Three Reasons to Be Bullish on Silver with Or without Reddit Raiders
The comments below are an edited and abridged synopsis of an article by Schiff Gold
Silver is getting a lot of attention thanks to the so-called Reddit Raiders. But it is a fantastic buy, and was poised to go up even without the message board investors.
Silver is a monetary metal. As fiat currencies devalue, silver holds its value as prices increase in dollar terms. Currently, central banks are creating money like never before, and there is no sign that the money printing will abate; it must continue or the debt-ridden US economy will crash.
Central banks destroy the value of fiat money by endlessly printing it. Since silver and gold are scarce resources, the marketplace determines their underlying value. Thus, in times of economic turmoil and inflationary central bank policy, silver and gold maintain their purchasing power, while fiat money can become worthless.
Looking long-term, buying silver at $27 is a bargain.
The Fed’s expansionary monetary policy has already driven investment demand for silver to 5-year highs. Silver coin and bar sales have helped push investment demand. Retails sales are projected to rise by 62% on the year.
Silver is historically undervalued compared to gold. Even with the recent run-up, the silver:gold ratio is still over 60:1. This is historically high; the modern average over the last century has been around 40:1.
Future supply and demand dynamics look good for silver. More than 50% of global demand comes from industrial and technological applications. Three of the metal’s key characteristics: It has the highest thermal and electrical conductivity of any metal; it has anti-bacterial properties; and it is widely available.
Non-investment silver demand dropped in 2020 due to the economic contraction sparked by Covid-19, but the market is recovering. Analysts expect industrial demand will rebound as the global economy recovers from the pandemic.
Silver demand will likely get a boost from solar power and other green energy initiatives in the coming years. Solar power generation is expected to nearly double by 2025. Even if the global economy recovers more slowly than expected, green energy demand for silver will likely remain robust.