Similar to gold, silver is a commodity that is treated as a safe haven investment due to its long-term, inherent value. However, there are other factors which influence the silver price and make it a worthwhile investment.
Apart from its intrinsic value as a commodity, silver also has various other industrial uses that influence its price. The high conductivity of silver gives it various technological applications, from its use in solar energy to the automotive industry.
With this in mind, investors should include silver in their portfolio as part of an understanding of the growing demand for clean energy and various other technological advances, so that the growth of these industries will result in the long-term value of the silver price.
While silver is a more volatile commodity in terms of its price than gold, most analysts forecast that its price will average at around $32 in the next five years. In order to understand this forecast, it is helpful to consider some of the factors that will move the silver price in the next few years.
Investment demand will have one of the biggest effects on the silver price going forward. Between the year 2000 and 2020, the investment demand for silver has increased to 1.52 billion ounces held worldwide says Louis Schoeman from Forexsuggest.com
This trend indicates that investors from around the world are increasingly seeking more exposure to silver. As this demand is only projected to increase, the price of silver will naturally follow suit.
As noted earlier, silver is used widely in many different industrial and technological areas, most notably in the use of green technology.
While industrial demand on the whole tends not to fluctuate, the introduction of government-led green policies in many countries will likely result in an increased demand for clean energy, and so for the technologies needed to provide this energy.
With the industrial demand for solar panels increasing consistently, so too will the value of silver as an important application in this, and other, green technologies.
Added to this, silver remains widely popular throughout the jewellery industry, a factor which will function in conjunction with the demand for its technological applications to drive the silver price upwards.
Silver as an investment over the next few years
With the important factors of both investment and industrial demand projected to drive up the silver price over the next five years, a final component in its viability as a long-term investment is that silver is a good hedge against inflation.
US fiscal policy is likely to see the introduction of stimulus programmes in the near future, which will cause the dollar value to drop. As a result, the value of both gold and silver will increase as the dollar value goes down.
In conclusion, silver is a worthwhile asset for investors seeking both diversity and stability in their portfolios, and for investors looking towards more long-term returns.
Both investment and industrial demand for silver continue to grow; and while the precious metal is more volatile than gold, the expected decrease in the dollar value in the coming period is likely to push up the value of silver even more.