Is Silver a Good Investment in 2022?
There are plenty of proven investment methods, but few are as good an investment as silver.
Author:James PierceReviewer:Alberto ThompsonFeb 24, 202217.2K Shares1M Views
There are plenty of proven investment methods, but few are as good an investment as silver.
Sometimes dubbed “the poor man’s gold”, silver has an ancient history as a store of value and as a currency.
Compared to other metals in the market, silver is the only one to trade higher in 2021 than their 1980 high.
So how could silver be a good investment today if it's below its 40+ year high?
Proponents of the silver market believe it’s about to make a comeback.
CEO of First Majestic Silver (NYSE: AG), Keith Neumeyer, thinks silver can reach $130/oz.
He believes the market we’re seeing today reflects the 2000-2001 market.
The endless bidding in the infamous dotcom era of March 2000- October 2002 sent the NASDAQ into free fall.
In the scramble to find a haven, investors tend to look at metals such as gold and silver as a hedge.
And while it has played second fiddle to gold, silver offers much of the same benefits as gold.
Perhaps instead of a dotcom bubble burst triggering new investment in silver, it could be a new trending investment route, such as NFTs or cryptocurrency.
Let’s see if your best bet is a silver investment in 2022.
5 Reasons To Invest In Silver
The stock marketis full of commodities, but we’re anticipating a big year for silver. Here are some reasons why to make a silver investment in 2022.
Relatively Inexpensive
Compared to the price of gold or platinum, silver is an inexpensive way to invest in the metals market.
This makes silver an accessible way for investors of practically any income or experience level to participate in the metals market.
Versatility
Similar to gold and copper, silver has wide industrial applications.
This includes photography, medical technology, green technology, and other sectors.
Outside of its industrial use, silver has historically served as a storer of value and a currency.
Inflation Hedge
In times of uncertainty, countless investors flood the gold and silver markets in search of a haven.
Metals like silver make for a great hedge against portfolio losses.
Why is silver so popular during economic turmoil?
As precious metal and an industrial metal, you can use silver as a form of currency or in manufacturing. Its versatility means silver will stay relevant and in-demand despite economic conditions.
Gateway Commodity
Have you always wanted to invest in precious metals such as gold or platinum but could never justify it?
Perhaps you’re worried about investing a large sum with no experience in the market.
Silver is your chance to change that.
Being the more inexpensive option, you can build confidence and experience without taking a huge risk.
Diversification
Is your portfolio full of the same asset types?
Try adding silver for some diversification.
It’s a great hedge against inflation, it’s versatile, and relatively inexpensive compared to other precious metals.
Understanding The Risks Of Investing In Silver
Every investment carries some kind of risk—silver is no different.
Before adding silver to your portfolio, understand the risks involved.
One prominent risk of investing in silver is that, despite its wide-industrial use, it’s highly replaceable.
Highly Replaceable
In other words, let’s say a manufacturer needs a part made from metals with conductive properties.
The manufacturer may look at their options and see some savings if they replace silver with a cheaper metal, such as copper.
Tech companies may choose cheaper metals to mass-produce technology, lowering the demand for silver.
Supply & Demand Fluxes
Like all metals, there is only a finite amount of silver.
That means the silver market is prone to sharp price changes as the laws of supply and demand apply.
Silver also has a smaller market compared to gold, so its prices are notoriously volatile.
Vulnerable To Recession
What could hurt a wide-industrial use and value store worse than a recession?
When the economy slows down, so does our appetite to fund new projects meaning silver demand drops.
But, this drop in demand means the price should follow suit.
In that case, it may be your best time to invest in the future,
When the economy recovers, industrial commodities—like silver—thrive.
Silver’s Performance In 2021
To understand and analyze silver’s performance in 2021, we must look at 2020
In august of 2020, silver prices approached $30 per ounce thanks to a combination of factors.
Economic turmoil caused by the ongoing COVID-19 pandemic in 2020 turned investors to precious metals for safe haven.
The surge in silver price helped silver stay about $20 per ounce in 2021—a feat not done since 2014.
As recovery efforts took place in 2021, metals like silver enjoyed higher demand but supply constraints as well.
In the first half of 2021, silver rallied to a high point of $27.79 per ounce in June. By the end of September 2021, it had shrunk to a year-to-date low of $21.52 per ounce.
So while silver was able to stay above $20, it was never able to cross the $28 threshold because of uncertainty related to industrial supply and demand.
The 2022 Outlook For Silver Is Bullish
Despite the volatility of 2021, the outlook for silver investment in 2022 looks bullish.
One of the main factors affecting this outlook is supply and demand.
Here are some reasons why silver is a good investment:
- In 2021, Chinese demand for industrial-use silver reached an all-time high.
- Silver’s anti-microbial properties make it essential for healthcare use.
- The white metal will play a key role in the future of green technology.
Demand for silver looks strong, but on the supply side, it’s still uncertain.
So long as demand stays strong—and it seems it will—that uncertainty can help prop silver prices up.
Best Way To Invest In Silver
Ready to invest in silver? Here are the best ways to make a silver investment.
Silver ETFs, ETNs, Or Mutual Funds
You can find several exchange-traded funds (ETFs), exchange-traded notes (ETNs), and mutual funds that own silver and whose prices track silver's price.
When you purchase a fund, there is no physical silver buying involved. But what you do have is more liquid than physical silver, meaning you can sell your shares back easier.
Silver Futures Contracts
Are you a speculative trader? Try investing in silver futures and bet on the rise or fall of its price.
You can usually find silver futures with options for high leverage, where you can purchase more by leveraging your broker’s money.
However, be cautious, as this leveraged position comes with increased risk.
Silver Stocks
Before silver can be made into parts, bars, or coins—it has to be mined. Silver stocks are an investment in a mining company, in this case, one that looks for silver.
Typically, a company will also mine for other precious metals and basic metals to cover operations costs and keep profit margins steady.
This makes it difficult to invest in a purely silver stock, but it also means you'll benefit from whatever else that company mines and sells.
Make The Right Investments In 2022—Join Dear Retail Investors
Whether you want to learn how to buy silver stocks or want to keep up with today’s trends, Dear Retail Investorshas you covered. We’re dedicated to bringing our community exclusive content and up-to-date information that leads to real profits. Join us today.
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James Pierce
Author
James Pierce, a Finance and Crypto expert, brings over 15 years of experience to his writing. With a Master's degree in Finance from Harvard University, James's insightful articles and research papers have earned him recognition in the industry.
His expertise spans financial markets and digital currencies, making him a trusted source for analysis and commentary. James seamlessly integrates his passion for travel into his work, providing readers with a unique perspective on global finance and the digital economy.
Outside of writing, James enjoys photography, hiking, and exploring local cuisines during his travels.
Alberto Thompson
Reviewer
Alberto Thompson is an acclaimed journalist, sports enthusiast, and economics aficionado renowned for his expertise and trustworthiness. Holding a Bachelor's degree in Journalism and Economics from Columbia University, Alberto brings over 15 years of media experience to his work, delivering insights that are both deep and accurate.
Outside of his professional pursuits, Alberto enjoys exploring the outdoors, indulging in sports, and immersing himself in literature. His dedication to providing informed perspectives and fostering meaningful discourse underscores his passion for journalism, sports, and economics. Alberto Thompson continues to make a significant impact in these fields, leaving an indelible mark through his commitment and expertise.
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