10 things to love about silver
Fiat currencies are relatively new to human history, but gold and silver have existed over time. Silver is often overlooked, although like gold it is a store of value and a versatile industrial metal. Here are the top ten reasons to own silver, according to a brochure from Sprott Asset Management.
- Silver is one of the oldest currencies in the world. Hopefully, if you went back 5000 years and wanted to buy something, you would have enough Mesopotamian shekels to get what you wanted. The shekel is the earliest known coin to contain silver, and since then silver has been part of currencies used by civilizations around the world.
- Silver is a natural entry point for newcomers to the precious metals sector. Known as “the people’s money,” silver is cheaper per ounce than other precious metals, but has some of the same properties.
- Silver is in tremendous demand for its industrial uses. As a substance that is malleable and indestructible at the same time at the molecular level, silver is extremely useful as a raw material. Industrial buyers draw approximately 50% of the silver, while coins, bars, jewelry and silverware only account for 46% of the silver consumed.
- Silver is the key to critical green technology. A sustainable future is not possible without silver. Electric vehicles use between 25 and 50 grams of silver per vehicle. Solar panels require 20 grams, and cell phones and even medicine use the unique properties of silver.
- As renewable energies take up a larger proportion of silver, the demand is growing. Environmentally friendly technologies are in great demand. Photovoltaics alone account for 11.3% of the total demand for silver, compared to 5.6% in 2012.
- Silver cannot be hacked or erased by inflation. Like gold, silver is a safe haven that acts as an inflation hedge due to its limited supply and wide acceptance. Many people try to label Bitcoin as “the new gold,” but this argument has several flaws. Silver is far less volatile than any cryptocurrency, with the added benefit that it cannot be hacked by cyber criminals.
- Silver has a low correlation to other asset classes. Real estate and commodities all tend to rise and fall together. The price of silver is driven by other factors, which makes it an excellent portfolio diversifier.
- Silver is cheaper than gold. The gold / silver ratio was the main tool used to determine the relative value between the two precious metals. Gold currently trades at a premium well above its long-term average, which tends to be around 50 times the cost of silver. It currently stands at 79.25 which makes silver a compelling buy.
- Silver has attracted new investors. While silver has some of the same conservative investors going into gold for the same reason, it has drawn new investors on Reddit and Twitter. It hit a low of $ 11.98 in 2020, but these new investors drove it to $ 29.13 later in the year. Gold has the “gold bugs”, but silver has the #silversqueeze community.
- Silver is a natural complement to gold. Since gold and silver have similar investment qualities, adding silver alongside your gold could help increase returns. During the precious metals bull markets, silver tends to outperform gold by 2.1 times on average.
Investors interested in silver can get into the Sprott Physical Silver Trust (PSLV).
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