Investing in Silver in 2022

Like many other investors, you may have considered investing in silver or already hold silver. Like gold, silver is considered a long-term investment and a portfolio diversifier. The precious metal is incorporated in investment portfolios as a safety net against market volatility, and utilised as a safe haven from currency devaluation and economic uncertainty.

As a testimony to the above – at the time of writing this article – the silver chart on Kitco.com showed that silver has increased by 262.81% over the last 20 years.

This is an impressive return for any investor who bought silver back then.

Silver prices are currently trading around $28.42 per ounce. In comparison, the price of gold was trading around $2557.42 per ounce when we published this article. So if you were to buy silver today, it would be more expensive than buying gold. However, there are some reasons why you should consider buying silver now.

The following reasons will help you decide whether to invest in silver:

1) Silver Is A Safe Haven Against Currency Devaluation And Economic Uncertainty

One of the main reasons why people buy silver is because they want to protect their wealth from inflation. When governments print money, they tend to increase the value of their currencies. This means that the purchasing power of your money decreases over time.

Inflation can also lead to higher interest rates. Higher interest rates mean that you pay more for loans and borrowing money becomes more difficult. If inflation continues, the value of your savings could decrease significantly.

However, silver is not affected by inflation. As a result, its value remains stable. You do not need to worry about losing purchasing power due to inflation.

2) Silver Has Been Increasing Its Value Over Time

If you look at the history of silver, you will notice that it has been increasing in value since 1980. It reached a peak in 2011 where it traded at $50.80 per ounce. Since then, however, the price of silver has decreased slightly. Currently, the price of silver is trading around $30.00 per ounce.

3) Silver Is Incorporated Into Investment Portfolios As A Safety Net Against Market Volatility

When markets go up, investors usually sell stocks and bonds. They prefer to put their money into assets such as real estate which are less volatile.

However, when markets go down, investors often turn to investments with higher returns. These include commodities like gold and silver. Investors believe that these assets are less likely to lose value during times of financial instability.

4) Silver Can Be Used To Invest In Stocks

You might think that investing in silver is only useful for those who want to hedge against inflation. But you can actually use it to invest in stocks. For example, if you own shares in a company, you can purchase silver futures contracts. This allows you to speculate on the future performance of the stock without having to physically own the stock itself.

Simply put, silver and other precious metals such as gold, are integral to a well-balanced investment portfolio. This is because precious metals perform well in volatile markets and do not correlate with traditional asset classes, and thus serves as a preservation of wealth.

Ways to Invest in Silver

There are a number of ways to invest in silver, thereby gaining access and exposure to the benefits of the precious metal. These methods include silver ETFs, mining company shares, silver derivatives, silver futures, unallocated or pooled accounts, and mutual funds.

However, these are all options to buy paper silver. The real benefits of investing in silver comes from purchasing and holding physical silver, which is separated from the fluctuations and determinations of the stock market.

Compared to other precious metals like gold, silver is generally more affordable and therefore an easier way to enter into the precious metals market. You can purchase physical silver in the form of silver bullion, silver coins, silver ingots or even by the gram. But how can you make sound decisions when it comes to buying and selling silver?

Silver Bullion sales

Gold and Silver Ratio

A popular tool used by investors is the gold to silver ratio. As explained by Investopedia.com , “The gold/silver ratio represents the number of ounces of silver required to purchase one ounce of gold. Investors use the fluctuating ratio to ascertain the relative value of silver compared to gold. This comparison allows the trader to determine the optimal time to purchase one metal over the other. It also helps investors diversify their precious-metal holdings.”

Here’s a quick history of the Silver-Gold Ratio:-

2022: As of July 13, 2022, the ratio was 91.51
2021: As of Dec. 3, 2021, the ratio bottomed out at 65.41 and peaked at 79.98.
2020: For the year, the gold-silver ratio peaked at 114.77, the highest it’s ever been since 1915.
1991: When silver hit record lows, the ratio peaked at nearly 100.
1980: At the time of the last great surge in gold and silver, the ratio stood at about 15.
1834-1862: Congress moved to change the ratio to 16 from 15.
1792-1834: The U.S. operated a bimetallic standard, with a fixed ratio of 15.
Roman Empire: The ratio was set at about 12.

But how may you apply the gold/silver ratio to your investment strategy? The current ratio is relatively high when compared to historical data. While these figures will continue to fluctuate, an opportunity has presented itself.

By comparing the current ratio to historical data, you may expect the ratio to increase or decrease and eventually normalise. If you are expecting the ratio to decrease, you have the chance to trade an ounce of gold for 88.54 ounces of silver.

If the ratio decreased to, say the 35-year low of 31.06 ounces of silver to an ounce of gold, you would then be able to purchase just over three ounces of gold using your silver, thereby increasing your total holdings of gold – and vice versa when your aim is to increase your holdings of silver.

Gold and silver have different uses. While both are used as currencies, they differ greatly in terms of supply and demand.

For instance, while there is a fixed amount of gold available, we cannot say the same about silver. Because silver is so much more common than gold, it’s easy to find supplies of silver on the open market. In fact, there are so many places where you can buy silver that you could easily end up paying too little for it.

On the other hand, because gold is scarce, its price tends to rise when the global economy does well. So if you want to invest in gold, you should do so during times when

In essence, compared to gold silver is a more affordable way to enter the precious metals market, and the precious metal has become readily accessible via a range of innovative products.

Silver is a highly liquid asset that you can buy and sell anywhere in the world; and unlike currency, silver can not be readily reproduced. Today it is easy to invest in gold and silver, and adding to or selling your silver is simple. You can purchase and sell back to retailers and online traders instantly, based on the spot price.

If you’re new to silver investment, Private Vaults Australia is part of the Gold Bullion Australia (GBA) Group with over 40 year history trading in gold & silver. We are here to answer any questions you may have about buying silver bullion and other products. PVA is a secure safe deposit box gold and silver bullion dealer servicing the Sunshine Coast and Brisbane region.