Gold and Silver Performed Just as Expected
With so much focus on inflation over the past several months, or worsening economic productivity, or mounting job losses in the tech sector, who would have thought that the most acute problems in our...
One of the most encouraging things when it comes to the silver market is the increasing use of silver in new technology. It’s well known among most silver users and investors that solar panels require silver to function, and that rising demand for photovoltaic panels is leading to rising demand for silver. Some of the forecasts for photovoltaic demand over the next several years are quite bullish too, which could be very good for the silver price.
But the solar industry isn’t the only industry in which silver use could be rising. It’s possible that electric cars could end up becoming another driver behind growing silver demand.
While current internal combustion engined vehicles use about ½ oz. to 1 oz. of silver per vehicle, electric cars use about 1-2 oz. per vehicle. As more and more car companies go electric, the amount of silver used in automobiles will likely increase. And that could increase significantly more if new battery technologies end up using more silver.
Of course, in order to use silver these companies have to source silver. And that isn’t always the easiest thing to do, as some mints found out last year.
That’s given rise to speculation that companies like Tesla may try to buy silver mines in order to ensure that they have a supply of the metal. While that may sound far-fetched at first glance, maybe it’s not.
After all, if the 2020 recession taught us anything, it’s how fragile modern supply chains are. We’re still dealing with the knock-on effects of 2020’s shutdowns, and not everything is quite back to normal.
With many of the technologies in electric cars requiring metals that are or that could be in limited supply, that are difficult to source, or that are primarily sourced from a single country or geographic region, metal supply is going to be increasingly important going forward. What we’re seeing now is numerous companies trying to overcome Tesla’s first mover advantage, and one way that Tesla could overcome that is by controlling the sources of the raw materials that it needs.
Think of it this way. You can either rely on just-in-time inventory and metals markets to provide you with the metals you need when you need them, or you can vertically integrate your company and control everything from raw materials through to the finished product.
Failing to control sources of raw materials could leave you at the mercy of markets which, given increasing demand for lithium, cobalt, and other materials, may not be able to supply you at any given time. Imagine needing massive amounts of lithium to build batteries for your cars but you can’t get any because mines are at capacity and selling to your competitors who are paying more. Or maybe environmental concerns, political instability, or worker strikes are affecting the mines from which you’re buying your lithium.
If those types of incidents occur, wouldn’t it be better to control your own supply of lithium? And the same could go for silver too, albeit on a smaller scale. Many companies seem to be reverting to strategies from times gone by, holding larger amounts of inventory to prepare against potential shortages or price increases. And reverting to vertical integration, rather than outsourcing, could be coming back into vogue.
If firms like Tesla were to start buying their own silver mines, or mines that produced other raw material metals, it would likely have an effect on prices on world markets, especially if multiple firms took this same approach. What might happen if other electric car makers suddenly decided also to become their own sources of raw material supply and vertically integrate their operations? And what if that included securing their own sources of silver?
With governments around the world looking to ban the sale of internal combustion engined automobiles over the next few decades, it looks as though we’re slowly reaching an inflection point in the global automotive industry. Twenty years from now the industry will likely look a lot different than it does now, and the structure of automotive companies could look completely different too. Could ownership of sources of raw materials be something that defines the successful automobile manufacturers of the future?
A lot can certainly happen over the next few decades. But whether or not car companies decide to secure sources of silver, there’s still no denying that silver will play an increasingly important role in emerging technologies. Silver’s properties have made it an ideal metal for new green technologies like solar panels, and its role in electric vehicles could continue to grow, particularly if new battery technologies incorporating silver become more mainstream.
Silver has long served as a safe haven asset, just like gold, and it retains its popularity as a safe haven today. While it may not garner the same attention as gold, many precious metals aficionados realize that during bull markets for precious metals silver may actually outgain gold. During the aftermath of the 2008 financial crisis, for instance, gold nearly tripled in price but silver more than quintupled.
Many analysts today believe that silver remains undervalued compared to gold, but they remain bullish on silver’s future. With more economic headwinds facing the economy, an increasing chance of recession, and inflation that has remained high, everything seems to be coming together to create conditions ideal for silver to take off.
It’s worth noting too that during the stagflation of the 1970s silver’s annualized rate of growth was over 30% per year over the course of the decade. If the 2020s end up becoming a repeat of the 1970s, could silver end up repeating that kind of growth? Even growing at half that rate would be phenomenal if it could hold up over the course of a decade.
If you’re worried about your financial well-being and want to protect your wealth against what may be coming, maybe it’s time to start thinking about silver. With a silver IRA, you can protect your existing retirement savings with a tax-free rollover or transfer from your existing retirement accounts, allowing you to enjoy the benefits of owning silver. Or if you prefer to purchase silver directly, you can make a direct cash purchase and store your silver at home or wherever you prefer.
With over $1 billion in precious metals placements and thousands of satisfied customers, Goldco’s experts do whatever it takes to help our customers enjoy the benefits of owning precious metals. Call Goldco today to learn more about how owning silver can help you safeguard your hard-earned savings.
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