Investing in silver can be an interesting investment idea. There are a number of reasons and current trends for this. Why is silver extremely interesting for preserving and increasing your capital? I will try to clarify for you in this article.
Fundamental growth factors
There are a number of fundamental factors behind the rise in the value of silver.
1) New trends in production
Silver, unlike its counterpart – gold, is much more actively used in industry. So 50% of the mined silver goes to industrial purposes. Today, this metal becomes a participant not only in current and already existing essential needs (medicine, smartphone screens, microcircuits), but plays an important role in the formation of new trends. For example, the use of silver in batteries for electric vehicles and the production of solar panels, providing technologies for the production of renewable energy sources.
2) Increased need for asset protection
Today, almost everyone is already aware of the overheating of the American stock market, which was formed in the dock era, but it only intensified in the post-covid era. The bubble on the stock markets is obvious, monetary incentives are only exacerbating this situation. That is, the likelihood of folding America’s stock indexes, and following them, and other markets is a matter of time. This means that protective assets will be in demand, because free money will need to be parked somewhere and at the same time protected. And even a dollar may not be able to cope with this traditional function for itself. And silver looks very attractive for this role along with gold.
3) Development of trends in the fashion industry for silver jewelry.
Silver jewelry is also gaining popularity. today it is becoming fashionable to use silver as non-standard design jewelry solutions.
4) Undervalued in relation to gold.
The all-time high of the value of silver is $ 49.82, now its current price is $ 27, which is a discount of 45.8% from the all-time high.
For comparison, gold has an all-time high of $ 2,089.2, today its current price is $ 1,792.3, which is 14.86%.
The difference in discounts is obvious. Considering that among precious metals – gold is equivalent, we are confidently talking about the underestimation of silver in relation to gold.
5) Limitation of silver as a mineral.
In total, there are no more than 570 thousand tons of this metal in the world and the depletion of reserves will inevitably lead to its shortage.
Growth technical factors
When I study the investment appeal of an asset, I always try to refer to the primary source, namely the stock chart of the instrument.
Let’s look at the Bloomberg commodity chart to understand the trend in commodities in general.
The downtrend, which has lasted since 2011, has not yet completed its existence, but its reversal is clearly visible on the chart.
We are not fixing the reversal itself, but a confident attempt at reversal of the commodity index, and this is a very positive fact for us in our further work.
Having dealt with the picture in the commodity index as a whole, let’s turn to the silver chart.
This is the weekly silver futures chart
The graph clearly shows that there is a squeeze to the $ 30 level, which has been going on since August 2020. This is important for us for a number of reasons:
1) the squeeze itself indicates a more likely breakdown of the $ 30 level and subsequent upward movement.
2) the duration of the compression is already 8 months. This is a long time for this figure. This increases both the very probability of its development and the potential of the impulse in this case.
Methods for investing in silver
1) Investment coins and bars;
2) Depersonalized metal accounts;
3) Shares of companies mining silver;
4) ETF for silver;
Summing up, I will dwell on the fact that silver has a number of fundamental and technical factors for growth, and their combination allows us to talk about, practically, uncompromising growth of this asset. Today we see preparations for a breakdown of the $ 30 level, which has been going on for 8 months already. I expect a breakout and strong growth in the value of this metal and will take this into account when forming my portfolio.
Specific investment ideas, their goals and through what tools to do this, we will consider in my telegram channel @perfilov_invest.
In addition, in the telegram channel, I present only my personal view of the market and individual papers, I rewrite news from other news portals or channels.
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Alexander Perfilov, a private investor, was with you.