Why silver is a good investment for 2023 and beyond
Often in the shadow of gold, silver remains a valuable commodity and a popular investment choice for enthusiasts, collectors, savers and traders around the world.
Silver enjoys a millennia of history as money. It has been used as a store of value, a medium of exchange and – thanks in part to the tokenisation of the asset – a unit of account.
Today, it also enjoys several industrial and retail use cases that generate continuous demand for the metal, consistently outweighing actual supply and creating a silver supply deficit.
What is silver used for?
Silver has several major use cases in the retail and industrial sectors thanks to its density, weight, electricity and heat conductivity, and other properties, even before we consider its potential for use as money.
Jewellery and silverware
As a highly malleable precious metal like gold – silver can be used to form a variety of jewellery and silverware items such as rings, necklaces, cutlery and more.
Silver coins are not only attractive and useful, but they’re also difficult to counterfeit due to the natural weight and density of silver. Silver coins are an excellent investment for those who value the tangibility of a physical asset, appreciate the beauty of silver and are looking to hold on to their assets for a long time rather than spend them.
For some time now the impact of electric vehicle production on silver has been clear: each new car uses between 25 and 50 grams of silver in its production and as consumers and governments around the world pursue a greener future, this demand is likely to increase.
Like with electric vehicles, silver is of vital importance to solar panels because of its use in photovoltaic power which is currently the leading source of this green energy, causing heavy demand for silver and contributing to the considerable silver deficit.
Due to its powerful anti-bacterial and antimicrobial properties, silver is used in many healthcare and dentistry settings. Silver’s ions are positively charged (Ag+) and this is what kills bacteria and microbes. Some wound dressings even contain silver!
Is silver a good investment?
Investors typically diversify their portfolios, and those who do invest, see precious metals – particularly those with solid fundamentals like silver – as good investments due to their natural appreciation in value over time.
There are some investors who focus entirely on silver and believe that this particular metal is severely undervalued, with more bullish price predictions putting it at $100 an ounce (about 4x what it is today).
Silver in particular has strong fundamental use cases as well as solid technicals for the long term, standing out as a prospect for traders and investors alike.
Is silver a safer investment than gold?
Gold is seen generally as a safer investment than silver because of its longer history, but that does not necessarily mean either of these investments is safer than the other, and this may change over time.
The important thing to consider is the ability of these precious metals to hedge against inflation.
Comparing gold and silver to Bitcoin and Litecoin
Bitcoin and Litecoin are both digital currencies that have been growing in popularity in recent years. They are often compared to gold and silver as investments, as these assets share some of the same use cases, characteristics and benefits. Advancements in technology such as blockchain have led to the creation of asset-backed tokens that enable the digitalisation of gold and silver investments, empowering precious metals with a modern and forward-looking mechanism of investment.
- Store of value: Each of these assets but especially Bitcoin has been shown to be a good store of value over time, prices have generally trended upwards.
- Limited supply: There is a limited supply of Bitcoin, which could make it a more valuable asset in the future. The same is true of gold, silver and Litecoin.
- Utility: Each asset needs to be able to have the underlying value it represents accessed via trading, spending, saving or sending.
- More affordable: Litecoin and silver are much more affordable than gold and silver. This affordability changes over time with price volatility.
- Portfolio diversification: Gold, silver, Bitcoin and Litecoin can be good ways to diversify your investment portfolio, as they are not correlated with traditional assets like stocks and bonds.
- Industrial use: Silver has some industrial uses, which could make it a more valuable asset in the future. The other assets can also be used in retail and industrial use cases as payments.
The best investment for you will depend on your individual circumstances and risk tolerance. If you are looking for a safe and long-term investment, gold or silver may be a good option. If you are looking for a more volatile investment with the potential for high returns, Bitcoin or Litecoin may be a better choice.
It is important to do your own research before investing in any asset and to understand the risks involved.
What to look for when investing in silver
Silver has been money before and thanks to Kinesis it is again. When looking to invest in silver whether for the first time or if simply expanding your stack, consider the following before you do:
Ownership – ensure that you own the underlying asset backing your purchase. This is especially important when purchasing digital representations of silver such as asset-backed tokens on the blockchain.
Divisibility – it is difficult to spend a silver coin or bar of bullion. The tokenisation of silver has enabled divisibility for easier spending of your underlying assets.
Redemption – it should always be possible to withdraw your physical assets and have them delivered to your home should you choose to do so.
Audited & insured – it must be possible to prove that the silver you have purchased exists and a good way to do this is through blockchain technology and audits. Insurance adds further protection.
Utility – ideally your silver should be stored in a vault that has no fees or management costs and provides additional utility such as earning you interest for holding it.
Logistics – your silver may be held in a vault on the other side of the planet: transporting it may be a challenge.
Fineness – only silver of the highest quality should be purchased, look for a fineness rating of higher than 999.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.