by | Aug 19, 2022 | Precious Metals

Economists, analysts, and investors alike remain uncertain about the health of the world’s economy. Increasingly, the economic bellwethers are pointing to a looming global recession. Historically in times of market tumult, many investors turn to precious metals such as silver to hedge against economic uncertainty. In this article, 10 financial advisors discuss whether now is a good time to buy silver.

Invest First in Other Assets Such as Gold

Silver, just like gold, is an asset that can be used as a hedge against inflation. Since this asset is affected by different factors compared to bonds and stocks, investing in this is a great way to reduce your risk exposure especially when the stock market is down. Silver also holds its intrinsic value, which is helpful when interest rates are low, and is used in many technological advancements due to its high conductivity.

While silver is good for diversification, it still has a lot of undersides when compared to investing in gold. Because of its smaller market, it tends to be more volatile and less liquid as compared to gold. With this, I recommend that you invest first in other assets such as gold, in case you’re still new or don’t have many tangible assets yet.

However, if you’re already a seasoned investor who’s looking to diversify more, and has already enough investments in different vehicles, then silver may be a great option.”

Sophia Jones, Financial Analyst, PiggyBank

Silver is Less Likely to be Impacted by Economic Downturns

“Now is a good time to invest in silver since prices are low and it’s expected to rise in the coming months. Experts think that this upward trend will continue for many years to come. Here’s why:

First, silver is a finite resource. As global demand increases, its price will only continue to go up. Second, silver is an important industrial metal. As the world economy continues to grow, demand for silver will increase. Finally, investors are increasingly turning to silver as a safe haven asset, as it is seen as a more stable alternative to gold.

Silver is less likely to be impacted by economic downturns than other commodities. It is also cheaper than gold yet has more returns than gold, according to historical data. Because it is cheaper, silver is a more practical and versatile investment option. When you invest in silver physically by a silver bar, pure silver, or other items, you can be assured that its value will persist.

However, it is still important to do your research before making any investments in silver, as the price of silver can still fluctuate significantly. To avoid theft, you should also store your silver investment in a safe deposit box at a bank.”

John Brown, Financial Analyst and Content Creator, GetCash.com

Now Would be an Excellent Moment to Put Money Into Silver

“Silver is recovering from its all-time low levels. I would say, that when you take a look at the recent trend of silver in the market, you will notice that it is recovering from its recent lows in the previous couple of years. This can be seen when you take a look at the recent trend of silver in the market. 

After all of that, now would be an excellent moment to put money into silver. From this vantage point, the upswing appears more plausible, and there is very little risk associated with investing in this metal when one considers the most recent market developments. Because of this factor, you might want to think about silver as a potential investment. Investigating the current value of silver is an important step in the proper direction.”

David Janssen, CEO and Director, VPNoverview

Now Would be a Good Time to Buy Silver

“From a purely trend-following perspective, here are some bullish facts about the silver market. Silver’s price today was $ 20.27 mid. Over the past 21 days, silver’s price increased 14 days and decreased 7 Days. For every up day, there were 0.5 down days. The average return on days where the price increased is 1.1061%. 

The average return on days where the price decreased is -0.8303%. So from an investment perspective, the price has been more likely to increase, and when the price increases it outperforms days that the price decreases. Over the past 21 Days, the price has increased by 9.92%, or 0..4725% per day on average. Over the last session, the price increased by 1.41 %. Over the last session, the price accelerated by $ 0.1611. 

Markets are unpredictable, but if you believe that the market will continue performing the way it has been then now would be a good time to buy silver.”

Barry Weinstein, Founder and CEO, VolatilityMarkets Newswire

A Small Position in Precious Metals May Dampen Portfolio Volatility 

“During times of market turmoil, one always hears talking heads espousing the benefits of investing in precious metals. Simply put, if one has a long time horizon, one shouldn’t consider investing in gold or silver. If you have a long time horizon (and retirement fund investors definitely have a long time horizon) you should not invest in precious metals, as the long-term returns are far below those of equities. At the end of 1925, the price of an ounce of silver was $0.68 At the end of 2020, an ounce of silver sold for $17.14.

