While Bitcoin (BTC) continues to ignite, we chose to take a closer look at one of the most promising outsiders of the year in terms of alternative investment, I named : metal silver. Generally called poor man’s gold, silver has the same characteristics as the yellow metal except that they do not have the same colors and some differences in components which partly explain the price difference of the two precious metals. preferred by jewelers and investors. However, it is customary to say that the price of silver follows that of gold, and it is therefore a safe bet, given the current economic situation, that the gray metal has a bright future ahead of it. But before we get high on the air and imagine how high your return will be on the same date a year from now, let’s take a closer look at what makes silver one of the trending precious metals of this decade. . Jewelry, solar panels, electric vehicles, money seems to have a bright future in the years to come, and it may well become an asset in the energy transition. So after an increase of over 60% in value in just one year, will the money go? “to the moon”?
Warning : This article is brought to you by the company Veracash. Crypto investments are risky by nature, do your own research and invest only within the limits of your financial capacity. This article does not constitute an investment invitation.
Metal money: from poor man’s gold to the must have of your alternative wallet
The history of silver more or less resembles that of gold, although it does not derive its nobility as much as the oldest barbarian relic. We had the opportunity to present to you through the history of money, the chronology of gold as an exchange currency and then as a safe haven at the time of the Bretton Woods agreements.
Silver has always been a monetary metal, and should continue to be more and more due to its rare character. In the history of money, the monetary system set up by Croesus in 561 BC will lay the foundations for bimetallism, and in this it will be decided that silver is complementary to gold as a means of payment.
But, we have to go back much further to understand the intrinsic characteristics of white metal. The mining of silver ore began about 5,000 years ago in Anatolia, which has since become Turkey, and it was the civilizations of the Near East, Crete and Greece that were the first to use silver veins as a valuable resource. In 100 AD, Spain rose to the fore as the capital of silver production and served primarily the Roman Empire, the hotspot of the Asian spice trade. Finally, the Spanish conquest of 1492 opened the door to the new world, brought down the monetary value of silver and exploded the extraction of ore thanks to the discovery of a large quantity of veins in the American West.
Over the centuries, silver has found a special place in alchemy, an age-old process of transforming the most common metals into gold or silver. Experiences that earned him the names of “moon metal” or “Diane’s metal”. Can be considered less as a noble metal, gold is however differentiated from gold by its robustness compared to the yellow metal, but softer than copper thus creating more conductivity and malleability.
Investors have long overlooked silver for want of gold, the star of alternative portfolios. Already at the time, 10 silver coins were worth one gold coin, thus making money the new “poor man’s gold”, or in other words a more divisible and more accessible currency, especially for individuals. An anecdote that will make you smile: Charlemagne, with a lack of gold supplies, made the decision to switch the Western monetary system to the silver standard, proof that when one flexes, the other is never too far away.
But a bit like a sibling, it’s never really good to stay in the shadow of your older sibling.
With qualities close to those of gold, silver keeps very well and does not devalue. It therefore constitutes in many ways a complementary value of trust, especially in a crisis, and much more accessible by making a more popular investment. And it’s not me saying it but the famous author of the book “Riche Dad poor Dad” who advises you to watch the money train if you missed the Bitcoin one!
It was at the start of the year that investors turned the most to precious metals and especially silver for two main reasons:
- The jewelers massively use the money on the feast of Valentine’s Day
- The industrial invest in metals, especially in the automotive industry, thus boosting the performance of silver, platinum and even palladium, at the start of the year to schedule their production
Let’s take a closer look at what uses silver meets for:
Money is thus used in many processes and is tending to become scarce because it is increasingly required as part of the energy transition: photovoltaic panels, electric vehicles, wind turbines, electronic equipment, etc.
At this game, money therefore promises to shine with all its fires, and the increase in its price over the past year is an illustration of this: between March and this summer, Silver outperformed by over 77% and global holdings of money-backed ETFs increased by 21%.
