Around 1500 B.C., the Egyptians started making gold-containing shekels, and around 700 years later, silver coins appeared. We still use gold and silver because they can act as a hedge for an investor’s portfolio during times of rising inflation as well as market or economic downturns.
According to the World Silver Survey, half of all silver is used in high-tech and heavy industry, including solar panel cells, cellphones, tablets, car electrical systems, etc.
Because of its wide range of applications, silver is more susceptible to fluctuations in the economy than gold (used mostly for investment and jewelry).
In 2024, both precious metals saw strong performance.
Advantages of Investing in Silver
Investors are watching closely on supply and demand patterns in the precious metal market as well as the potential effects of Trump’s policies and actions. Here’s what advantages experts see coming for silver in 2025:
- Over the past two years, there has been a significant slowdown in global inflation. Therefore, we anticipate that the inflation in U.S. will remain above 2.5% for most of 2025. Silver is a tangible metal and a widely traded commodity in global markets. Unlike cash and other liquid assets, which tend to lose value over time due to inflation, precious metals like silver and gold typically move in the opposite direction, often increasing in price over time.
- The industrial sector has played a key role in driving silver demand in recent years. In 2024, total industrial demand for silver rose by 7% compared to 2023. This supply-demand gap is expected to persist into 2025, driving price of the silver up.
- Silver is regarded as a highly liquid investment due to its strong demand and multiple buying and selling options. Its liquidity is influenced by factors such as market availability, price volatility, and the ease of converting it into cash.
One of silver’s key advantages is its accessibility—it can be easily traded in various forms, including coins, bars, and ETFs. With a lower price point than gold, silver offers investors a more affordable entry into the market and the ability to buy or sell quickly. This high liquidity makes silver an attractive choice for those seeking flexibility and ease of trading.
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Silver Investing Challenges
- One challenge facing silver production is its concentration in geopolitically sensitive regions like Russia and Kazakhstan, where securing funding for supply expansion is difficult. These factors limit silver’s growth potential compared to gold, which benefits from its status as a safe-haven asset during times of economic uncertainty.
- A significant factor influencing the price of silver is its essential role in various industrial and technological applications. However, economic recession or downturns in these industries can negatively impact silver prices. With technology constantly evolving, entire sectors can become obsolete almost overnight. There is also the possibility that a new, more affordable material with similar properties could replace silver in certain applications. Future innovations could potentially diminish its demand in entire industries.
- Income from silver is limited to the amount you will receive when you sell it. You won’t receive any dividends or interest that would provide you with monthly income.
- Consider carrying costs associated with silver investment. These costs may cover the maintenance, insurance, and storage of physical bullion. However, investors can avoid physical storage and save carrying costs by purchasing gold and silver through financial instruments like mutual funds and exchange-traded funds (ETFs). Goldco is reputable company that can make it easy for you to benefit from owning physical gold or silver.
Investor Takeaway
All things considered, 2025 might be a big year for silver investors. However, economic and geopolitical unrest might hinder silver’s growth and create challenges for the resource industry.
Gold and silver serve as a hedge against market crashes due to their historical value and status as safe-haven assets. During periods of economic uncertainty, investors often turn to these precious metals for their perceived stability and ability to preserve wealth. Throughout history, gold and silver have maintained their value during volatile market conditions. However, it’s essential to recognize that while they can offer protection, they do not provide absolute immunity from market downturns.
Investors who look beyond 2025 might consider adding precious metals to their retirement savings. Think about investing through a 401(k) plan. Incorporating precious metals into a diversified retirement portfolio can offer long-term wealth protection and opportunities. By choosing a reliable precious metals supplier and following IRS storage guidelines, you can defer capital gains taxes and possibly reap tax benefits. Goldco with their precious metal experts have over 10 years of experience in helping customers protect their retirement savings.
Conclusion
In conclusion, as we look ahead to 2025, both gold and silver present themselves as compelling investment options. Their historical resilience, coupled with their role as safe havens during economic uncertainty, reinforces their potential to preserve wealth and provide a hedge against inflation.
As global markets continue to fluctuate, diversifying your portfolio with precious metals can offer a strategic advantage. For investors seeking stability and long-term growth, incorporating silver alongside gold may prove to be a prudent decision in the evolving financial landscape.
