Is Silver Still Undervalued Today? Should You Invest?

In the world of investments and complicated financial instruments, doing your due diligence before buying a stock can make the difference between making a profit or incurring a loss. Even in the realm of precious metals like gold, silver, and platinum, which people often view as safe-haven investments that are immune to the unpredictable currents of supply and demand, due diligence is king. Many metal purists think that silver is gold’s ugly stepsister, but they are slowly proven wrong every day.

Gold, silver, platinum, and palladium are some of the world’s leading financial vehicles that help people land a hassle-free retirement. Gold is famously resilient to numerous market pressures, with its market price hitting an all-time high only two years after the market crash of 2008. However, half of its demand goes to jewelry, in sharp contrast to silver, which people use in solar panels, batteries, and medical equipment.

When you make a year-on-year comparison between July 2019 and July 2020, you’ll see that silver’s price has been steadily rising, culminating at a nearly 25% increase over the past year. This price increase is one of the highest ever in the market life of silver, and experts predict that it will rise even more.

Silver prices are currently soaring over palladium, gold, and platinum, a fact that’s leading many investors to ask: Is silver still undervalued? Is it still wise to invest in what people call “the poor man’s gold?”

What the Experts Are Saying

According to Edmund C. Moy, the former Director of the United States Mint and the Chief Market Strategist at Valaurum, Inc., the same market forces that dictate a rise in gold prices also dictate silver prices. Even though silver has more industrial uses than gold, its primary demand driver is the fear of inflation from the stimulus checks that governments hand out.

Governments have been writing stimulus checks to small businesses, large institutions, and innumerable individuals worldwide who lost their jobs because of the pandemic. The more money a government prints, the less its currency is worth, so people have been stocking up on silver, gold, and other precious metals, which they see as a safe-haven investment. Investors are unsure when an economic recovery will take place.

By the time people retire, the worth of whatever currency they use in their country might be far from their economists’ predictions. Pandemics are getting worse and worse, with new, deadlier, and more contagious strains developing almost every five years. Some experts say that the global lockdowns brought on by COVID will not be the last in a millennial’s lifetime.

In the past five years alone, oil prices have seen multiple crashes. The aviation and freight line industry, which are two commodities that people think the world would always need, went under multiple recessions, with Hanjin and Avianca declaring bankruptcy a mere three years apart.

The world is moving into a new era of riskier investments, with electric cars, renewable energy, and unproven ESG initiatives taking the forefront. With all this uncertainty about what money will be worth 10, 20, or 50 years from now, silver, gold, and other precious metals are the natural option for people who want to avoid inflation. According to Moy, silver still has vast untapped potential value.

Silver Prices Are Changing

silver coins with the prices of silver on a chart in the background

Even millennials are wising up to the value of precious metals. Even as their investments in sustainability, climate change prevention, and human rights causes help make the world a better place, they don’t necessarily provide adequate gains. A good portfolio is a balanced one, and according to Moy, even though silver is trailing behind gold in value, people see it as an effective counterweight in times of economic instability.

Silver has always been historically cheaper than gold when you buy by the ounce, and its broad industrial usage means its market value is more demand-driven. If people stop buying aerospace, medical, and dentistry equipment, the price of silver will inevitably stall. The value of silver is more stable when you compare it to other stocks, but it’s more volatile when compared to gold.

Moy says that the silver units you would need to buy some gold are high, which means that either silver is underpriced or gold is currently overpriced. If gold is overpriced, the market will correct itself soon enough, but if silver is underpriced, investors can look forward to making massive gains when it achieves real market value. “There is a lot of money to be made,” he says, even though “[silver] is lagging behind gold’s rise.”

By the close of the market on July 27, 2020, silver futures had a price per ounce of $24.501—a 7-year high. On July 30, their values went up by nearly 25%, inching closer and closer to the record-high from Q2 2011 of $48.599. Gold futures are increasing in value at a similar rate, with a record $1953.40 per ounce at the market close of July 29, 2020, up 8.5% from June.

According to Rian Giannotto, Research Director of GraniteShares, a company that investors rely on for ETFs and other investment solutions, silver is barely halfway into achieving its full potential. The demand for this precious metal is not slowing down, and people are increasingly making more sound investments in a turbulent world. When it comes to safe-haven investment vehicles, precious metals still rule.

Why Silver Is Soaring and Why There’s More to Gain

Giannotto says that silver, even with its more volatile nature next to gold, palladium, and platinum, is unlikely to double in value anytime soon. However, with the current state of the world, he remarks that it’s unwise to rule out a surge in value. Even though silver is for the conservative investor who wants some protection for a rainy day, market trends are instilling it to provide a quick return.

Historically, to get an ounce of gold, you would need 80 ounces of silver. However, with silver’s soaring price in the precious metals market, you would only need 60 ounces to get that precious yellow metal today. According to Ross Norman, the CEO of the publication Metals Daily, this ratio went up to a 4000-year high on March 18 thanks to global economic uncertainty.

Even though the price of silver is currently soaring, it’s still much cheaper than gold, and it has been for much of its history, meaning there’s still a lot of value to be uncovered. Norman says that even though the ratio’s upward trend is previously unseen, there are still excellent gains awaiting investors who are willing to buy stock in silver.

Whenever gold’s price is in a rally, investors look to the value of silver to make sure it’s stable and real. Precious metals investors are risk-averse by nature, which means if the gap between gold and silver prices becomes too wide, the value of gold begins to stall, which is like the market repositioning itself to avoid entering a bubble. Today, according to Giannotto, gold’s price is “untethered from technical resistance levels.”

The sentiments of individuals, governments, and private institutions that hoard gold and silver largely dictate their prices. Silver futures naturally attract speculators with experience in navigating through complex trading agreements and willing to put in the time and effort to research where the market is going. If you want to invest in silver today, you need to be comfortable making real-time decisions.

Two Popular Forms of Silver Investments

etf text with charts and numbers on the background

For private individuals, silver coins are still one of the most popular ways to invest in silver. In mid-2020, the U.S. Mint said they’ve begun shipping 604,000 more ounces of silver in contrast to June of the past year, which is massive when considering the high markups buyers have to pay. Silver coins from the government have their purity, silver content, and weight guaranteed by the state.

According to Giannotto, unlike gold and platinum, silver can sometimes trade erratically, so to complete your safe-haven portfolio, you may need to invest in less-volatile metals like platinum or gold. ETFs are still the easiest and most cost-efficient way to invest in silver and other precious metals. The IShares Silver Trust, a silver-backed ETF, rose 27% in value year-over-year in July 2020.

If You’re Looking To Invest In Silver, Contact Oxford Gold Group

There is an inherent risk to investing, no matter which commodity you choose. When people hear that gold, silver, palladium, and other precious metals are safe-haven investments, some of them are quick to jump on the bandwagon, incurring massive losses because they didn’t do enough research.

Thankfully, many experts know how you feel as you’re starting from the bottom. Before investing in precious metals for retirement, short-term returns, or a midlife nest egg, contact our specialists by calling Oxford Gold Group at 833-600-4653 to increase your likelihood of getting a return.

Look through our catalog of gold, silver, platinum, and palladium products and get genuine coins and bars that we accurately test for purity, weight, and precious metals content. Begin creating a lucrative precious metals portfolio today.

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