BUY SILVER ONLINE: A 2021 GUIDE
Often called poor man’s gold, silver is not as headline grabbing as its more lustrous precious metals counterparts. It has a dual-life as an industrial metal — getting dirty in soldering, engine bearings, and chemical production. But it is also an investment metal that offers protection from a tumbling dollar and the renewed risk of inflation.
It is silver’s versatility and under-the-radar quality that make it an opportunity metal. While the shutdowns and recessionary fallout from COVID-19 have pushed gold to an all-time high, silver still has a ways to go. Historical comparatives suggest that it has the potential for much higher returns as evidenced by the last four major gold bull markets.
Silver spent most of the 2000s hovering at an average of just under $5 per troy ounce, but the events that unfolded throughout the decade — the dot.com crash, September 11th attacks, Hurricane Katrina, the housing crisis, and ensuing financial meltdown — pushed silver to levels not seen in generations. It climbed 14% in 2004, 29% in 2005, another 46% in 2006, and as high as 80% in 2010. Then, as now, all of the ingredients are present for silver to once again deliver historic returns.
If you’re looking to buy silver online in 2021, we’ve compiled a guide about our predictions for the silver industry in the coming year and why it’s a great option to buy silver online!
SILVER HAS ROOM TO RUN
So, what makes silver different from other precious metals? We’ve already confirmed that it’s far more affordable. At the current writing, gold is over 7000% more expensive than silver, platinum is roughly 3357% higher, while palladium is a whopping 7878% pricier. Stated another way, $25,000 buys you 892 ounces of silver but just under 12 ½ ounces of gold, a little over 25 ounces of platinum, and a mere 11 ounces of palladium. Buying silver clearly puts more physical metal in your hands.
While silver prices are driven by the same factors that elevate gold prices (i.e. loose monetary policy, fiscal deficits, recessionary forces, slumping GDP, etc.), it has far more room to rise as the economy recovers. Silver is an essential component of industrial fabrication, medical instrumentation, and photovoltaics. It is used in countless electronic components including circuit boards, switches, and contacts. And there are few aircraft, space craft, or nuclear reactors built without silver. Therefore, when you buy silver online, you are buying a commodity that is much used in industries.
PENT-UP AND REBOUNDING DEMAND
Silver is a vital tech metal and a critical component of computer tablets, smartphones, batteries, LED chips, semiconductors, and photography. While industrial demand for buying silver softened in the first half of 2020 due to the trade war with China and the onset of COVID-19, it will likely rebound as global industries come back online.
Not surprisingly, demand for silver jewelry also softened due to slumping GDP and shuttered retailers worldwide. In addition, there have been shipping, logistics, fabrication, and product availability issues. But much like other sectors of the economy, jewelry sales are expected to recover substantially.
A recent survey by the Silver Promotion Service (SPS) confirms a significant pent-up demand for jewelry as consumers demonstrate strong post-pandemic buying intent. 64% of those surveyed indicate that they still plan to purchase the jewelry they wanted during quarantine — and 50% of those ready to buy stated that their purchase would be silver.
Keep in mind that silver jewelry will likely weather the storm far better than other metals due to its affordability and ease of online purchase. Buying silver online is one way to get in on this at the ground level before prices shoot back up in the future.
THE GREEN NEW DEAL’S BIG SILVER LINING
A Biden presidency could also be a windfall for silver. Vice President Biden has endorsed the framework of The Green New Deal, an aggressive plan for tackling climate change by dramatically cutting greenhouse emissions by shifting to renewable power sources and ramping up solar installation.
Biden’s website outlines his desire to:
- Achieve a 100% clean energy economy and reach net zero emissions no later than 2050
- Make a historic investment in clean energy and climate research
- Deploy clean energy innovations across the economy
Silver has the highest electrical and thermal conductivity of all metals, and it is broadly used by most clean energy sources:
- Silver is the building block for solar panels
- Wind energy uses silver motor brushes to power its turbines
- Silver is pivotal in moving the pistons that propel water for hydroelectric power
- Silver helps power the mechanical generators that harness ocean energy
- Silver bearings are used in the turbine engines of geothermal electricity production
- Silver, along with palladium, is used to purify hydrogen fuel
Silver is already a key component of traditional automobiles, i.e., power seats, heated seats, navigation, and most electronic circuitry — and it will play an even bigger role in self-driving cars and sensor-driven crash-warning systems.
