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Will silver go up if the dollar collapses? This question is on the minds of many investors as COVID-19, shortages, and climate change drive the prices of staple goods skyward. In the past, Americans have turned to the tangible safety of gold, silver, and other precious metals in the hope that they will preserve their value more than cash savings, stocks, real estate, and other investments.
Why Silver Could Go Up if the Currency Crashes
Supply and demand drive silver prices. Silver has industrial uses and is a popular metal for jewelry. To estimate the price of silver after any event, you should ask yourself if the event affects the relative scarcity of silver compared to the number of dollars in circulation.
If the U.S. dollar were to lose its value suddenly, the demand for silver in the jewelry market might decline. People often avoid expensive luxury items during an economic crisis unless they are using the metal as a way to protect their assets from inflation. Sales of silver bullion coins and other collectibles are likely to increase.
The scarcity of U.S dollars depends on the nature of the currency collapse. If the U.S. government were to print large numbers of bills, perhaps in an effort to pay its creditors, there would be many more dollars in circulation, and the dollar would weaken relative to other currencies and to silver.
Taken together, a run on silver could drive silver prices up at the same time that a flood of U.S. dollars on the market decreases the purchasing power. If you have silver in your possession at that time, the value of those assets in U.S. dollars might increase. We cannot say for certain that this is the case because the foreign exchange market is complex.
Why Silver Might Not Go Up If the Currency Crashes
When currencies collapse, investors in stocks and real estate might see a drop in the value of these assets as markets respond to the crisis. They might need cash or other liquid assets to cover any debts that are due, pay living expenses, or pay down adjustable-rate mortgages before the interest rates go up. These pressures might cause people to sell off their stocks of silver and other precious metals, especially if their value is spiking. Holders of silver and gold might believe that the crisis is temporary and that they can protect other assets and lock in gains by selling their metals. Investor psychology is difficult to predict.
Risks of Investing In Silver
Like most investments, there is a risk that silver might decline in value. Silver has experienced a great deal of volatility, ranging from less than 30 cents per ounce in the midst of the Great Depression to nearly fifty dollars per ounce in the inflationary 1970s.
Mining companies could discover new silver deposits, increasing supply and reducing demand for existing stocks of silver. Changes in consumer demand for silver jewelry and industrial uses of silver could also reduce demand.
International laws and policies could change regarding the sale and transport of silver, making the metal less valuable for global precious metal investment. If investors worldwide divest themselves of silver in order to acquire other assets, the market price of existing stocks will decline.
What Economists Say
Economists and pundits offer conflicting views of silver as an investment vehicle in 2021. Some are bullish, while others are bearish.
Some economists point out that silver has spiked in the past after the inflationary period in the 1970s and after the financial meltdown of 2008-2009. This has not happened for silver after the COVID pandemic hit in 2020, so there is a possibility that a spike in silver is due. It is equally possible that the COVID pandemic is different from other economic crises, particularly in its effect on global trade.
One factor that analysts mention as a unique element of the COVID pandemic is a disruption to the supply chain for silver. As a result of COVID travel restrictions and changes to the workforce, many companies and governments have faced difficulties in shipping goods effectively. Prices have risen for everything from lumber to meat in the wake of COVID.
What will shipping disruptions mean for silver prices? On the one hand, silver could experience a rise in prices because people who want silver have difficulty getting it and might be willing to pay a premium. On the other hand, some investors may conclude that procuring silver is not worth the effort and shift to a different investment strategy.
Economists don’t always offer clear-cut predictions. U.S. President Harry Truman was said to have quipped, “Give me a one-handed economist!” in frustration when economists started their recommendations with “On the one hand….”
One conclusion is certain. Silver will always have value, even though its price per ounce may vary over the years. By holding silver, you can be sure to have a lasting investment. Silver will last for the next million years.
What Happens if the Dollar Collapses?
The question of will silver go up if the dollar collapses is only important if the dollar is, in fact, likely to collapse.
Economists are not certain about the short-term future of silver, but what about the U.S. dollar? It has long been a trusted currency for governments and national banks around the world. Many people believe that the dollar is “too big to fail” as a global reserve currency and that the many stakeholders will work together to prop up the dollar in an economic collapse.
While the U.S. dollar has risen and fallen over the past century, it has never faced a total collapse on par with the German Mark after World War I or the Zimbabwe dollar in the late 2000s. The U.S. dollar weathered the 1918-1919 flu pandemic and the Great Depression without undergoing a collapse.
Unprecedented Economic Times
That being said, many of the challenges we face are unprecedented. We do not know how COVID will spread and mutate in a globalized economy, and we do not know what other diseases might emerge. We also do not know when the historic levels of national debt will impact the value of U.S. currency.
In that worst-case scenario, will silver prices go up if the dollar collapses? The position of the U.S. economy may be unlike anything economists have encountered before. In these circumstances, it is reasonable to prepare for the unthinkable.
What would happen if the U.S. dollar were to collapse? The key question of whether silver will go up if the dollar collapses is part of a larger question. What will you do to maintain your way of life in an economic collapse?
Silver and gold, like other precious metals, are likely to keep pace with inflation. This means that you could cash in some of your silver at inflated prices during a collapse in order to buy food, gasoline, and other essentials during the crisis. If the dollar collapses and other currencies remain viable, you could sell the silver you have for other currencies.
Experts also recommend doing the following in addition to investing in precious metals:
- Own your own home, so that you are not forced to pay inflated rents
- Grow your own food to sustain yourself if there are food shortages or rationing
- Get to know people in your neighborhood and community
- Find trusted companies to do business with
A Silver Company You Can Trust
When you look for a company to handle your silver investments, be sure they are established and prepared to hold and protect silver stocks for the length of your investment.
Before investing in any fund or commodity, be sure to learn about the company in general and the specific investment vehicle. Is the company established? Have they been managing this type of investment for a long time?
The need for a capable and knowledgeable investment firm is particularly true for precious metals investing. It is relatively easy for a stockbroker to buy shares of a stock or fund with a keystroke. Buying silver and gold at competitive prices, shipping them, and storing them require expertise and in-depth knowledge of silver itself and the silver supply chain.
Invest in Silver With the Oxford Gold Group
The founders of the Oxford Gold Group are committed to providing dependable acquisition and storage of your precious metal investments without high commissions and other costs. Let the Oxford Gold Group do the work for you. That way, you can relax with the peace of mind that comes from having a sound investment in dollar-denominated silver coins or silver bars.
If you want more answers to the question, will silver go up if the dollar collapses, the Oxford Gold Group can help.
To learn more about the Oxford Gold Group’s Gold and Silver IRA plans, read their How to Invest in a Silver IRA page, or call (833) 600 – GOLD to talk to an investment professional about your precious metal investment plans.