10 Reasons Why You Might Consider Investing in Silver

It’s been mined for millennia, part of our currency since currency has existed, and now it’s part of the technologies we rely on to live our modern lives. So, why invest in silver? Read on and you’ll find 10 key reasons why you might consider silver as part of your portfolio now and into the future.
At Gold Stackers, we specialise in providing investors with high-quality precious metal products, including silver bullion and silver coins, as well as providing storage and product guidance on other precious metals. Whether you’re an SMSF trustee or simply an individual looking to diversify your investment portfolio, we’re here to help you find a solution that aligns with your long-term goals.

TL;DR

• From its past value to its future potential as an ally to the renewable energy industry, silver as an investment has both historical value and projected value.
• Silver is an accessible entry into precious metals, giving investors access to a ‘safe-haven’ commodity without gold’s higher price point.
• Both projections of increased industrial demand and global instability look to have silver investments performing well in the near future – making this asset more appealing to a wider range of investors.

1. Historical Store of Value

Due to its scarcity and precious metal status, silver holds intrinsic historical value as a physical asset. It also holds a degree of security: in an age of cyber attacks and global instability, a physical silver investment provides safety and tangibility. While gold’s higher value from increased scarcity and consequent stability have proven it more valuable in this arena, silver is playing new and exciting roles in industrialised futures and catching the eye of keen investors. 

2. Industrial Demand

Silver, unlike gold, has enjoyed a significant uptake in industrial applications. While it has been in use for centuries, new and exciting applications continue to arise. From its past role in photography and antimicrobial properties in medicine, silver is now playing a growing role in future industries. Whether it’s in the batteries that power electric cars, or its use in the conductive layers of solar panels, the future looks bright for silver. The industrial appetite for silver is increasing at a rate that’s outstripping supply, causing a spike in silver prices and creating exciting opportunities for those looking to invest.

3. Investment Demand 

Considering this industrial demand, it’s no surprise that investing in silver is enjoying escalating popularity amongst investors across the board. Both physical silver investments and silver EFTs (exchange-traded funds) are gaining traction and come with their own set of risks and rewards. Physical silver appeals to an audience invested in stability and security – it’s tangible and easy to liquidate. Silver EFTs are preferred by those who might not yet have the means to store a physical product or those who enjoy the quick convenience that online trading provides. Silver – particularly in its physical form –  is considered a ‘safe-haven’ investment that hedges against inflation and turbulent market conditions. Historically, silver’s performance has been a stabiliser in investors’ portfolios at this time, alongside gold which performs similarly.

4. Affordability 

Affordability in relation to other precious metals is a key factor for many investors looking to enter the silver market. Gold prices are – unsurprisingly – higher than those of silver due to scarcity. The historic ratio of gold versus silver prices has moved a great deal over time – reaching historical peaks of around 98 to 1 in the early 1990s to approximately 80 to 1 in recent years. But this isn’t a disadvantage of investing in the silver market – it’s often considered a benefit by ambitious investors. Silver represents an affordable alternative to gold in many ways – it’s more accessible and its lower price point offers the potential for higher percentage gains. 

5. Hedge Against Inflation 

Silver prices have – at times in history – increased as stock market performance decreases. Its performance during high inflationary periods is another reason it’s chosen by discerning investors and defined as a hedge against inflation. Other common inflation hedge choices are real estate and other precious metals like gold – and these have their perks and downfalls alongside silver. Gold is generally considered to be a better hedge than silver due to silver prices’ attachment to industry. In times of economic downturn, industry tends to decline, resulting in a sinking demand for silver . Real estate, too, has traditionally been considered an effective hedge with high returns, but for investors on a smaller scale, it certainly carries high risk and associated management costs that could accumulate at a higher rate than gold and silver storage costs (for instance, property management expenses and ongoing building maintenance). 

6. Diversification

A precious metal investment is an enduring diversification choice for investors looking to maximise their resilience and returns. Adding precious metals to your portfolio can be a particularly inviting idea for those who already invest in stocks, as gold and silver prices often rally while share prices fall. Silver can play a key role in reducing your portfolio risk as its price has a generally low correlation with other asset classes throughout history – aside from gold which follows relatively similar patterns. 

7. Silver’s Role in Monetary Systems

Centuries and millennia stand behind the value of silver as a commodity and as a currency. Both the Ancient Greeks and the Ancient Romans used silver coins as currency, with evidence of silver being mined for over 5000 years.

While silver is no longer a physical component of official Australian currency, its impressively persistent value and cultural connection to currency makes it an inviting option for investors.

Some investors also note that while central banks are part of promoting the transition to a digital, cashless market, they still hold extensive and unrivalled collections of precious metals. One interpretation of this is that these banks believe silver will play a role in global currency for some time to come. On top of this, many take silver and gold’s ongoing value stability as a sign that it will continue to play a role in currency while things like cryptocurrencies and fiat currencies enjoy more short-lived dominance. 

8. Geopolitical Stability

As mentioned above, silver is considered a ‘safe-haven’ commodity during times of global geopolitical turmoil – and this reputation is well earned. Some prefer the terminology ‘crisis commodity’: the idea of silver’s strong performance during a crisis as true as it was in recent times as it was in centuries before. Both 2020’s COVID-19 lockdown announcements and the Great Financial Crisis saw the price of silver rise, while it also experienced a peak during the American Civil War in 1864. 

9. Supply Constraints 

Silver’s industrial popularity is causing somewhat of a problem for its demand, which, in turn, inflates its price. Mining of silver occurs mostly as a byproduct of other materials like zinc and this means that it is often in uncertain supply. However, dedicated silver mines do exist, with one such example in late approval stages as close afield as Western Australia and silver’s increasing role in clean energy leading some mining groups to explore silver extraction more closely. Mining yields have been subject to declining ore grades and increasing energy costs associated with extraction. This is constricting silver production’s growth. This pressure on supply drives the price of silver upwards and will continue to do so as silver’s scarcity increases.

10. Future Outlook

It’s likely that the price of silver will continue to rise as supply pressures increase and silver’s role in green technologies is realised. This is potentially catalysed by factors like increasing global tension and uncertainty as conflicts escalate in multiple areas of the globe, increasing investors’ appetite for silver as a safe haven. 2024 was a particularly exciting year for silver investors, with its price going above US$34 an ounce in October. The sentiment of silver’s increasing value is echoed by investors worldwide, as well as peak bodies including the Minerals Council of Australia, who credit the use of silver in consumer electronics and solar PV cells as the reason for silver’s increasing value towards 2030 and beyond.

Whether you’re excited by its future trajectory, its history, or its stability amidst global financial turbulence, silver investment certainly has plenty to offer discerning investors. At Gold Stackers, we’re excited to meet with and provide personalised service to those who see the potential in silver and are looking to diversify their investment portfolios. If you’re looking to take the next step in investing in silver, we’re here to help. For additional information and to better understand what investment opportunities could be here for you, get in touch with one of our experts today.