Investors hold silver and gold to hedge economic instability and political crises. Is the move stable enough to sustain market fluctuations long-term, though? How much will silver be worth if the dollar collapses?
As an investor, you probably have numerous questions regarding precious metals, such as silver, and it is natural to wonder about the future. It is a common belief that silver prices fall when the dollar weakens, but if that’s the case, isn’t it better to invest in precious metals after the situation settles? Before you form a strategy, it’s best to look at the facts.
Let’s analyze some of the past trends to understand whether investing in silver is the right option for you.
What We Learn From Previous Stock Market Crashes
How much will silver be worth if the dollar collapses? It is crucial to go back to previous slumps in the stock market to compare silver’s performance as a whole. The biggest and most notable market crashes globally were registered in 1978, 1982, 1987, 1990, 1998, 2002, 2009, and 2011.
From the official reports, silver did not perform well during market crashes. The price differences were minimal (almost insignificant), but the cinch was silver’s high industrial use (more than 50% of the supply) and the sell-offs (related to the ailing economic situation).
While almost all of these events caused the silver price to drop, the situations in 1978 and 2009 were unique. The expected results were different from other similar events because silver improved its performance on both these occasions. High volatility should have caused a price decrease; instead, the market value increased by 15% in the 70s and ended flat by the end of the crisis in 2009.
These two anomalies give a sliver of proof that the precious metal holds its own under political or economic instability.
Will The US Dollar Collapse In The Near Future?
When the US dollar value drops, currencies collapse. Everyone tries to sell assets and run for gold, but no one wants to purchase the risk. While there are numerous reasons for the US dollar to collapse, hidden weakness and viable currency alternatives are the two common factors that lead to catastrophe.
At the moment, the dollar is not appearing to hide any weaknesses that may lead to dangerous bubbles. Between 2008 and 2020, the US dollar strengthened by almost 30%, and the coronavirus pandemic strengthened that estimate by a further 10%.
The reason the US economy is known as the strongest and most stable economies in the world is because of its direct ties to the world’s reserve currency. As a global player, the US dollar is used for numerous cross-border transactions, and more than 60% of the currency reserves are in US dollars.
There is no currency option for everyone to purchase simultaneously, however. The next best currency after the US dollar is the euro (EUR), but it only compromises 20% of the central bank reserves. It can’t compare to the greenback’s power or availability, either.
China and other powerful countries have often discussed a global currency for standardized features other than the US dollar. The Oriental giant would prefer to promote its yuan, but that option only compromises 6% of the current central bank reserves.
For now, we could say that the dollar is stable, even under dire pandemic and economic crises worldwide. Silver is stable, as well. If nothing changes, our investors expect steady silver growth and safe investments alongside a reliable US dollar.
How to Protect Your Investments If The US Dollar Collapses
How much will silver be worth if the US dollar collapses? It could trigger a significant decline in silver’s value and create economic chaos, especially where investors run to other currencies (euro or yuan) and havens (including gold).
You can always turn to other precious metal investments and consider bars, coins, and commodities. It is still essential to know how to protect yourself from progressive dollar decline, however.
The best strategy is to be mobile. Things change overnight, and it is essential to keep your assets as liquid as possible so that you can transfer the value quickly.
No one knows when the stock market will crash, but there are a handful of steps you can take to keep your investments safe.
Weigh Risk Tolerance
It is essential to understand your risk tolerance and define how changes in the market will impact your investments and peace of mind. Some investors can afford a small risk; others put it all on the line for huge rewards (or losses).
Rebalance Your Portfolio
Whether you’ve invested in silver bars or coins, it is vital to have an associate or an agency by your side to explain the options and explore various possibilities. One recommendation is rebalancing, which could protect your investment and keep your future on track.
Make Wise Decisions
The worst decision you could make in lieu of a stock market crash is a snap decision to sell off your assets. Even if the price of silver drops, you will lose even more money by selling it off in a panic than you will by giving it time in the market (it’s the strategy of experts to stay in the game and ride out the waves long-term).
Take a deep breath. After a thoughtful comparison, decide what’s best for you and your investment.
Is Silver An Attractive Investment?
Investors believe it is wise to hold silver because it maintains its value (although that notion depends on many factors). Most stockholders regard silver as a hedge during a market crisis and hold onto the possibility of growth.
Statistically speaking, silver gradually decreases its value during market crashes but quickly recovers its worth in bull markets (the situation in 1978 and 2009). Beware, while reliable statistics are essential to a financial strategy, these figures won’t guarantee secure investment outcomes.
A few other factors may impact your silver investment.
Supply And Demand
An increased local supply puts pressure on the silver price, lowering its value. Silver has broad industrial use, though, and depends directly on market demand for movement.
Worldwide demand also affects silver prices. It is more challenging to track global demand than local requirements, and there are many reasons for an unexpected price change that leads to market losses.
Inflationary pressure directly affects silver and other commodities. When inflation increases, the silver price tends to follow suit as paper currency suffers.
Government Rules And Policies
The US Mint stores a large percentage of the world’s silver supply, and any sudden political changes in America affect silver’s value worldwide.
While silver is not as risky as other metals and commodities, its volatility is a significant factor. If you are seriously considering investing in precious metals, learn as much as you can about the options available before you commit to a strategy.
How to Invest in Silver?
The current silver price per gram is $0.65 (or $653 for one kilogram of silver bullion). The price is attractive for those who prefer investing in safe and stable metals.
While there are different options, the most attractive investments are silver bullion bars, silver IRA, EFTs, and stocks in companies that produce or finance silver.
Silver Bullion Bars
Silver bars provide physical ownership of the precious metal. Depending on your needs, you could invest in 2, 3 or 5 oz silver bars, kilo silver bars, or 5000-gram silver bars.
An Individual Retirement Account (IRA) is tax-deferred, allowing investors to hold silver bars and coins in their accounts to save on tax obligations. It is similar to the standard IRA, but funded with physical metals instead of stocks.
Exchange-traded funds (ETFs) allow investors to own shares that track a physical commodity without owning the metal itself.
You have two options–invest in companies that mine silver or those that finance silver-mining factories.
How Much Will Silver be Worth if The Dollar Collapses?
The best way to understand how much silver relies on the dollar is to consider the global influences on the prices of precious metals. The US dollar has long been considered a safe asset due to the country’s stable economic and political situation. It is the largest economy in the world and capable of sustaining the most challenging crises compared to its counterparts.
If the US dollar collapses, silver will still be an excellent investment due to its industrial applications, scarcity, and liquidity, however. According to historical data, investing in silver has paid off well throughout the years, even under pressure.
The future is always uncertain, and no one knows what could happen on the stock market, but the statistics confirm that silver is still an excellent choice. If you are currently unsatisfied with your investment returns, it might be smarter to reevaluate your financial strategy and diversify your portfolio.
If you need help protecting your savings or retirement goals, don’t hesitate to contact us at Oxford Gold Group. Whether you are considering adding silver to your IRA or reevaluating your investment strategy, our financial professionals have a solution that is right for you.