Over that 95-year period, the precious metal returned 3.46% compounded annually. Over that same time period, according to Ibbotson Associates, the compound annual rate of return of a diversified portfolio of large stocks (the S&P 500) was 10.3%. That same $0.68 invested in silver at the end of 1925 would have grown to $7,537 if invested in the S&P 500. Investing in a diversified basket of small stocks provides even greater returns. The compound annual rate of return of a basket of small stocks over that 95-year period according to Ibbotson Associates was 11.9%. That same $0.68 would have grown to $29,605 at the end of 2020. The terminal wealth of a silver investor over that 95-year time period was approximately 0.23% of the terminal wealth of a large company stock investor.

Inflation over that 95-year period averaged 2.9%. The inflation-adjusted return of gold over that same 95-year period was a paltry 1.97%. The inflation-adjusted return to silver was 0.56%. By contrast, the inflation-adjusted return of large company common stocks averaged 7.4%.

While having a small position in precious metals may dampen portfolio volatility in the short run, the tradeoff between slightly dampened volatility and the lost long-term return is certainly not a prudent one.

Gold and silver are speculative investments, based on the Greater Fool Theory. The price of gold is not determined by its intrinsic value but simply by its expected selling price to someone in the future. But, don’t listen to me, listen to Warren Buffett who in 2011 when meeting with students at the CFA Institute Research Challenge explained his rationale concerning gold as an investment as follows: “The world’s gold stock is about 170,000 metric tons, which if melded together could create a cube of about 68 feet per side; the cube would be worth about $9.6 trillion. For that much money, one could buy all the cropland in the United States, purchase 16 Exxon Mobils, and have about $1 trillion of walking around money left over.” He asked the students, which one they would rather have. He also noted, “You can fondle the cube, but it will not respond.”

 Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University

If You Look at the Long-term, the Price of Silver is Likely to Rise

As the economy grows more unstable, people looking to hedge against inflation should invest in silver. If you look at the long term, the price of silver is likely to rise, and I believe now is a good time to invest in precious metal stocks like silver.

Furthermore, silver has tremendous industrial use. It has been used in electronics and even has research value. You also don’t need to buy tons of silver all at once. You can think about easing into it by buying just a little bit and go from there.”

Rei Shen, Founder, Success in Depth

I Advise Allocating 1% to 5%

“There is never a good time to buy silver. Every investor should have some silver; there is never a good time to purchase it.

There is never a good time to purchase silver, but I predict that the price will reach $2,000 per ounce by the end of the year. Every investor’s portfolio ought to include some silver.

Typically, I advise allocating 1% to 5% of a person’s whole portfolio to silver. But now, that might increase from 5% to 15%.

Most people’s portfolios still only include a minimal amount of silver. However, a slight rise of 1% to 2% might significantly impact.”

Steve Wilson, Founder, Bankdash

A Number of Factors to Consider When Making this Decision

“Silver is a precious metal that has been used for a variety of purposes throughout history, from currency to jewelry. In recent years, the price of silver has fluctuated dramatically, reaching an all-time high in 2011 and then plummeting in the following years. However, the price of silver has begun to rebound in 2022 and is currently at its highest level since 2016. So, is now a good time to buy silver?

There are a number of factors to consider when making this decision. First, it is important to understand why the price of silver has been volatile in recent years. A major reason for this is due to the fact that silver is primarily mined as a byproduct of other metals, such as copper and gold. Therefore, when the prices of these metals decline, the price of silver typically follows suit. Additionally, demand for silver tends to be fairly sensitive to economic conditions. When the economy is weak, demand for silver declines as investors move into safer asset classes such as gold. However, when the economy is strong, demand for silver typically increases as industrial users require more of the metal for purposes such as electronics manufacturing.

