Why Has Silver Become Such A Popular Asset?

If you’ve been keeping track of investment news recently, you’ve probably noticed that silver has been on a bit of a rally. In fact, according to FX Street, silver hit an all time high on Thursday, trading at $116.60 per troy.

But for an asset that has historically been seen as a cheaper and less desirable alternative to gold, the recent rally has raised a lot of eyebrows.

But why now? Why silver? We take a look…

How Do People Invest In Silver?

There are a few different ways that people invest in silver. In days gone by, physical silver bars or coins used to be bought and stored in-person.

Now, however, people can invest in exchange-traded funds (ETFs), which track the price of silver without the need to store it themselves. This means that investors can get the benefit of holding silver, without needing to physically store it.

Others invest in silver mining companies, as share prices will usually rise with the value of the metal.

Why Silver Has Recently Jumped

Assets rarely rally in this way without a reason, and for silver prices, wider economic decisions made for the perfect rally storm.

When banks talk about lowering interest rates, having money in savings accounts becomes less attractive. In times like this, investors look for alternative options to help their money grow alongside inflation. And historically, silver has been a good bet.

In addition to this, as many governments struggle with growing debt and turbulent economies, investors tend to be drawn towards assets they can touch, and silver has been seen as one of those safe havens.

When Governments Print More Money, Investors Like Physical Assets

Governments around the world are struggling with debt. To combat this, many have been printing more money to help manage interest rates. The problem is that at a certain point, printing money starts to eat away at the currency’s value.

For people holding cash, this can be a big problem.

However, unlike money, silver can’t be printed or created out of nowhere, so it’s a good store of value when trust in a certain currency breaks down.

This sense of security becomes particularly attractive in times of economic turbulence like we are currently experiencing.

Silver Isn’t Just An Investment, It’s A Real Asset

One of the things that sets silver apart from other investments is that it isn’t just something people buy and put away, it’s genuinely used in the real world.

Silver is used to create solar panels, medical equipment, electric vehicles and other electronics. It is also a very effective conductor of electricity, making it both useful and valuable.

With this usefulness has come increased demand, and when demand is high and supply stays steady, prices rise.

Silver As An Asset vs Gold

Gold has taken a lot of time in the spotlight, but as an asset, it’s incredibly expensive.

Silver on the other hand gives people a way to own a precious (and useful) metal without a high cost. This makes it a great option for those that want the inflationary benefits of an asset like gold, without the big cost commitment.

Because of that, more investors have piled in.

Why Silver Might Keep Going Up

In the current economy, there isn’t just one reason why silver is becoming more popular, but multiple reasons all colliding at the same time.

People are worried about inflation and the value of their money being eaten away by government borrowing.

Silver is being used across multiple industries and as a result, demand for it is growing.

Supplies are limited and can’t just be created out of nowhere, the raw material needs to be mined.

Investors are looking for ‘safer’ stores of value for their money, and precious metals seem like a good bet.

It is all of these elements combined that mean silver is on a rally, and it doesn’t look like it’s slowing down anytime soon.