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Last Updated on: 27th August 2021, 06:33 pm
It's no secret that silver is a white-hot commodity these days. The price of silver currently sits at $26.15 per troy ounce as of mid-July 2021. Considering that the silver spot price hovered around $18 an ounce last January, we're looking at over +45% gains for silver in the past 18 months—that even surpasses the record-setting S&P 500 (+31.5%) in the same time.
The truth is, there are many reasons to invest in silver in 2021 that have nothing to do with its recent bull run. Due to a confluence of political, economic, technological, and fundamental factors, silver is likely headed for an excellent next few years. In this article, I'll summarize the best reasons to invest in silver in 2021 and beyond.
Table of Contents
- 1. The Looming Infrastructure Boom
- 2. Silver is an Affordable Alternative Asset
- 3. Industrial Demand for Silver is Rising
- 4. Silver is Sound Money
- 5. Silver Beats Gold During Bull Runs
- 6. Silver Can Hedge Against Financial Instability
- 7. Anonymity and Seizure Benefits
- Why Wait? Start Silver Investing Today
1. The Looming Infrastructure Boom
At present, the incumbent White House administration and the majority of Congressional representatives are pushing forward a $1.2 trillion (yes, trillion) infrastructure spending bill. The bill is poised to revolutionize the country's transportation grid and renewable energy generation system to promote solar power nationwide.
Both electric vehicles (EVs) and photovoltaic cells (PVs) will figure prominently in America's next-generation clean infrastructure. Fortunately, both technologies rely on the unique conductivity properties of silver. Therefore, the billions of dollars to be funneled into PV and EV technologies will inevitably be reflected in the price of silver in the years to come.
The specific provisions of the bill calling for public investment in solar and EV infrastructure include the following:
- Decade-long extension of an investment tax credit (ITC) for solar energy production and storage
- $50 billion investment in National Science Foundation (NSF) for solar, wind, and tidal energy R&D
- Ordering the erection of high-voltage-capacity transmission power lines
- At least $174 billion in support for EVs, in addition to the installation of no fewer than 500,000 EV chargers nationwide
We're often asked, “Is silver a better investment than gold?” The answer, as always, depends on the time and place in which the question's asked. In this case, at this particular time, it seems that the answer is obvious: silver is a superior investment as compared to gold. Major federal spending is set to kickstart public investment in silver-dependent energy technologies, and investors would be remiss not to seize the opportunity to get in now.
2. Silver is an Affordable Alternative Asset
Unlike gold bullion, which has straddled the $2,000 per ounce mark for over a year, silver can be purchased in denominations affordable to the average American investor. Currently, on a per-ounce basis, silver costs about 1.5% of the equivalent amount of gold. You can purchase much more silver with the same amount of capital than you could if you were all-in on gold.
Not only does its price lower the barrier of entry for silver for newer investors, but it also makes silver an affordable gift. If you're looking for a precious metal retirement gift, or simply want to add silver to your IRA or 401(k), you can do so with much less investment capital than you would have to with certain other precious metals.
3. Industrial Demand for Silver is Rising
The solar energy industry alone accounts for 10% of silver metal demand worldwide. Similarly, consumer electronics production demands 48 million metric ounces of silver every year to make smartphones, televisions, and other household goods. Not only that, but this figure is expected to skyrocket +54% between 2021 and 2030.
When you also account for the fact that large-scale public investments in EVs and solar energy are likely to come under President Biden's American Jobs Plan, we can only expect industrial demand to surpass these targets throughout the decade.
4. Silver is Sound Money
Whenever we're asked “Why invest in silver,” our answer is simply that silver is sound money. Unlike fiat currencies such as the dollar or the euro, silver is a finite substance that cannot be fabricated or reproduced by the dictate of a sovereign state. Whatever silver deposits exist in the earth is the natural limit on what can be mined.
Therefore, silver is not vulnerable to depreciation or price manipulation due to money printing. It is, however, fully fungible and transferable as a form of money and store of value. Should the value of the dollar one day collapse, or the fiat currency system reach a point of instability, physical silver investments could replace the dollar as the money of tomorrow.
5. Silver Beats Gold During Bull Runs
Among the many reasons to invest in silver in 2021 is the fact that silver has historically outperformed gold during upswings in the precious metals market. During the coronavirus pandemic, silver gained +44.6% on the year in 2020, whereas gold rose by about +23.8%. Similarly, silver outpaced the growth of gold during the stagflation era in the 1970s and nearly tripled its performance during the global financial crisis.
Therefore, whether during market highs or lows, silver is always a suitable investment. During lows, it can provide a hedge against equity market instability; during highs, it outperforms even gold. For this reason, the silver price forecast 2021 is positive in the long-term, regardless of external market conditions.
6. Silver Can Hedge Against Financial Instability
Stock markets are volatile and unpredictable. Over the past few decades, we've seen numerous periods marked by sudden and sustained losses to the S&P 500, including:
- Black Monday 1987: -22.6%
- Iraq-Kuwait War 1990: -21%
- Dot Com Crash 2000-02: -38.5%
- Global Financial Crisis 2007-10: -20.1%
- Coronavirus Crash 2020: -19.8%
By comparison, both gold and silver spot prices during the same periods of time either fell by a comparably lesser degree or even appreciated in value. For example, the 2008 financial crisis saw the price of silver drop to about $11 per ounce before quickly rallying to above the $50 per ounce mark as investors flocked to a safe haven asset.
When the stock market stumbles, precious metals such as silver can catch your fall. As a hedge against equity market instability, real assets provide an illiquid alternative that can either offset otherwise devastating losses or even bring your portfolio into the green.
7. Anonymity and Seizure Benefits
Amid social unrest, political upheaval, and unpredictability regarding climate change, you should ask yourself: “Should I buy silver in 2021 to hedge against uncertainty?”
There are few assets as safe as silver. We're often asked, “Should I buy silver bars, or silver stocks?” Fortunately, this question has an easy answer—bars. Real, physical precious metals simply offer more benefits than highly liquid mining ETFs or volatile gold stocks. If you're buying “paper gold”, you're not gaining true exposure to the precious metals market; instead, you're just making a play in the stock market like any other.
Silver offers privacy to investors since it can be used as a medium of exchange similar to cash. However, it doesn't appear on a public record. It's also true that silver is secure and protected against theft or government seizure since all IRA-approved silver is held in fully insured and ultra-secure vaults by third-party custodians.
Why Wait? Start Silver Investing Today
If you're wondering if you should invest in silver in 2021, the answer, by all accounts, is yes. Silver as an investment has existed for millennia, and not without cause.
When the stock market undergoes periods of instability, you can lose your life's savings. However, a well-diversified retirement portfolio with holdings in silver and gold can protect your wealth when you need it most.
Evidently, there are many reasons to invest in silver in 2021. Silver is sound money that has real industrial demand. Therefore, it will always hold value for investors. As America gets ready for a solar energy and electric vehicle revolution powered by a $1.2 trillion infrastructure spree, silver demand is about to reach never before seen heights. Ready to get started? Check out our guide for more tips for buying silver.