Silver is Undervalued

Silver is Undervalued

 

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In the 1980s, it took 1280 ounces of Silver to build the average median home. Now, in 2023, an ounce of Silver costs $43. The average median home will cost about $704,000. That means buying the same average house will take 16,372 ounces of Silver. What does that mean for investors? 

 

Certain assets often take center stage in investments, while others remain overlooked or undervalued. Gold, often overshadowed by its more glamorous counterpart, is one such hidden gem that investors should pay attention to. Despite its historical significance and myriad industrial applications, silver’s potential as an investment asset needs to be recognized. This article will explore the reasons behind silver’s undervaluation and what this means for savvy investors looking to diversify their portfolios.

Industrial Versatility and Demand

Silver boasts various industrial applications due to its excellent electrical and thermal conductivity, high reflectivity, and antibacterial properties. It is critical in producing electronics, solar panels, batteries, medical devices, and many other industrial products. As technology advances, the demand for silver in various sectors is expected to grow exponentially. For instance, the solar energy sector heavily relies on silver in manufacturing photovoltaic cells, which enhances the efficiency of solar panels. Similarly, the rapidly expanding electric vehicle industry depends on silver for its electrical components and battery technology.

 

This consistent industrial demand provides a strong foundation for silver’s value, making it an attractive investment opportunity for investors looking to capitalize on the growth of emerging technologies.

Intrinsic Value and Store of Wealth

Similar to gold, silver has intrinsic value as a precious metal with a long history of being used as a medium of exchange and a store of wealth. Silver has been treasured throughout the centuries for its beauty, rarity, and ability to preserve purchasing power. As global financial uncertainties persist, silver’s status as a store of value gains significance for investors seeking to protect their wealth from inflationary pressures and currency devaluation.

 

Silver’s tangible nature and long-standing history as a form of money provide a level of reassurance for investors during economic volatility and uncertainty. In financial crises, precious metals like silver often act as a safe-haven assets, preserving wealth and hedging against potential economic downturns.

Supply and Demand Dynamics

Despite its industrial demand, silver’s supply is limited. Silver mining and production face various challenges, including declining ore grades, higher production costs, and environmental concerns. Silver’s annual production has struggled to keep up with its growing demand in recent years, leading to a supply deficit. As the demand for silver rises, the supply-demand imbalance could increase prices.

 

Moreover, silver is often mined as a byproduct of other metals such as copper, lead, and zinc. As a result, its production is influenced not only by silver’s demand but also by the mining activities of these primary metals. Any fluctuations in these industries can affect the overall supply of silver, adding another layer of complexity to the metal’s value.

 

The equilibrium between supply and demand is a primary factor determining the price of silver, just as it is with any other mined commodity. The fundamental case for silver is compelling when considered in this light. Metal is an essential part of two of the most important industries of our day, namely the energy transition and the technological revolution. As a result, industrial demand is at record levels, which is causing supply shortages because mined output and recycling are having trouble keeping up with demand.

 

To back up this claim, the Silver Institute predicts that total silver demand will exceed 1.2 billion ounces, making it the largest on record. This would result in a supply imbalance of 194 million ounces, four times the deficit seen in 2021. 

Historical Price Ratios

The gold-to-silver ratio, which measures how many ounces of silver it takes to buy one ounce of gold, has historically been significantly higher than it is today. This ratio has averaged around 60:1 over the past century, meaning it took 60 ounces of silver to buy one ounce of gold. However, in recent times, the ratio has been much higher, often surpassing 70:1 or even reaching 80:1. Some analysts view this as an indication that silver is undervalued compared to gold, making it a suitable time for investors to consider silver.

 

During periods when the gold-to-silver ratio is high, silver’s relative undervaluation compared to gold becomes more evident. Investors seeking to capitalize on potential price appreciation may find silver attractive, especially considering its historical price ratios.

Potential for Price Appreciation

Given the supply-demand dynamics, industrial demand, and historical price ratios, there is a strong case to suggest that silver has significant potential for price appreciation. As investors reevaluate their portfolios and seek assets with growth potential, silver’s undervaluation could attract increased attention, potentially driving its prices higher.

 

Additionally, as the world transitions to a more sustainable and environmentally conscious future, the demand for silver in renewable energy technologies will likely surge. Governments and industries worldwide are committed to reducing carbon emissions, which benefits Silver’s long-term growth prospects.

Conclusion

As the investment landscape evolves, investors must recognize and seize opportunities in undervalued assets with strong growth potential. Silver’s versatile industrial applications, historical store of value, and supply-demand dynamics represent a compelling investment opportunity that often flies under the radar.

 

While gold has historically been the poster child for precious metal investments, silver’s unique qualities and current market conditions indicate that it may be the hidden gem investors have been searching for. As with any investment, thorough research, risk assessment, and portfolio diversification are vital. By considering the undervalued potential of silver, investors can add an element of resilience and growth to their investment portfolios while capitalizing on the numerous advantages offered by this often-overlooked precious metal.

 

So you have decided to buy silver online.

Great choice. Let’s talk about silver.

