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Why Silver is a Great Investment for 2021

Investment

Why Silver is a Great Investment for 2021

by | Investment

Ben Constanty

CEO, Smartlink

Disrupting online payments with smart contracts.

2020 has been a great year for precious metals and looking into 2021, there is no reason why the momentum should cease.

With interest rates at zero and inflation trying to take hold, investors are looking for ways to store wealth and hedge against current market conditions.

Typically, investors look towards gold, but silver provides similar investment opportunities with a significantly lower cost.

You can look at other metals such as copper but the premium for those products outweigh the spot price greatly.

Store of value

Silver price in 1920

Macrotrends.net

First, silver can be a perfect store of value. Below is a price chart of silver (not adjusted for inflation) over the last 100 years. It has steadily increased in value and looks to continue doing the same.

The idea with silver is not to look at it as an investment that yields returns because it takes longer than the stock market.

However, it can reliably hold value and slowly appreciate over decades.
Also, keep in mind the idea of supply and demand.

Silver, along with gold and other precious metals, the supply is limited.

If nations and large purchasers continue buying silver and storing it, that limits supply and drives price up.

Hedge Against Inflation


Silver as hedge against inflation

Next, silver can be a great way to help hedge against inflation, which can negatively impact bank stocks.

If you compare the chart of the U.S. Dollar strength and silver, you can see they tend to act inversely.

Depending on how you want to utilize silver, you can purchase through an ETF that tracks directly its price or purchase physical billions online or via a coin shop.

Centralized Digital Currency

A new way you can begin thinking about silver is a protection against a new currency.

The IMF came out with a statement and are looking at the idea of revamping how we use currencies, via a new centralized digital currency. You can see it as a new Bretton Woods.

You may be wondering how silver plays into this equation. Put simply, it will hold value and allow you to transition to any new fiat currency.

If the strength of the U.S. Dollar continues to decline and there does become a centralized currency, it will require more dollars. Whereas with silver, you will already have a desired asset with much more value.

The US dollar is going down (DXY)

Market Watch

2021 could prove to be a genuinely great year for silver and other precious metals.

With pandemic uncertainty and stock struggling to keep pace, investors are looking at other assets.

Might it top $50 like it did in the 1970’s? Who knows, but the case seems plausible.

The two variables to watch are the stability of the U.S. Dollar and continues of the COVID-19 pandemic. If these two get better, we could see prices ease on precious metals.

This could present a great discount in pricing for those looking to add more.

Should those two problems persist, we can easily see silver continue appreciating in value for months to come.

Ben Constanty

CEO, Smartlink

Disrupting online
payments with smart contracts.

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