Tyler Robinson - January 04, 2022
Why Invest in Silver? Here's 8 Great Reasons
When you think of precious metals, silver is right up there with gold.
And along with gold, silver is a prime investment asset. But why invest in silver rather than gold?
There are many reasons why silver is an excellent investment choice. For one thing, it's more affordable than gold, and it can be more easily liquidated for small cash amounts should the need arise.
Let's take a look at eight great reasons why buying silver is the right choice for every investor.
1. Physical Silver Is Actual Money
This might seem obvious—but it's an important consideration in this age of paper and electronic currencies.
The earliest currencies were inseparable from minted metals like silver and gold. And although our money might be more intangible these days, silver still possesses that unmistakable cachet that comes from being a real, hard asset.
So why invest in silver? Well, the main reason is that it is a physical form of money that governments cannot devalue through fiscal irresponsibility. This is well illustrated by the current woes of the US dollar, with financial experts raising concerns over increasing inflation.
The fact is, fiat currencies can be printed out of thin air by central banks, which depreciates these currencies and makes them less attractive for long-term investing. But silver is a non-renewable asset—there's a limited amount in circulation, and its value is real and not fictitious.
Different sizes and brands of Silver Bars. Photo Credit: Investor Crate Facility circa 2019.
2. Silver Is Cheaper Than Gold
So why buy silver rather than gold? After all, the same arguments for the physical value of silver apply to gold with even greater force, right?
Well, therein lies the rub. In the gold versus silver argument, gold obviously comes out on top in terms of sheer value. But this also makes it more difficult for average investors to obtain gold. There's a significant barrier to entry imposed by the cost of gold itself.
But silver is another matter. There's a reason why silver is considered the poor man's gold. Silver is relatively cheap compared to gold, and still acts as a powerful hedge against inflation.
Silver is currently 1/80th the price of an equivalent amount of gold, which makes it a much more affordable inflation-proof asset.
3. Increasing Demand
The needs of industry are driving the growing demand for silver across the board.
The renewable energy sector is especially driving the consumption of silver for industrial purposes. Silver, it turns out, is an important component in the production of solar panels. As more and more countries shift away from fossil fuels, the demand for solar panels can only increase—and with it the demand for silver.
The electronics sector as a whole also has a voracious appetite for silver. Smartphones, in particular, require silver in their electronic components, and it's safe to say that the smartphone industry is not likely to wane anytime soon.
All of this is to say that silver has more than merely a monetary value. The market for silver is robust, and that's why investing in silver is a wise choice.
A pile of various government minted Silver Coins from around the world. Photo Credit: Investor Crate Facility WEST circa 2017.
4. More Practical Than Gold
When deciding to invest, you shouldn't discount the greater practicality of silver as a purchasing asset.
This is because it's easier to sell silver, just as it's easier to purchase it. So, if you need to divest yourself of small amounts of your precious metal assets, it's much easier to do so with silver than gold.
Should small, everyday financial needs crop up, you can easily sell silver in smaller denominations than gold. Rather than sell off that full ounce of gold, you can divest yourself of smaller amounts of silver to make smaller purchases without liquidating your costlier assets.
5. Silver Outperforms Gold
At least, when it comes to bull markets.
It turns out that the silver market is quite small, which is the reason for the volatility of silver. Even small inflows and outflows of cash greatly affect the silver market, far more so than in the markets for other precious metals.
In a bear market, the silver values fall much more than the fall of gold prices. Conversely, in a bull market, silver rises much higher and faster than gold.
Various pictures of Silver Bars, Rounds and Coins. Photo Credit: Investor Crate staff photos.
6. Silver Stockpiles Are Falling
There was a time when world governments stockpiled vast reserves of silver. The reason for this was simple: national currencies were made of silver, and so it was crucial to have the precious metal on hand for minting purposes.
That's no longer the case, and so national silver stockpiles have plummeted in recent decades. This is understandable from the coinage aspect, but there are other considerations. If a nation's industry requires more silver, many governments will be unable to supply this lack.
It's yet another reason to invest in silver. The need for this precious metal will only increase, and along with that its value.
7. Decreasing Supply
In recent years, the amount of mined silver has declined.
Some of this has had to do with COVID-driven closures of South American silver mines. It's also due to a reduction in the amount of exploration for new silver veins and the construction of new silver mines.
Meanwhile, a great deal of the silver supply comes as a byproduct of the mining of other, less precious metals—such as zinc and copper. The exploration and development of mining for these metals has also declined, with a concomitant drop in silver production.
With increasing demand and decreasing supply, investing in silver is becoming a more attractive option.
8. Inherent Value
Silver is an inherently valuable commodity. It's a durable precious metal, and (as we've seen) it has properties that make it much desired in high-tech industries.
This also means that silver, along with gold, represents a stable investment in a scarce resource that will only accrue value over the long-term.
Why Invest in Silver?
These are just a few of the many answers to the question "why invest in silver?" The market for silver is strong and getting stronger, so the time to consider investing is now.
Investor Crate is a veteran-owned, US-based subscription crate company. If you're interested in investing in silver, please contact us today about our subscription crates.
This is in no way to be considered investment advice. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Keep in mind that any form of investing involves risk and you should always consult with your financial advisor before making any financial decisions. Investor Crate, LLC., it's subsidiaries and staff will never advise you on any asset as our aim is to provide a fun and affordable service should you decide to purchase Precious Metals.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.