When it comes to precious metals, silver often takes a backseat to its more illustrious counterpart, gold. However, beneath its humble exterior, silver boasts a range of uses that make it a compelling asset to consider. In this article, we explore why silver shines brightly and why it may just be a worthwhile addition to your portfolio.
Versatility and Value
While silver and gold are renowned for their use in jewellery, coins, and electronics due to their exceptional conductivity, silver goes beyond these traditional applications. It finds its place in industries such as photography, silverware, batteries, bearings, catalysts, solar energy, medical advancements, and water purification. This versatile metal's unique properties, including its unparalleled reflectivity and conductivity of heat and electricity, contribute to its value in various sectors.
Affordability and Accessibility
One distinct advantage of silver is its affordability compared to gold. For the average investor, the lower price per ounce makes it more accessible and easier to enter the precious metals market. While an ounce of gold might cost $1,500, an ounce of silver can be obtained for $50. This affordability factor opens doors for individuals who seek to invest in precious metals without a substantial upfront investment.
Safe Haven Appeal
In times of crisis, silver holds an advantage over gold due to central banks' lack of significant silver reserves. Unlike gold, there is no risk of banks flooding the market with silver to depress prices. This characteristic grants silver a safe haven status, as it remains largely outside the control of the banking system. Moreover, silver has shown resilience against inflation, making it an attractive commodity to protect against currency devaluation.
The dynamics of silver supply differ from that of gold. Gold is primarily mined as a primary product, whereas silver is mostly a by-product of other mining, particularly zinc production. This distinction means that increasing silver supply is not as straightforward as opening new mines solely for silver extraction. Instead, silver production relies on the growth of zinc mining to see a significant increase. This unique relationship adds a layer of complexity to silver's supply and demand dynamics.
While gold is known for its enduring existence, with most ever-mined gold still in existence today, silver faces a different fate. Due to its consumption in industries such as photography, electronics, and batteries, silver is gradually depleted. Landfills now contain minuscule amounts of this precious metal. Throughout history, approximately 46 billion ounces of silver have been mined, compared to 5 billion ounces of gold. However, only about 1 billion ounces of silver remain available in bullion form today, in contrast to 2 billion ounces of gold.
Silver's value extends beyond its role as a secondary player to gold. Its versatility, affordability, safe haven appeal, and supply dynamics make it a worthy contender in the world of precious metals. Its unique properties and limited availability offer an opportunity for alternative diversification. Consider exploring the allure of silver and unlock its potential as a valuable asset in your precious metal journey.