Due to persistent concerns over the COVID pandemic, a weakening dollar, and lingering economic uncertainty, Investors flocked to precious metals, propelling the safe-haven assets to multi-year highs. This week, Silver powered into the spotlight, reaching a high of $ US$25.60, its highest level since 2013. Silver up over 100% since March, just 4 months ago. Citigroup recently projected that Silver could reach US$25 over the next six to 12 months.
What’s driving Silver?
Many issues driving the demand for Gold are the same issues propelling the demand for Silver namely: Economic uncertainty, Worsening China/US tensions, Record Stimulus spending and the weakening Dollar. Silver is also getting an added boost from bets on a rebound in Industrial activity.
- China-U.S. relations rapidly deteriorated after the U.S. abruptly ordered the Chinese consulate in Houston, Texas closed. China called the move an “unprecedented escalation”.
- Covid-19 cases continue to surge in the US with the President recently admitting that things will get worse before it gets better.
- The U.S. dollar continues to weaken. Silver has an inverse relationship to the US dollar so as the dollar weakens, silver prices tend to rise. Silver offers some protection against a falling dollar.
- The EU reached a deal on a massive stimulus plan and the U.S Congress is seeking another US$1 Trillion in economic relief. As governments pump massive stimulus money, experts warn of higher inflation and Dollar devaluation. Silver is a great hedge against inflation.
Silver’s association with Gold as a safe-haven asset will only propel its status, hence as the Gold market strengthens, you can expect similar positive sentiments for Silver.
Silver’s use as an Industrial Metal
Silver’s widespread use as an Industrial metal is unmatched. In addition to its monetary and investment attributes, Silver’s global demand and consumption also come from electronics manufacturing. Technological advances in areas such as Solar energy, Electric vehicles and 5G will continue to support Silver consumption and with hopes of a rebound in industrial activity, demand should remain robust, which could push prices up further.
Silver, a Viable Alternative
Silver offers investors a cheaper viable alternative to Gold while offering some of the same potential benefits. Silver like Gold is a great diversification tool, a safe-haven asset in times of uncertainty and a great hedge against inflation and a falling dollar.
As the Dollar continued its decline, Gold broke above US$1900 on Friday, its highest level since 2011. With Gold rapidly surging towards $2000, Silver is poised to benefit and could go higher. Now could be the perfect time to add some silver to your portfolio.
At American Hartford Gold, we specialize in precious metals and will help you add Silver to your self-directed retirement account.
Call 800-462-0071 to speak with a Precious Metals Expert.