Silver is frequently overlooked in favour of its more luxurious sister metal gold, but the former may currently represent the better investment. That’s because the price of silver has risen by more than 70 per cent in a single year – and could have even further to go.
According to strategy experts, this rally is set to continue as the global economy stirs into life once more. With silver now trading at around $27 per ounce, this is a rise of 74 per cent from the same time last year. The price of gold, in comparison, has grown by 6.4 per cent in the same period.
More demand than supply
When we think of silver and its uses, we rarely consider its applications beyond the obvious. However, as well as being used for jewellery and coins, silver is an integral material in both electronics and photography.
For those looking to trade CFD futures or commodities through a company like INFINOX, which has low margin requirements and minimal trading costs, even a small amount of research reveals that this particular asset could be a useful addition to your portfolio. These sites also give valuable insights into price movements, even to the extent that the price you’re quoted is the same as the underlying exchange.
That’s because the durability and high electrical conductivity of silver suit it to a myriad of technological and industrial applications. Indeed, it’s found in everything from computers and smartphones to cars, with demand for the semi-precious metal far outstripping supply in 2021.
According to Ole Hanson, an expert in commodity strategy, around 50 per cent of the increased demand for silver in the past year came from the industrial sphere, with the remainder stemming from savvy investors. Copper, another industrial metal, saw a similar surge in value after hitting a low point in 2020.
Hanson explains that there is another factor at play too: the shift toward green technologies. This has catalysed a further rise in demand among the industrial metals used in solar panel production, for example.
No signs of waning
Due to the rapid surge in prices, some investors have expressed concerns that this growth cannot last. Others have voiced worries regarding inflation, which has caused precious metals to be used as a hedge against rising prices and the falling value of the dollar.
While this has been more of a spur for the gold market, the two commodities tend to grow together. Though this is currently positive for investors, some market watchers have become fearful that it may lead to a tightening of monetary policy to keep prices under control.
However, Hanson says that, so far as silver is concerned, this is unlikely, with prices remaining well below the record set in 2011 when the precious metal was selling for $50 per ounce mark. The commodity strategy specialist also noted that the push toward becoming greener in all areas will continue to support the rising demand for silver.
Similarly, the increase in production resulting from the reopening of the global economy should drive sales for the remainder of the year, with rising industrial consumption likely to push prices even higher as we move further into 2021.
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