For centuries, gold and silver have been considered valuable commodities. Though their prices may go up and down with the markets, they have always held a certain worth in society. In recent years, as the global economy has begun to rebound from the recession, both metals have seen an increase in value, as more investors are looking to them as a safe investment option. Here we'll take a look at why gold and silver are seeing such a resurgence in popularity, and how you can get involved in this booming market.
What Has Caused The Recent Commodities Boom?
The resurgence of gold and silver began in 2020, with the US Federal Reserve's decision to reduce interest rates. This caused investors to become wary of traditional investments such as stocks and bonds, which were not providing the returns that they had previously enjoyed. Therefore, many investors shifted their money into commodities like gold and silver, as these metals were seen as a safer bet.
Coronavirus caused an injection of money into the economy by central banks around the world. This additional liquidity caused investors to start buying up gold and silver, as they were seen as a safe haven in turbulent times.
The commodities boom has been further fueled by the US-China trade war, which has led to an increase in geopolitical instability. This has caused gold and silver to rise in value, as investors see them as a reliable form of security during times of uncertainty.
Demand Is Up Big In Recent Years
In the past two years, demand for gold and silver has increased significantly. In 2020, global gold ETF holdings rose by 17%, while silver ETF holdings increased by 21%. This is due to the fact that investors are increasingly looking to these metals as safe-haven assets during times of market volatility.
In addition, gold and silver bars have seen an uptick in purchases. Many investors are buying physical bullion as they believe it will provide them with a hedge against inflation.
More than half of silver’s demand comes from industrial applications in electronics, medical equipment and solar power generation. With the world becoming increasingly concerned about sustainability and climate change, silver’s industrial applications are likely to continue to grow.
2022 Slowdown Is Just a Lull Before The Next Move Up
Prices may be down this year, but experts believe that this is just a lull before the next big move up. Analysts are expecting gold and silver prices to increase significantly over the next few years, as demand continues to grow.
In addition, with geopolitical concerns remaining high, many investors are choosing to buy gold and silver as a means of protecting their wealth in turbulent times. As long as the geopolitical situation remains unstable, demand for these precious metals is likely to remain strong.
Which Precious Metal Should You Invest In?
If you are looking to invest in gold and silver, it is important to understand the differences between the two metals. Gold tends to be more stable than silver, and therefore is a better option for those who want to build wealth over time. Silver, on the other hand, can be more volatile but can also provide investors with greater returns in a shorter amount of time.
Silver Rallies Higher And Faster Than Gold
Silver tends to rally higher and faster than gold, so if you are looking for quick profits then silver could be the better choice for you. However, it is important to remember that silver is more volatile than gold and therefore carries greater risk.
Ultimately, the decision between gold and silver will come down to your personal investment goals. If you are looking for a safe haven asset, gold is likely your best bet. However, if you are looking for potential upside in a shorter period of time, then investing in silver could be the right choice for you.
How To Invest In Gold and Silver
If you’ve decided to invest in gold and silver, there are a number of different ways you can do so. You can purchase physical bullion such as coins or bars, or you could buy exchange-traded funds (ETFs). Alternatively, you could also invest in mining companies that specialize in producing these metals.
Physical Bars And Coins
The easiest way to invest in gold and silver is to buy physical bars or coins. Investing in physical precious metals can provide you with a tangible asset that you can hold onto for the long term. This also allows you to take possession of your investment, which can be beneficial if you want total control over it. Additionally, holding physical bullion can provide you with added security, as the metal is not subject to the same market fluctuations as other investments.
Precious Metal IRAs
For those who want to invest in gold and silver, another option is a precious metal IRA. A precious metal IRA allows you to purchase physical bars and coins of gold and silver inside an IRS-approved retirement account. Many people find that an IRA makes it easier to invest in gold coins, without having to handle and store the heavy metals. This type of investment can provide you with tax advantages as well as the potential for greater returns over the long term. Overall, investing in gold and silver can be a smart move for investors who want to diversify their portfolios and protect themselves from market volatility.
Exchange-Traded Funds (ETFs)
Another popular way to invest in gold and silver is through exchange-traded funds (ETFs). ETFs are a type of fund that trades on an exchange and typically tracks the price of a particular commodity. Investing in ETFs can provide you with exposure to gold and silver without having to purchase physical bars or coins. This can be especially beneficial for those who don’t want the hassle of storing and safeguarding their investments.
Gold and Silver Futures
Gold and silver futures are a type of derivative instrument that allow investors to speculate on the future price movements of these precious metals. Futures contracts are an advanced form of investing and are not suitable for everyone. If you do decide to invest in futures, it is important to understand the risks associated with this type of investment. Additionally, it is important to have a good understanding of the market before investing in futures contracts as they can be volatile and unpredictable.
Finally, another option is to invest in mining companies that specialize in producing gold and silver. Investing in mining companies can give you exposure to the metals without having to purchase physical bars or coins, as well as provide you with the potential for greater returns. However, it is important to remember that investing in mining companies carries a higher degree of risk than other investments.
Overall, gold and silver are both attractive investments that can provide investors with protection from market volatility. The decision of which one to invest in will ultimately come down to your personal goals and risk tolerance. No matter which option you choose, it is important to do your research and understand the risks associated with investing in precious metals before making any decisions.