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A Case For Silver Longer Term

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@rollandthomas
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Lets face it, Silver is the “step child” compared to Gold…it always takes a back seat. But Silver is more important to our society than we may realize.

Industrial and technological uses for silver account for over half of the demand for silver because of silver’s physical properties. Silver is a type of metal that is strong, malleable and ductile. Malleability is the ability of a material to deform easily under compressive stress, meaning to form think sheets. Ductile is the ability of materials to deform easily under tensile stress. So ductile is like pulling on a pie of metal from both ends without it fracturing.

But silver is also the best electrical and thermal conductor of all the metals, and so along with copper makes it a sort after metal for its electrical applications such as conductors, switches, contacts and fuses.

But silver isn’t just a one trick pony. Silver is can be used to prevent the growth of germs. For decades, physicians placed several drops of silver nitrate into newborns’ eyes to prevent infection. In addition, millions of water purifiers are sold each year with silver in them. Silver prevents bacteria and algae from building up in the filters so they can function optimally.

In 2019, demand from industrial applications was nearly unchanged from the previous year. But in 2020 as COVID-19 kicked into gear, between 60-70% of the silver mines shutdown, setting up the scenario for a supply-demand imbalance, especially when you take into account of silver’s inflation and safe haven attributes.

Long-term, investors can expect gold prices to climb multiple times its current value, and silver prices to rally into the triple digits, but they should not count on the precious metals to break out in the short-term.

In the next five to ten years, gold prices could climb to $8,000 to $9,000, with silver following suit in this bull-run, due to the similar macroeconomic environment that we currently share with that of the 1970’s, when gold prices climbed several hundred percentage points, Grummes noted.

“Silver has huge upside potential. It’s extremely undervalued in comparison to gold. It’s a very cheap inflation hedge. I think at some point over the next few years silver will run up against the $50 level again,” he said. “There will be another breakthrough over the next two to five years and once that happens, I think silver is off to three-digit numbers.”

Source

The gold/silver ratio is simply the amount of silver it takes to purchase one ounce of gold. And when this ratio hits 80, it reverses. Since the mid-1990s, the ratio has hit 80 four times. And when it reversed, silver outperformed gold over the next several years.

But that hasn't been the case on 2020, the gold/silver ratio is at its highest levels ever, hitting 125 in recent months and since then has pulled back to the 100 level. If even if the gold/silver ratio can get back its long term avg. of around 60,

that should make the case for silver prices to get back to the $50 level in the next couple of years.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance