probably one of the best strategic decisions you can make for your financial situation. But, that doesn’t mean that it’s easy to decide when to make that commitment. Like any investment the price moves around, and it can be stressful wondering if you’re going to spot the ‘right’ time to buy silver bullion.
Below, we take a look at when is the right time to invest in silver.
Should I buy silver now?
Many people ask ‘should I buy silver now’ because they are looking at the price of silver (which can move quite significantly over short-periods of time) and are worried their decision will make for an investment that is more expensive than it needs to be.
As with gold, the price of silver has been on some trip in recent years! If you look back to the early-2000s then the price was hovering around $3/oz, in the 20 years since it has been in touching distance of $50/oz but only fallen as low as $9/oz.
Silver is definitely the more volatile sibling when compared to gold. Just to take a recent example: between March 2020 and August 2020 it climbed by 142%…! Reasons for its volatility compared to gold are varied but the two main ones are that it has a much smaller market than gold, and it is an industrial metal which means the price can fluctuate more based on both demand and supply-side factors for industry.
Silver’s ease at staying above $10 in recent years is much thanks to a boom in industrial demand but also major global events such as various financial crises and the global pandemic. Just because these ‘events’ have seemingly passed, the silver price stays strong because the measures that were put in place to deal with these events have created systemic risks and so continue to support demand for silver.
Silver as an industrial metal continues to shine
Whilst silver has long played a major role in industrial applications, it is the industries of tomorrow where things get really exciting. Silver is the best electrical conductor and highly reflective, and so lends itself brilliantly to the renewable energy market.
Between 2020 and 2021 global spending on the transition to green energy increased 27%. with total investment reaching $755 billion. Renewable energy (e.g. wind farms and solar parks) accounted for $366 billion of that. Given the average solar panel uses around 20g of silver, this can only be a good thing for those who have chosen to buy silver coins or silver bars.
And renewable energy, such as solar parks, isn’t the only area where silver is stepping up. There is around 25-50g of silver in a battery powered vehicle. The investment into the vehicle electrification industry in 2021 rose by 277%, to $273 billion. Forecasters believe this will rise further, soon surpassing the amount of investment going into renewable energy. The International Energy Agency expects there to be up to 220 million electric vehicles on our roads by 2030. This is going to take some serious investment, the number stood at just 3 million in 2017.
Of course, the drive to ‘go green’, to become more sustainable and to look after our planet is really a huge economic transformation, that the world and industries within it are being forced out of necessity to take part in. And that’s why silver is a good buy for 2022 and beyond. If we are committed to making the changes required, then we have to use silver.
Silver is going to have a very major role to play in our transition to renewable energy and in turn, our new economic outlook.
But no economic outlook is possible without the support of government.
New economic outlook - reasons to hold silver
To support the move to a more sustainable planet, governments are aware it will take significant investment from the public purse. In the US alone President Biden has pledged $174 billion to support the electric vehicle industry. And just for ‘demonstration’ projects for large low-carbon technologies over $50 billion of public funds has been pledged across major economies.
Where does all of this money come from? Government spending across the West (and beyond) prior to and during the pandemic has been unprecedented and put enormous inflationary pressures on the global economy.
And this is where we come to the second and (arguably) biggest reason to own silver - governments continue to operate economies on a very short-term basis which just creates deeper problems and systemic risks, around the world. Silver is a safe haven that will help to protect your financial portfolio for when the proverbial hits the fan.
Safe haven investors choose to buy silver for the following reasons:
Hedge - Like gold bullion, silver bullion has shown itself to be a hedge against major systemic and geopolitical risks, inflationary, deflationary and economic crises.
Safe haven - Silver is without borders. It does not exist because a government or central bank deems it so. No one can turn on the printing presses and suddenly devalue it, unlike currencies. This, combined with its unique physical properties means that it has stood the test of time when it comes to holding its value and acting as a store of wealth for many people, over thousands of years.