Just like gold, lMoney is expected to become increasingly scarce, due to its massive use in many industries and the decline in available resources. According to the Silver Institute, silver mining showed a decline starting in 2016. The reasons are quite simple: the most accessible deposits have been exploited, so extraction is becoming more difficult and more expensive. Recycling is still too expensive and a difficult alternative, all in the face of unprecedented industrial demand that will continue to explode in the years to come.
Geopolitics of money
Money alone catalyzes an interesting business and geopolitical reality. While silver production has been falling for several years, the major producers of white gold can be found mainly in South America and Asia.
China figures (unsurprisingly) in the winning trio, but this is the Mexico which continues to dominate silver production, followed by Peru. These three countries alone produce more than 50% of the world silver supply. It should also be noted that recycled money now represents only 15%, a figure to be weighed against the environmental challenges posed by mining and which we have already had the opportunity to discuss.
Silver, however, remains a small market held in the hands of few players, but still produces about 25,000 tonnes per year, or 8 times more than gold. Considering that world reserves are estimated at around 580,000 tonnes, this would leave approximately 20 years of silver mining at the current rate, which is a real challenge. Unlike yellow gold, Silver is less in demand in the jewelry sector but more in industry and this trend tends to develop more and more.
Silver companies took longer than gold to reduce production when prices turned around, and this was partly due to the geopolitics of silver producers. While gold producers are predominantly located in high currency countries, white gold producers are primarily located in low currency countries such as South America or Central America. The drop in selling prices was therefore quickly offset by low production costs, which is not the case with yellow gold at all. However, if you are an investor or in the process of being, you should know like me that the gold / silver ratio is an excellent indicator and it is reaching historic highs today, making it look like silver is on the rise and shouldn’t stop anytime soon. For your information, the ratio now stands at 80, after silver has outperformed gold in the past two quarters. Some analysts even believe that silver could have more potential than gold, in particular because of its still very affordable price and therefore attractive in many respects.
Finally, If we look at the evolution of the demand for silver over the past 10 years, the Silver Institute estimates a demand in 2020 at 26% of total demand, a decline of more than 20% over the decade. So investments are down, just like photography, on the other hand, industry, silverware, jewelry and photovoltaics are exploding the ceilings showing an increase in demand in the next decade due to the energy transition in particular.
Money, an asset in the energy transition
Another reason why silver could see its price sharply increase in the coming decade is directly drawn from its composition: silver is the metal that has the best conductivity in many ways. And this conductivity, you will understand, allows transport electricity without resistance and is therefore very valuable in many energy transition projects.
So, Silver is gradually becoming a must have for many industries and is helping shape the energy transformation of tomorrow as well as the introduction of new technologies such as 5G.
Among the sectors in high demand, we find:
- Green industry : Carbon-free energy and technology have a bright future ahead of them. The use of silver in the photovoltaic industry has increased by 900% to reach 100 million ounces used in 2018. But beyond that, theRenewable energies could reach 4.5 times their current level by 2030, raising the share of electricity to 14%. Some analysts estimate that solar panels and wind turbines will need 3 times as much silver by 2050
- Electric vehicles : the automotive industry consumes around 36 million ounces per year and with the announced transition to electric and hybrid vehicles, sales are expected to increase by around 60% per year, thus creating a strong demand for silver
- Mobile telephony : a mobile phone contains 333 miligrams of money, and according to IDC, 1.7 billion smartphones were sold in 2018, making a total of 17,989,720 ounces of silver used in phones alone.
Industry now accounts for the largest share of global silver demand, at around 56% according to the Silver Institute.
And in the years to come, we should see a sharp increase in the demand for silver, coupled with a decrease in production, I’ll let you do the math.
