When it comes to investing in precious metals, most people’s attention naturally turns to gold. Gold is synonymous with wealth and has been for centuries. So, it’s only natural that when it comes to thinking about protecting assets, investors think about investing in gold through vehicles such as a gold IRA.
But gold isn’t the only precious metal, nor is it always the best performing precious metal. And with new economic and technological developments, silver could end up outpacing gold’s performance.
Silver often seems to be considered only as an afterthought. Investors who buy gold may tack on a small silver purchase to help diversify their precious metals investment. Or those who think about investing in gold may start pricing silver coins just for the heck of it. But silver could become a fast grower, giving investors bigger gains than gold can.
Unlike gold, whose demand largely comes from investment and jewelry, roughly half of silver demand comes from industry. And because of silver’s great thermal and electrical conductivity, it has rapidly become one of the most important metals in the green economy. Rising demand for green energy could provide a significant boost to the silver price over the coming decade.
Silver and Green Energy
Many silver investors already know that silver is the most important metal used in the photovoltaic cells used to generate solar energy. Without silver, solar energy wouldn’t be possible. So as demand for solar energy rises, demand for silver should rise too.
Engineers are constantly trying to make photovoltaic cells more efficient, reducing the amount of silver used in them in order to minimize costs. Yet the potential exponential rise in demand for solar energy could still result in a massive increase in silver demand from the solar panel industry.
With President Biden recently announcing that he intends for the United States to cut carbon emissions in half by 2030, expect to see a flurry of demand for green energy, including solar. California has already mandated that all new residential construction include solar panels. Between state mandates and federal regulations, the push for green energy means that demand for silver could jump significantly over the next decade as a result of these government actions.
Silver and Electric Cars
While many Americans still love their internal combustion engines, their days may be numbered. Governments around the world want to try to drive internal combustion engines out of existence and, seeing the writing on the wall, car companies are capitulating rather than fighting. If electric cars become the primary means of personal transportation over the next decades, it could affect silver demand in three ways:
- Silver vehicle demand
- Increased electrical demand
- Silver batteries
1. Silver Vehicle Demand
All cars today use silver in their electrical systems, and while it only amounts to a couple of ounces per car, when you figure that over the nearly 80 million cars produced worldwide each year, that really adds up. Electric cars use more silver in their systems than internal combustion engine vehicles, sometimes up to 50-100% more. That means that silver demand for automobile production could increase significantly in the future.
2. Increased Electrical Demand
Replacement of internal combustion automobiles with electric vehicles will result in significantly increased demand for electricity from households and businesses, as households will start charging cars overnight, parking lots and garages will have to have charging stations, and gas stations are replaced by a network of charging stations. The intention will be for much of that increased electrical demand to come from green energy, much of which could come from solar, which would further boost demand for silver.
3. Silver Batteries
Electric cars today are powered by lithium-ion batteries, which have significant drawbacks, including limited range, slow charging, and spontaneous combustion. Researchers are looking into solid state batteries to power electric cars, which feature longer ranges, quick charging times, and long lifetimes. While lithium is a primary metal in some of these batteries, others use silver in them, such as the silver-carbon battery developed by Samsung.
If silver-containing batteries end up gaining market share, or even becoming the dominant technology in electric vehicle batteries, that could drive up silver demand from the automotive industry even further.
How Can You Benefit From the Green Revolution?
Whether people like it or not, the green revolution is upon us. Governments are going to force green energy on us regardless of the cost. While we can fight it as much as we want, the likelihood of success is slim.
Since the green revolution will be dependent on silver for its performance, investors who invest in silver stand a good chance of making good gains as silver demand takes off and the silver price rises. Many analysts think that the long-term outlook for the silver price is incredibly bullish, which makes silver a great choice for those looking to protect their portfolios with precious metals investments while still making great investment gains.
Remember too that silver often outperforms gold during bear markets. In the aftermath of the 2008 financial crisis, for instance, silver saw its price increase over 540%, while gold only increased about half that.
Investing in silver can be as easy as opening a silver IRA to buy and hold silver coins or bars. A silver IRA can be funded by rolling over or transferring assets from existing retirement accounts such as a 401(k), IRA, TSP, or similar account. And a silver IRA offers the same tax benefits as any other tax-advantaged IRA account.
If you want to get ahead of the curve and invest in silver now, whether it’s to diversify your investment portfolio, protect your assets against inflation or a stock market crash, or benefit from potential future price gains, call the experts at Goldco today to find out how investing in silver can help you.
is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.
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