Why should you invest in silver?
Since 5,000 BC, silver has been used to store wealth. Even in 1964, US quarters contained 90% of the metal. Silver bullion coins, such as the UK’s 1-ounce Britannia (99.99% silver), still have a face value of PS2, despite their metal content being worth around PS17 today at the silver price.
Since silver has been a valuable store, it has also been used to make jewellery and other precious items. Silver’s value decreased as its supply increased in relation to gold. By 1600 BC, it is thought that the supply of silver had reached a point where the price was half that of gold. A silver ounce costs just a bit more than 1% of the price of gold today.
Silver’s unique properties and availability as a precious material, along with its wide range of industrial, medical, and technological applications, have now made it a popular metal for use in many industries. Silver is a valuable metal that can be used in many industries, medical fields, and technologies.
What industrial uses does silver have?
Silver is anti-microbial, non-toxic, and has been used for centuries to store fresh food and liquids. Wild West cowboys would place a coin of silver in their milk in order to extend its shelf life.
NASA astronauts drink water purified with ionized argon rather than chlorine, which was used in the past. Silver ions are used to destroy bacteria and then filter out the water. The same method is used by Russian cosmonauts aboard the International Space Station. Ceramic filters coated with colloidal silver are used in conjunction with solar disinfection to help bring clean drinking water into developing countries.
Silver is an important component of solar panels because it has the best electrical and thermal conductivity. Silver paste is used to capture the sun’s light and convert it into photovoltaic power. The typical 3×5-foot solar panel used for residential housing contains up to 20 grams of silver. It costs about PS12 ($15).
Silver use in photovoltaics rose 13% in 2021, to more than 3,200 tonnes. This is despite solar panel manufacturers reducing the amount of silver in each panel. A report by the Silver Institute for April 2022 estimates that photovoltaics account for almost 24% of the world’s industrial silver demand. This is up from 11% and 2%, respectively, in 2013 or 2006.
The Silver Institute also reported that “average vehicle loadings of silver, which is currently estimated to be 15-28 grams per light internal combustion engine vehicle (ICE), have increased over the last few decades.” Silver consumption is higher in hybrid vehicles at 18-34g, and battery electric vehicles (BEVs), which are believed to use between 25-50 g.
Silver is used in the most diverse ways.
The Silver Institute predicts that global demand will reach a record of 31.5 thousand tonnes (1.12 billion ounces), in 2022.
The largest silver share in the world is 49.0%.
Silver bars and coins are the second largest area of demand, accounting for 25.3%. The second largest area of silver demand is jewellery, which accounts for 18.3%.
In terms of global demand for silver, photography (2.6%) is now behind silverware (4.8%).
What are the advantages of investing in silver?
Silver, like gold, is regarded by many as a safe-haven asset. When traditional investments like stocks and shares are declining, investors will look to invest a portion of their capital in assets that can hold or even increase their value.
Silver investment prices fell year after year in the 1980s and 1990s during the “Long Boom” enjoyed by Western stock exchanges. So did gold.
Silver prices can also fall or struggle when economic conditions worsen, as its industrial applications mean that the demand for silver may decrease if a recession occurs. Silver has shown the best returns when the stock markets have been underperforming.
Silver, like gold, can provide some security against inflation as it tends to rise in price when the interest rates fall behind rising costs of living.
The real interest rate is the return you receive from your cash in the bank after inflation has been taken into account. In the 1970s, it was negative, which meant that savers lost real money because inflation exceeded the interest rate they were earning. It also happened in the first decade of the 2000s. Silver was a good investment, especially when combined with a weak stock market.
Since 1968, gold and silver have had a correlation of 0.63. (1.0 is the perfect correlation). Silver prices, however, are more volatile. Silver moves on average 3% for every 1% change in gold, up or down.
When did the silver price reach its all-time high?
This depends on whether your interest is in the GBP or USD price of silver.
If you look at any chart of the price of silver in pounds sterling for the last 20 years, April 2011 is the month that stands out. The peak spot price reached PS30.06 (PS966.45/kg) on April 28, 2011, with the highest price per day (previously known as the London Fixing), reaching PS29.26 (PS940.73/kg) the same day.
Silver reached its all-time high in US dollars of $49.45 an ounce ($1,589.85 a kg) on 18 January 1980, when the Hunt Brothers tried to corner silver by buying physical silver bullion as well as silver futures contracts. Their failure led to the price dropping by two-thirds by 15 April 1980 to less than $15.00 per ounce ($482 a kg).
Is there a silver price pattern?
Silver prices have been trending upwards for the last 20 years.
This graph shows the number of times in the last 20 years that silver has gained over the previous month, either in US Dollars, Euros, or British pounds.
Below is a chart that shows the average monthly change in silver prices over the past 20 years, also for these 3 major currencies.
Silver Price Predictions
BullionVault regularly surveys its users to find out their opinions on the price trends of precious metals in the coming 12 months. In our most recent survey, 25.8% predicted that the price of silver would rise by at least 20% before the end of the year.
We have data, charts, and expert opinions to help you understand the impact of the silver shortage on the future price.
Silver bullion: How to invest
The table below summarizes the pros and cons of different silver investment options.
Silver jewellery/cutlery/objects
When it comes to selling silver items that require craftsmanship, the price will be significantly higher than the value contained in the piece.
Silver jewelry and silver cutlery are not investments for these reasons.
Silver coins and bars
All silver coins, small bars, and wholesale bars begin as 1,000 oz bars (32 kg), before they are melted and smelted and stamped or cast into smaller pieces.
Silver coins and small bars are subject to 20% VAT in the UK. The price of silver coins would have to increase by more than 20% to make a profit. However, in reality, it would take a price rise even higher to achieve a profit.
Silver Exchange Traded Funds & Commodities ETC
Investors who are not concerned with owning physical silver bullion can get exposure to the wholesale market through silver ETFs and ETCs.
The price of silver is closely tracked by these investment products. They do have an annual cost ratio for managing the fund and storage. However, the investor doesn’t own the actual silver.
Silver Bullion Vaulted Wholesale
The cheapest way to buy silver is by buying wholesale silver bullion bars directly from the refinery. These 1,000 oz bars (32 kg) are accepted as good delivery in London Bullion Market Association-approved vaults. They can be traded and transported worldwide from one vault to another VAT-free.
Silver Investment Options
In the past, paying a storage charge for the safekeeping of physical assets was decisive to prove that an investor legally owned the property. This evidence is missing if no storage fee has been charged.