Precious Metals for Energy Transition is the headline of a World Bank report that says 350% more money will be needed by 2050 to meet expected demand for power generation technologies. Clean, Green and Upbeat: As impressive as gold’s performance this year is, the World Bank noted that the rally in precious metals markets in the third quarter was led by silver. The report says the price of silver rose 50% between July and September, reaching its highest level in seven years, at more than $ 28 an ounce.
Why invest in silver in 2021?
You would have understood it, Silver is becoming an attractive alternative investment solution and is positioning itself alongside the world’s greats, namely gold and Bitcoin as one of the solutions to choose in 2021. But, you will tell me, why invest in this precious metal which is rising but still not peaking, and whose prices are volatile due to its dependence on industry.
I will explain this to you in a few points.
First of all, silver tends to follow gold, so as soon as the yellow metal goes up, its little brother follows it. So, these days, precious metals are benefiting from investors’ nervousness in the face of the slow economic recovery and the ever-present risks due to the pandemic. In addition, the demand for silver, as we have seen, is exploding in certain industrial sectors.
First, silver outperforms other precious metals in 2020, with an overall return of 47.61% for the year. Many analysts even say that 2021 will be the year of silver, as a famous poet would say, it is high time to rekindle the stars! But this is a matter of chance you will say to me, so look instead at the different valid reasons over time:
- Silver is an affordable precious metal, because, as we described previously, its price is not that of gold, and it is therefore within the reach of all wallets;
- Silver has real value, like gold, it is the ultimate form of money. Owning silver is like owning a real asset that is easily circulated and traded;
- Demand for silver is on the rise in particular because of its use in many industries and in particular the green industry which requires a particular interest of this decade;
- Money requires complex extraction and recycling: Silver Institute analysts observe both a drop in R&D investment around new deposits but also a drop in the extraction of white ore in the various producing countries;
- Silver stocks present a risk of shortage : this precious metal which tends to become scarce could be contained in a cube of 52 cubic meters like this:
- The course of silver is devalued due to its role as a raw material in the industry thus drastically lowering its ratio to gold
- Money is a non-confiscable asset and as such, strictly speaking, there are no silver reserves in the coffers of banks
Finally, the money appears as a short and long term investment given the characteristics that we have listed above. It thus represents a complementarity of choice with gold.
How do I buy silver?
Now that you know “everything, everything” about money not to cover a famous French song, it’s time to take a look at how to take the plunge and buy some. And this is where our friends from Veracash and by extension Aucoffre.com have done strong, not only do they allow us, as you know, to invest and pay with gold, but it is also possible with silver.
Since 2008, Jean-François FAURE has had the good idea to innovate in terms of the digitization of currency and portfolio diversification thanks to precious metals in particular.
With Veracash it is therefore very easy to buy money, in two ways:
- Buy silver ingots, ingots or even an ounce. For this you will need to obtain a certificate mentioning the weight, silver content, manufacturer and series. The disadvantage of this mode of investment is of course the price of VAT of 19.6% in this case and the problem of storage.
- The second way is to invest in tokens and coins like Vera Silver, which allows you to combine purity (999.7% Good Delivery quality), security (tamper-proof QR code), and certified quality all in one ounce of pure silver.
But that’s not all, Veracash as a true atypical neo-bank also offers its customers the opportunity to endow themselves with money thanks to the Veracash account and payment card, which allows you to save but also to pay for your daily purchases, all backed by your precious metal now preferred. Thus, thanks to Veracash the purchases of silver that you make through your account are fully backed by legal tender coins and investment tokens. Finally, in order to avoid congestion related to the storage of your precious, Veracash has thought of everything and makes you benefit from free custody costs in ultra secure safes at the Geneva Free Ports.
Gold or silver, if your heart is wavering, don’t hesitate to take a look at our weekly articles in the platform for alternative investment, in order to better understand the value of such assets in times of crisis.
Karen is passionate about new technologies in general, and blockchain in particular! Finding out about trendy news, the latest market developments and the treasures of the ecosystem, she is happy to help you discover this universe in all its colors.