No third party liability - When you own physical silver, you own physical silver. This is in stark contrast to when you buy futures, ETFs, stocks and shares where (usually) you do not own the underlying asset and are very much at the behest of third parties as to how your investment is managed.
Liquidity - Silver is generally a very liquid market. When buying silver bullion with the right dealer, you will find it very easy to enter and exit the market. And, unlike many other investment and currency options the price is set by the market.
Protect against uncertainty - silver can act as insurance for your financial portfolio. In times of uncertainty, as ours is now, we need to hold assets in our portfolio that have stood the test of time. We look back on the last decade and see a global economic crisis, major climate disasters, a global pandemic and a potential world war. If there was ever a time to get some insurance, it should be now.
Are you happy to be uninsured?
Silver is an insurance asset. Usually when buying insurance, we don’t sit and wait for the opportune time to buy it, because it is too risky to leave our homes or our cars or our belongings uninsured. So why do we do this with our other investments?
Rather than ask when is a good time to buy silver you should perhaps ask, when do I want to be without it? And right now, we think you probably don’t.
What indicators should I look for when deciding when to buy silver bullion?
Of course, if there was a crystal ball that could tell us that silver’s price was going to change so dramatically then we’d share it with you. But there isn’t, so we can’t. Instead it’s always good to consider the following, when trying to decide when to buy silver bullion:
- Keep your ears open - Those who invest in any asset class would be wise to always pay attention to the news. Not just around the silver market but global news. As silver is both industrial and a safe haven then there are a number of news events which could affect the price. Some are big ones such as military invasions and global pandemics or monetary policy announcements. But others might seem initially irrelevant such as governments announcing billions of pounds to be spent on renewable energy technology. But given silver’s role in the green technology industry this announcement would definitely affect silver demand.
What’s happening elsewhere? - Here we mean look at other asset classes. Definitely look at gold, and the drivers of the gold price but also remember that silver is a byproduct for mining for other metals such as copper and zinc. If you see movements in their price then you are likely to see changes in the silver price.
Silver is not just something to ‘buy now, sell quick.’ - By all means keep an eye on the news and other asset classes, but keep at the forefront of your mind that silver should be in your portfolio for the long-term
Is Buying Silver a Good Investment in 2022?
2022 is proving to be a challenging one, to say the least. It’s barely got a global pandemic in its rear view mirror whilst driving head on into a potential third world war, a rumored recession, dramatic weather patterns and the financial fallout from said pandemic.
It’s understandable therefore that you might be looking to future proof your portfolio and are asking if this is a good year to buy silver. We think it is thanks to both industrial demand and the systemic issues in the global economy.
We believe that silver bullion should always have a place in your investment portfolio. It is not only in great demand as an industrial metal but it has a long-term role as a hedge during uncertain times and as a safe haven. The factors that have pushed up the price of silver have only left bigger, more systemic issues which will continue to support the price and the need to hold silver bullion.
Above we have demonstrated that there are a number of factors that are setting the scene for a hike in silver prices. We don’t see a time on the horizon when investors will be comfortable to fully liquidate their silver holdings. The factors discussed above both affect the silver price and give plenty of reasons to own it. They will not go away anytime soon. We fully expect them to create bigger upset and risks in our economic and financial systems.
How to buy silver?
Getting started when you have decided on how to buy silver can be a bit tricky. You might be asking ‘are silver bullion coins a good investment?’ or ‘should I buy silver bars?’ .
Click to learn more on “How to buy silver coins? or if you’re going big, How to buy silver bars?”.
We have created some fantastic guides for those who are looking to get started on their silver investment journey. Read ‘where to buy silver’ today, or simply schedule a call with one of our dedicated experts: Ireland +(01) 653 3426, UK +44203 0869200, US +1 888 381 8130. We are ready to answer any questions you may have, or to help you in any way we can. We look forward to hearing from