Are you new to investing and interested in precious metals, or more specifically, silver? You’re not alone. With inflation rates on the rise, many retail investors, new and seasoned, have their sights set on silver. And with current market conditions, it is an excellent time to give your portfolio a hedge against risk and diversify your assets to avoid loss. Silver and precious metals stocks give you the opportunity to accumulate wealth while securing your holdings. Even though the value of precious metals can change like other investment options, some experienced investors use market fluctuations to their advantage. Whether you’re a new retail investor or already have some experience with precious metals investing and want to learn more, this article will discuss why now is the perfect time to add silver stocks and other precious metals to your portfolio.
The stock markets
Over the past year, we have seen the impact of geopolitical tensions or other economic issues related to debt management on the stock market. If you look at the market’s recent trend for silver, you will see that it is rising from the recent lows reached in the previous two years. With many federal governments looking toward climate change solutions, including renewable energy, there is a high possibility that the demand for silver for its use in clean tech will rise.
Silver plays a vital role in electronics, batteries, and EVs, leaving little room for downside, given current market tendencies. Investing in silver bullion or silver mining companies on track to produce helps support a long-term investment strategy. A positive move would be to check the silver price today — while it has risen from the lows over the past two years, the price is still relatively accessible, and if you hold, it can bring the potential of lucrative returns.
The gold/silver ratio
The ratio between the two metals, known as the Gold-Silver Ratio, is a key factor in why silver investors favour silver over gold. The gold-silver ratio is determined by dividing gold’s spot price by silver’s cost at any given time. It describes how many ounces of silver are required to purchase one ounce of gold. The ratio provides an insight into the market’s present valuation of gold relative to silver, which metal was the most popular at the time as an investment, and which metal may be either overvalued or undervalued when evaluated in a historical context. The ratio indicates how much more silver is needed to purchase an ounce of gold or how much less silver can cost with gold, the higher the percentage.
Commercial and industrial applications
Silver has several industrial applications that make it attractive to investors. Silver has unique qualities that other metals cannot match, making it useful for various industrial uses that gold does not have, including solar panels, chemical catalysts, and medical applications. Its key benefits include solar panels, electronic devices and switches, circuit boards, electric vehicles, medical devices, and much more. Nearly every computer, mobile phone, automobile, and appliance contains silver. With growing industries and sustainable technologies on the rise, silver will be a precious metal required for future applications and development.
EV market demand
As mentioned above, sustainable technology development in the EV sector has led to electric vehicles and an infrastructure explosion. Silver is seen as a critical catalyst in its growth as the world looks to expand the capabilities of EV technology and other renewable energy sources.
In addition, silver will perhaps play a far more significant role than gold as we progress toward a future concerned with the earth’s sustainability. Electrical efficiency and net-zero emissions are concrete goals for the future, and this means that there will likely be a lot more physical silver needed than there is right now.
Stability in the market
Unlike cryptocurrencies with a high potential for devaluation, which leads to losses, silver is a tangible item that cannot be altered, destroyed, or inflated. Due to its stable supply, widespread adoption, and specific characteristics, silver has played a significant role as a store of value and a method of exchange for thousands of years. Although fiat currencies, like the U.S. dollar, are widely used and provide price stability, their quantity is not set, and governments are free to produce them whenever they like. Fiat currencies may have relative long-term buying power losses to inflation due to an expanding money supply — hence the popularity of precious metals, like silver or gold, as hedge assets.
If you need more reasons to support your decision to add silver to your portfolio, consider this: Since several main asset classes have high correlations, they frequently move in the same direction and often simultaneously. It is because many assets, including stocks, real estate, and commodities, tend to grow and fall in value in tandem with the status of the economy and investor sentiment. However, silver and other precious metals are different. There is a limited link between the price of silver and other common investment products. In other words, the performance of silver fluctuates on its own and may act as a return diversifier in a more extensive multi-asset portfolio.
Like with any investment product, be sure to perform your due diligence, or consult with a licenced advisor to learn about your options for investing in silver ETFs, futures, mining stocks, bullion, or certificates to protect your portfolio against risk.