Precious metals markets have long been seen as safe havens for investors seeking to protect their wealth against fluctuations in global economies. Gold has traditionally been seen as the go-to metal; indeed it was even called a ‘safe haven’ asset at one point! However, silver should also be taken seriously as an investment option and sometimes could even outshone gold altogether as an attractive hedge asset option. Here are a few reasons investing in silver may sometimes prove more prudent.
Gold to Silver Ratio
In recent history, the ratio between gold and silver prices has fluctuated considerably over time. When this ratio rises significantly – an indication of gold’s relative high cost relative to silver prices – investors often look at this ratio to gauge which metal might be undervalued relative to another; an elevated value might point towards undervaluation in favor of silver over time.
Industrial Demand
Silver has numerous industrial uses beyond gold’s purview; electronics, solar panels, medical applications and many others utilize silver in various capacities. As technological progress and green energy become more mainstream, its demand is expected to increase further – providing both stability and impetus for upward price movements in silver prices.
Silver’s lower price per ounce makes it more accessible for smaller investors or newcomers starting out, providing greater granularity when investing–you can purchase multiple ounces at once, gradually building your holdings over time.
Volatility
Silver tends to be more volatile than gold, presenting both potential for greater percentage gains during bull markets as well as increased risks during downturns. Investors with an appetite for risk may find its volatility appealing.
Diversification
Diversifying across asset classes is critical, while diversifying within precious metals is also beneficial. Holding both gold and silver may serve as a useful way of diversifying, while those bullish on silver’s demand could consider allocating more towards that sector.
Supply Constraints
Most silver production is an by-product of mining other metals like copper or zinc; therefore when silver prices increase it doesn’t automatically trigger more mining activity for silver; supply constraints combined with increasing demand could create an advantageous supply/demand dynamic that favors silver investors.
Historical Proof
Silver has outshone gold when measured against gains during precious metals bull markets in terms of percentage returns; investors positioned with silver could potentially reap substantial returns by following history’s lead and bet on it during future bull runs.
Conclusion
Although gold often tops the conversation when discussing precious metal investing, silver deserves serious consideration as part of a diverse portfolio. Silver’s industrial applications combined with its affordability make it an attractive option, particularly for beginning investors looking for small investments to begin. As always, potential investors should conduct extensive research or consult financial advisors in order to develop an investment plan tailored specifically for themselves and their needs/risk tolerances.
