Investing In Silver: Diving Deeper into Demand, Deficits, and Risks

Silver At The Crossroads

Precious metals have been the refuge to which capital flocks in troubled times since the dawn of civilization. In large part, this is because they represent a form of wealth that is independent from the monetary or financial system.

And for sure, gold seems to have been playing this role in the past few years since the explosion of international tensions following the start of the war in Ukraine. Tariffs and international trade with the US slowing down also contributed.

Source: GoldPrice

The cheaper relative of gold, silver, is also outperforming, reaching in nominal terms (not inflation-adjusted) its all-time highs from the 1980s.

However, concerns about inflation, geopolitics, and monetary disorder are only part of the story with silver. What was historically a metal mostly used in jewelry and coinage is today a crucial industrial metal, notably for electronics, and the cornerstone of the green energy revolution, with solar panel production now a major driver of silver demand.

Another part of the story is that production of fresh silver from mining is struggling to keep up with demand, depleting inventory over time.

So while not as talked about or valuable as gold, silver might have as much or maybe even more upside potential as the yellow metal.

What Is Silver? Properties, Uses, and History

Silver is a gray metal known since antiquity, believed to have been discovered around 5000 BC, with the first jewelry and silver objects made in 4000 BC.

For a long time, silver’s value was comparable to that of gold, with the ratio between the two metals varying depending on the region of the world and the respective abundance of ore in that area.

Since the end of the direct monetary role of gold and silver in the global monetary system, the silver-to-gold ratio has fluctuated, with silver becoming less precious than gold over time.

Source: Aberdeen Investments

For this reason, silver coinage was common and represented a form of money in most of human civilization.

Silver is ranked chemically in the same category as copper and gold.

Source: Priam Study Center