Even if you’re an investor who understands that investing is often all about the long game, it can be tough to see asset prices move sideways, or even down. We may understand intellectually that prices are variable and will move up and down, but emotionally it can be difficult to process that. The temptation sometimes comes to sell off assets at the first sign of value loss, even if we believe that the long-term trend is ever upward.
It’s the same for precious metals investors as it is for stock and bond investors. Even though we believe the long-term trend for precious metals is for prices to rise, it can be frustrating to see prices stagnate or even decline. Certainly all the support is there for precious metals prices to continue climbing, so we wonder why they aren’t.
Everything will happen in good time, however, so it’s probably best to be patient. The potential for the silver price, in particular, to rise is particularly strong. During precious metals bull markets, silver price growth often exceeds that of gold. And there three very strong trends that could support significant future silver price growth.
1. Photovoltaic Industry
Worldwide there has been a tremendous push towards the use of more green energy in recent years. Green energy such as geothermal, solar, or wind power is more in demand than ever, due both to market demand or government mandates. In California, for instance, all new single family homes will have to have solar panels installed.
Forecasts for the solar industry are particularly strong, with analysts predicting anywhere from three to ten times more demand for solar energy by the end of the decade. And with that, demand for silver should also increase.
Silver is the metal that makes solar panels function. It is crucial in the production of photovoltaic cells. Without silver, you can’t get solar energy.
Even with engineers attempting to minimize the amount of silver used in solar panels due to cost, increasing demand for solar energy could result in a significant rise in demand for silver from the photovoltaic industry. That’s just one part of burgeoning industrial demand that could help boost the silver price.
2. Automotive Demand
Silver is in demand in the automotive industry too. You may not realize it, but each car produced today uses silver in its electronics. Hybrid cars and electric cars use even more silver than cars with internal combustion engines, sometimes up to twice as much. As electric cars become more popular, or as government mandates require manufacturers to electrify their fleets, more and more silver will be used in the automotive industry.
A recent report from the Silver Institute estimated that total silver demand from the automotive industry could reach 98 million ounces a year by 2025. That’s up from an estimated 61 million ounces of use this year, which would mean a 60% increase in just four years.
That kind of silver demand would rival demand from the photovoltaic industry, and could mean that industrial demand for silver will become an even greater driver of the silver price than it is today. It’s important to note too that services surrounding electric vehicles, such as charging stations, will also require silver. So as the infrastructure to support electric vehicles continues to be built out, there will be additional demand from that sector as well.
3. Investment Demand
Traditionally, about half of silver demand comes from industry. That changed over the past year as lockdowns shut down industry and as investor demand increased in response to the collapse of stock markets in early 2020.
Going forward, investor demand could remain quite strong, as the outlook for the economy remains weak. Millions of Americans remain out of work, inflation is rising, and overall indebtedness continues to increase.
The federal government shows no signs of slowing its spending, and the Federal Reserve shows no signs of tapering its accommodative stance of monetary policy. In effect, all the conditions are right for a major rise in the silver price.
Silver markets, like markets overall, seem to be in a sort of waiting phase. They’re waiting for the next shoe to drop, the next sign of which way things are going to go. There’s a widespread sense of fear and foreboding, but no one knows when exactly markets are going to start falling, when stocks are going to correct, or what event will precipitate a correction. Until that happens, don’t be surprised to see prices trade in a relatively tight band.
The Outlook for Silver
When stock markets do begin to correct, and the long-overdue crisis everyone fears arrives, silver prices could make significant gains. Even if that doesn’t occur this year, many analysts expect silver to rise to close to $30 this year. Weak underlying economic conditions favor continued increases in the silver price, as it appears that we’re still in the very early stages of another precious metals bull market.
Over the long term, silver could very well eclipse its previous all-time high price. And with an outlook for years of rising government spending and rising inflation, the silver price could remain strong for years to come.
How to Protect Yourself With Silver
For many first-time investors in precious metals, the process of investing in silver can seem daunting. If you don’t have experience in buying silver, you may not know how to get started. Thankfully, the precious metals experts at Goldco can answer your questions and help you navigate the precious metals purchase process.
One popular method among those looking to protect assets they have in retirement accounts is to purchase silver through a silver IRA. A silver IRA holds physical silver coins or bars while still allowing you the same tax advantages as a conventional IRA retirement account. You can fund a silver IRA by rolling over or transferring assets from an existing IRA, 401(k), TSP, or similar retirement account tax-free into a silver IRA.
If you don’t have retirement account assets to transfer, or you would prefer to leave them where they are, there’s also the option of direct purchases of silver coins and bars. These can be delivered to your door, or you have the option of storing them at a bullion depository. With our established relationships with mints around the world, Goldco offers a wide array of silver coins and bars, something to suit almost every silver buyer’s needs.
Whether you want to invest in a silver IRA or just buy rolls of silver coins to hold at home, the precious metals experts at Goldco can help you through the process. Give Goldco a call today to learn more about you can benefit from investing in silver.