If you’re a precious metals investor, you’re probably hoping that gold and silver will take off in price soon, boosting the value of your precious metals IRA. If you haven’t invested in precious metals yet, you’re probably hoping for the price to remain stable just a little bit longer so that you can invest before prices take off. But this year could be the year that precious metals really take off. In particular, silver could get a significant boost, and there two prime reasons for that.
By now it should be apparent to just about everyone in the country that inflation has returned. And boy how it has returned. Prices of food, gas, and housing are climbing, and it doesn’t appear that there are any signs of it abating anytime soon.
Inflation isn’t just confined to consumer goods either, as prices for raw materials have increased significantly over the past year. Industrial metals such as aluminum and copper have nearly doubled in price, while zinc, lead, and nickel have increased significantly. Steel has tripled from last year’s lows and is nearing all-time highs.
Compared to those industrial metals, the performance of silver and gold over the past year has been slightly different. Gold’s performance over the past year has been somewhat muted, and while it has increased in value, it isn’t nearly as much as industrial base metals. Silver, however, has followed the pattern set by industrial metals, nearly doubling in the past year.
With continuing inflation, the value of all industrial metals is likely to continue climbing, at least until the monetary spigots are finally closed. That should benefit not just base metals but silver also.
At this point it looks like the Federal Reserve will continue its path of monetary easing without letting up. The longer that monetary easing goes on, the higher the silver price should rise. But even when the monetary tsunami lets up, that won’t necessarily mean the end of rising silver prices.
2. Investor Demand
That’s because investment demand for silver has rebounded significantly. The increase in investor demand in 2020 was massive, and while the initial expectations are for 2021 investor demand to be muted in comparison, that could change as the year progresses. Particularly if inflation picks up and begins to become a big problem, investor demand for silver could increase significantly, for two reasons.
First, as inflation picks up and begins to reduce the purchasing power of investors’ dollars, more and more investors are going to want to invest in tangible assets that hold their value against inflation. Silver is one of those, and its track record against inflation is impressive. During the 1970s, for instance, silver averaged annualized gains of over 30%, well outpacing the rising inflation of the stagflation era.
Secondly, as inflation rises, the outlook for the economy will continue to worsen. That could induce even more investors who are currently sitting on the sidelines to jump into precious metals markets by investing in silver.
It’s important to remember that these two factors aren’t everything when it comes to silver demand or to silver prices. After all, roughly half of silver demand during normal times comes from industrial demand. A growing percentage of industrial demand is coming from the photovoltaic industry in the production of solar panels. And with increased demand for green energy should come an increase in silver demand.
The stage is being set today for a real surge in the silver price. Silver should be able to challenge the $30 mark easily this year, and if conditions are right, $40 won’t be out of the question. And over the long term, silver could very well break past its all-time high price.
Investors who have been looking for an asset not only to protect their wealth but also to continue making gains during tough economic times might want to give silver a closer look. With silver’s proven track record of performing well during periods of economic weakness, and even outperforming gold, it could provide many investors with just the protection they need.
Silver can be a useful asset on its own, or as part of a diversified precious metals strategy that includes gold. Silver doesn’t get much attention from the mainstream financial media, making it somewhat of a sleeper asset that you really have to watch closely. But for those who invest in silver at the right time, the rewards can be great.
With a silver IRA, you can even invest in physical silver coins or bars while still enjoying all the tax advantages of an IRA retirement account. And you can fund your silver IRA by rolling over or transferring funds from an existing retirement account, such as a 401(k), TSP, IRA, or similar account.
If you want to learn more about how silver can help your portfolio, contact the experts at Goldco today. They have helped thousands of investors benefit from silver and can help you navigate the silver IRA process.
Whether you’re just starting to look at investing in silver, are looking to add to existing silver investments in a silver IRA, or just want to purchase silver coins, Goldco’s representatives can help inform you of all the options available to you. Don’t wait any longer to protect your wealth, call Goldco today to start putting silver to work for 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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