Silver’s rich history dates back over 5,000 years ago, to the prosperous civilization of Sumer. Sumeria is considered the first known human civilization, and it is no coincidence that they were the first to recognize silver’s value. The wealth of Sumerian kings were measured by the amount of silver they had – and for nearly 3 centuries the international monetary system was based on silver. Around the world, collectors, investors, governments, and central banks have an affinity for silver. The rich and powerful are the largest holders of silver. Bill Gates, Warren Buffet, and Thomas Kaplin have all made fortunes investing in silver, with Buffet making a cool $97 million so far, and Thomas Kaplin crediting silver to what made him a billionaire, stating silver is “gold on steroids”.
Many investors question why they should own silver if they already have gold in their portfolio. True diversification is a blend of investments, with variation within individual investment classes. Silver offers many of the same benefits as gold – it serves as a store of value, has historically been an excellent hedge against inflation, and has liquidity not seen in other ‘safe’ investments like bonds, CDs, and real estate. However, where silver truly shines is in growth potential. The exponential growth comes down to 3 main things: silver is more divisible than gold, silver is more affordable than gold, and silver plays a critical role in modern industry.
Right now, silver is the lowest-priced of all the precious metals. This relatively low price gives silver two huge advantages over gold and other precious metals. First of all, this divisibility makes silver practical in everyday situations. The current price of silver in 2022, is about $25 per ounce - a standard silver coin. Meanwhile, gold’s current price is about $2000 per ounce. You can easily do your everyday shopping with a few silver coins, but the same thing would be rather difficult with even a single gold coin.
The current affordability of silver makes it a popular choice for many middle-class Americans because you can start investing in silver with less money than gold, and you get more bang for your buck. This means that when the masses start investing in precious metals, they often choose silver over gold.
Silver’s demand does not stop at collectors, retail investors, major banks, and world governments. Silver is a modern-day industry essential. In fact, silver is the 2nd most widely used commodity, only being outranked by oil. It plays critical roles in many sectors, including but not limited to:
Silver is notorious in the electronics industry for being the best conductor of electricity. It outperforms both copper and gold, and for this reason is used in everything from light switches and RFID chips to TVs, mobile phones, and computers. If it has a circuit board, there is a good chance it was made using silver.
Silver’s use in jewelry dates back to the dawn of recorded history. Today is it one of the most commonly used metals for jewelry. This is because silver is one of the finest white metals available; it is hypoallergenic, and is second only to gold in malleability and ductility, but remains harder and significantly cheaper.
Due to silver’s unmatched conductivity, it is extensively used in both residential and commercial solar panels as a conductive paste. Silver is also used in nuclear reactors to slow the rate of fission.
Historically silver has performed remarkably well, even outperforming gold during recent gold bull runs. As mentioned earlier, this is because when the masses start investing in precious metals, they often choose silver over gold due to silver’s divisibility and affordability.
Just how well has silver performed? Here is the performance of gold, silver, and the major indexes during the last 2009-2011 bull market:
Over this period of just under 3 years, silver was by far the best investment, more than tripling the performance of gold and outperforming the indexes by 6.5-12 times. If you had $100,000 invested in silver during this time, you would’ve made nearly $390,000 in profit, $278,000 more than if you invested in gold, and $330,000 - $360,000 more than an investment into any of the indexes.
Industries that depend on silver are booming. Every year, the number of electronics the world produces grows by 2.5 million tonnes, and experts predict the solar panel market is to nearly double by 2028, growing to a total worth of $293 billion. In short, the global demand for silver is on track to explode. With this in mind, our financial experts firmly believe that now is the perfect time to invest in silver.
After all is said done, no one can deny that the big banks tend to end up on the right side of the market. And big banks are buying silver. JP Morgan Chase, the largest investment bank in the world, now owns the largest hoard of physical silver in history. JP Morgan started buying silver in 2011, and as of this time then has acquired $5 billion of physical silver, or 200+ million ounces.
This begs the question, would you bet against the largest investment bank in the world when they have $5 billion on the line?
Purchasing silver for the first time can be a daunting task, especially if you’re looking to diversify your portfolio and maximize your returns. At the National Group, our experts have been dealing with precious metals like silver for over 25 years, and we are here to help.
For more information on the different types of silver, and potential differences in their returns, give us a call at 800.719.7408. One of our experts will be more than happy to help you understand more about precious metals like silver and their potential benefits for your retirement portfolio.