The Inflation Hedge: What About Silver?


The inflationary gloom has some positive aspects, and silver may be one of them for some investors. Check for the Price of silver to shop for bullion products at a competitive prices.

There are many reasons why people invest in precious metals. These include the historical value, industrial uses, and scarcity of these metals. Let’s find out if silver could be a good investment for you.

What is Silver?

Silver is a soft, white, ductile metal. Silver’s dual nature as both a precious metal and an industrial metal makes it unique. Aside from coins and jewellery, the metal is used in solar panels, electric vehicles, LED lighting, medical devices, and other products. it is typically traded in units of 100 troy ounces.

Silver price has nearly tripled over the past century, rising from 68 cents per ounce in 1922 to $18.68 (USD) per ounce as of August 30. In fact, when adjusted for inflation, the price of silver has increased by about 67% over the last 100 years, outpacing U.S. inflation rates by a wide margin.

In the last century, the price of silver experienced several significant booms and busts.

Inflation and Silver: Understanding the correlation

Silver can be used as a hedge against an increase in inflation as it has often been used as a store of value when the financial markets are uncertain.

  • The first is that silver and gold typically move in lockstep; as gold’s price increases, so does silvers. Silver benefits from this formerly distant relationship because gold and inflation have a stronger correlation.
  • When demand for goods and services outstrips supply, inflation strikes, and prices rise, silver’s price tends to rise in tandem because of its stronger ties to industry (compared to gold, which saw just 8% usage in technology in 2020).
  • This is significant when comparing gold and silver because silver is much more accessible than gold and, as a result, moves in price much more quickly, providing a much higher rate of return. Gold’s growth from May 2020 to May 2021 was only 6.4% compared to silver’s 70% growth.
  • The demand for silver in industrial applications is only expected to rise as the world tries to transition to a green economy.

In the past, there has been a negative correlation between the value of the dollar and the cost of silver. The price of silver tends to decline when the dollar’s value is high. The cost of silver increases when inflation is high and the value of the dollar declines. Of course, there are always market forces at work, which explains why the spot price is constantly fluctuating.

How to invest

Coins and bars are available from jewellery stores at the going rate in the market. Although the making costs for decorative coins are considerably less than what jewellers charge for gold ornaments, you will not be able to recoup the costs when you sell the coins. One issue is that it might be challenging to find a large storage space to keep these secure if you make a sizable investment.

E-silver: The success of E-gold and the consistency of silver prices across the country inspired the National Spot Exchange Limited (NSEL) to introduce E-silver in April 2010. Silver is offered in small denominations of 100 gm and its multiples and is 99.9% pure.

Silver: A long-term or short-term investment

A great long-term investment is silver. Due to its value as both a precious metal and an industrial metal, it appeals as a dual-purpose investment. As the world continues to transition toward new forms of energy, the demand for silver is predicted to grow exponentially in the upcoming years. Certain battery types use silver as a component, and solar panel manufacturing requires silver as well. In addition, it has a huge range of uses, including filtration and electronics. Silver is ideal for long-term investing and as an inflation hedge due to its rising demand, particularly in the green energy technology sector. Since silver is a limited resource, its value should rise in tandem with

Final words

Silver has a long history as an investment that can provide added reassurance to an investor and help to offset the risk of investing in something new. However, silver has no track record, so there is no way of knowing if it will be a profitable investment. There is historical evidence, though, that investors can gain significantly and add to their portfolios when silver begins a bull run rather than just using it as an inflation hedge.