In short, if there is going to be a “Green New Deal” or a green platform of any kind, it will not happen without buying silver. As the world transitions away from fossil fuels, renewable energy capacity will increase along with the demand for silver. Consumption of silver in energy technologies could surpass more than 50% of current demand and the majority will likely come from the rapid adoption of solar power.
Solar energy penetration is expected to grow for the next three decades in the United States and even more significantly in developing regions like China and India as investment in solar infrastructure soars. When buying silver online, you are investing in the value of silver in these up and coming industries.
SILVER INVESTING STEPS INTO THE LIMELIGHT
As the gold market strengthened, the value of the dollar weakened and interest rates plummeted — silver-backed ETF demand also soared. As of July, iShares Silver Trust (SLV) the largest silver ETF, added $2.7 billion in new investments during the year.
The gold and silver ratio has also been on the move. After peaking at 124 in March, the ratio continues to tighten but still sits well above historical averages. Throughout the 20th century, the average gold-silver ratio was 47.1. So, despite silver’s historic run in 2020, it remains cheap relative to gold and has room to climb by historical standards. This ratio means that buying silver online has the potential to be great for you.
WANING GLOBAL SUPPLY
As COVID-19 infection rates slow and economies around the world return to vigorous consumerism — silver demand is set to rise across all sectors. Silver supply, however, will likely continue to dwindle. Pandemic-induced production disruptions, mining closures, and stoppages in several critical mining countries have caused a dip in global silver production.
According to commodities research firm CPM Group, mine closures in South Africa, Peru, and Mexico will likely result in a lost output of at least 21.1 million ounces of silver. Peru and Mexico alone make up almost 40% of world silver supply. Losses could be worse if closures are extended and the COVID-19 crisis is protracted. Some mines have already had to close down a second time due to a resurgence in infection rates.
According to the Silver Institute’s 2020 World Silver Supply Survey, global mine production had already fallen in 2019 for the fourth year in a row. The reasons included declining grades at silver mines, lower silver production from copper mines, and the shutdown of major producers.
In addition, there have been disruptions in silver scrap and recycled silver which are critical to meeting global demand. Through various purification processes, high-purity silver can be produced via refining and recycling. This has helped slumping production meet rising demand for the past few years but 2020–2021 could be very different.
The new closures and quality issues could have major implications for silver production going forward, and the Silver Institute now forecasts a 13% drop in overall mine production this year and a 7.2% decline in global supply.
In light of silver’s new supply/demand dynamic — Stephen Innes, chief market strategist at AxiCorp Ltd., states that “silver is now leading the charge” on profit potential, and claims it’s on the same trajectory as it was during the global financial crisis when it rallied to $50 an ounce back in 2011. Buying silver online now could prove to be fruitful in the future.
THE NEW SILVER WINDOW
The current silver buying window online has been years in the making. It is less about hype than about hard facts, historical trends, and market logic. First, silver is far more affordable than other precious metals and while it has recently hit seven-year highs, it has not hit all-time highs. So, it has more room to run historically.
Secondly, silver is being propelled by the traditional forces that drive precious metals like Fed policy, recessionary conditions, sovereign debt, and an uncertain economic outlook. It is also benefiting from a negative yield environment that has pushed the return on bonds below the rate of inflation and reduced the “opportunity cost,” (the cost of choosing one asset over another), of holding either gold or silver.
Silver has other characteristics that make it unique among precious metals. It has endless industrial applications. It will be an integral part of a “green” economy. And, it will continue to play a vital role in forward-thinking technologies like 3D printing, water purification, weather modification, anti-microbial protection, and the 5G revolution. It is about as far from a barbarous relic as one can get. Buying silver online is an investment in the future of our world.
Silver is also being driven by supply and demand metrics. While there is more silver than gold in the world, there’s far less of it above ground, and silver mining has been among the hardest hit of all metals by mandated closures. Nearly two-thirds of world’s silver production was shut down in an effort to contain the spread of COVID-19.
Silver’s success is grounded in a metal that is less expensive, more practical, far more forward-looking and heretofore under the radar with respect to its true profit potential.
Silver thrives in two, distinct investment timelines. In the short term, it is enjoying a price surge as an investment metal. In the long term, it will benefit from both a post-pandemic recovery and the touchless, wireless, clean energy economy of the future. Best of all, silver is still cheap relative to gold and that cannot be overstated during a cash-strapped recession.
If you’re considering buying gold online, now is the time! The team at Nationwide Coins is ready to help you start your silver journey.
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