Silver is exceptionally popular today. Part of the reason for this is the belief that it’s potential for upside value increase is even greater than the same belief in gold. In fact, there is a very good book on this subject entitled: “ Why Silver Will Outperform Gold by 400% in the coming years”. It’s a very scholarly book and quite convincing. Give it a read if you have the time.

Silver Bullion Prices

Mind you, one need not look as far as that book to find evidence of the common belief that silver has great potential for growth in the near future. All one has to do is go to the web or even Youtube and there are advocates of this thought at every turn.

At Durham Precious Metals we believe that silver is an easy choice because it gives a sense of substance due to its lower cost per ounce than gold.

Silver Bullion

Probably 90% of our business is silver sales so this sentiment is fairly unanimous throughout the public. 10oz bars seem to be the most popular. Generic rounds and Silver Maples seem to be the next most popular and 1oz bars a close 4th place. It is our opinion that 10 oz bars and 1oz rounds are your best value as their premium over spot is very reasonable. However, there is no wrong choice when it comes to our silver product line because we try to concentrate on product lines with low premiums anyway.

Silver has always been a form of money. There are those that will argue that silver has been demonetized but we beg to differ. All one has to do is refer to the (CCRA) definition for 999 bullion. It is deemed by Rev Can to be a “ financial instrument”. Enough said on that subject!

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From a utility standpoint, silver has somewhere in the neighbourhood of 60,000 industrial uses including painting the backs of mirrors to create the reflective surface to collecting radiation in solar panels. If nothing else, the lack of an above ground supply of silver ( which is relatively new historically) will keep the demand for this metal strong since for most applications there is no viable substitute.

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Can you imagine the mayhem that would ensue if all the major electronic manufacturers came grinding to a halt due to a silver shortage? It would be catastrophic to the economy. We believe that this fact alone will be a major driver of support for the silver price when the powers that be run out of tricks in their attempt to suppress the price of silver. And yes, we agree that this practice goes on in plain sight and that the regulators turn a blind eye. Let’s hope justice prevails and that the historic silver/gold ratio returns to its traditional level.

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In the meantime…keep stacking!

So you have decided to buy gold online.

Great choice! Let’s talk about gold then, shall we?

Gold is, and always has been, a favorite of collectors of precious metals. Its 6000-year history of sustaining wealth is unprecedented. The yellow metal has launched wars, bought fortunes and has been a form of money throughout that history. It is one of the densest metals and also one of the densest elements on the periodic table. It weighs in at a density of 19.32 grams per cubic centimeter. Water, by contrast, has a density of 1 gram per cubic centimeter.

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Platinum is the densest of the common 4 precious metals at 21.45 grams per cubic centimeter.

People will often ask when gold is the right choice to buy as opposed to other metals such as silver. This is a very common question. There is no easy answer that anyone can give to someone so we always boil it down to practical applications.

Gold Bullion

Consider how much of an investment you are planning to make over-all throughout the course of your precious metals buying.  If you are planning on purchasing, for example, $10,000 worth of metals and then cap your spending then it really doesn’t matter which metals you buy. The volume of the purchase will be relatively small in terms of weight and size. Our main concern and Durham Precious Metals comes down to simple things like , cost of storage, cost of shipping and bulk. We are always trying to help our customers have the best experience as metals collectors.

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For example, if you were to tell us that you are considering selling a piece of real estate and use the proceeds to buy metals then gold would be our suggestion. The reason comes down to volume and weight at this point. Several hundred thousand dollars of silver would be an incredible amount of bulk at this spend level. Hundreds of pounds of silver would be hard to store practically and would be more expensive to store as well. If you are the DIY type it would also be harder to hide than a comparable dollar amount of gold.

Keep in mind that at the time of this writing gold is about 75 times more expensive in dollar terms as the same weight of silver. That equates to 75 times less bulk per dollar spend. This will make it much easier to hide or store if you are looking at large purchase amounts.

Price of Gold?

If you are only considering a small total purchase amount either of the metals is perfectly fine. The one consideration we always emphasize for small purchase amounts really comes down to personal perception. Here is what we mean. Silver is 75 times more bulky per dollar spend. Obviously, it is going to feel a lot more substantial if you buy $5000 worth of silver and have several hundred ounces to admire than only about 3 ounces. It’s a perception thing at this point but perception matters to people since perception can make us feel a particular way about what we spend our money on.

In closing, gold and silver are both great choices and neither is wrong in terms of their value of utility. They have both had a long history as a store of wealth and that isn’t likely to change any time soon.

Buy both with confidence. Buy Gold Online

We often carry pieces that we don’t list on site so feel free to call us for an up-to-date list.

About DPM

When you consider silver value and gold value, the wise choice is to stock up today. At Durham Precious Metals we make it easy and convenient to buy silver and buy gold online.

For those who are serious about investing in gold and silver bullion, DPM is your one-stop store to buy gold and buy silver, whether it be through our website or our retail store.

Many people want to know where to buy gold and do not realize they can avoid the traffic hassle of driving into the city and visit us at DPM located in Oshawa, Ontario. See our Retail Store page for directions. Our customers are delighted with our competitive silver price. We carry mint direct silver bars, silver coins, gold bars and gold coins.

Make Durham Precious Metals your choice for gold and silver bullion.

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