Looking at these factors, it appears that 2022 could be a good time to buy silver. The price of copper and gold are both down slightly from their peaks in 2011, which suggests that there is room for further growth in the price of silver. Additionally, economic indicators such as GDP growth and manufacturing activity are both strong, suggesting that industrial demand for silver will remain robust. Of course, it is always important to consult with a financial advisor before making any investment decisions.”

Max Benz, Founder and CEO, BankingGeek

Silver Could Easily Appreciate by 200-500% in an Inflationary Environment

“There are many reasons why now is a great time to buy silver; with a few caveats.

The gold/silver ratio was set in ancient times (Egypt & Rome) between 15:1 and 17:1; that is 15 ounces of silver equals one ounce of gold. It was millennia before modern science could confirm that there are around 17.5 times as much silver as there is gold in the earth’s crust, so the old ratio was fairly accurate for over 7000 years.

The current gold/silver ratio is now closer to 88 than to its long-term historical norms. This means that gold prices would need to drop around 75% (unlikely) or silver would need to appreciate by 300% in order to maintain the long-running average.

In prior recessionary or depressionary periods (1929-1933) gold was seized by the government in order to provide stability to the currency. Silver was not seized with such gusto.

Numismatic items such as silver and gold coins, or items that held cultural, historic or religious significance were usually not subject to seizure.

For those who are confident that gold will not drop by 50% or more, prevailing theory suggests that silver could easily appreciate by 200-500% in an inflationary environment.

Whilst holding physical precious metal, ingots or bars is more secure than holding ETFs or paper notes, the most secure way of all is to hold the metal in the form of a coin, or an item of historical/cultural significance.

Bonus points if the face value of the coin is lower than the melt value. For example, carrying 600 ounces of silver bars across international borders may risk confiscation; whereas carrying 600 silver coins with a face value of $1 each will allow you to skirt the legislation.

Check the laws before you travel, but most places will not allow you to carry $10 000 in precious metals unless it happens to be face-valued at $1 per coin. This is a secret loophole I discovered, please do not tell everyone, as it may dramatically increase the price of gold and silver coins.

Other borderless and non-confiscatable items may include certain cryptocurrencies, such as BTC and ETH, which are undetectable on your phone.”

Dr. Jeremy Britton, Financial Planner, CFO, BostonTrading.co

Silver May be a Good Option Right Now

“I believe that silver could be a good investment right now. Inflation is expected to rise in the coming years, which could push up silver prices. Additionally, ongoing tensions between the U.S. and China could also lead to higher silver prices as investors seek out safe-haven assets.

Industrial demand for silver is expected to increase in the coming years. This means that there could be greater competition for silver, driving up prices even further. Additionally, silver is viewed as a safe haven asset, which means that investors tend to flock to it during times of economic uncertainty. With continued concerns about the global economy, now may be a good time to invest in silver.

Of course, there are also risks associated with buying silver. Prices could fall if economic conditions improve or if industrial demand decreases. So, it’s important to do your research and understand the market before investing in any commodity. But if you’re looking to add some precious metals to your portfolio, silver may be a good option right now.”

Edith Reads, Personal Finance Coach, Investment Writer

Diversification is an Excellent Strategy During Economic Uncertainty

Inflation has reached decades-high levels around the globe. Many market analysts and economists assert that we are on the cusp of a global economic downturn. Given that fact, many investors are turning to precious metals like silver for diversification.

An excellent retirement strategy that provides exposure to silver and other precious metals is a self-directed IRA. These retirement accounts enable you to build a diversified tax-advantaged portfolio. Always do your due diligence prior to making any investment choices. To learn more about how to build long-term tax-free wealth, here are our Precious Metals IRA reviews.

 

Sarah Bauder

Sarah Bauder is a financial writer with over a decade of experience at numerous online publications, writing about alternative investments, retirement, US politics, world economy and more.