The Outlook of Silver Prices in 2020
The price of silver raised 16% over the course of 2019, from $15.5/OZ to nearly $18/OZ. But what variables affect the price of silver and where will its value go from here?
A BRIEF HISTORY OF SILVER
Silver has been a form of money and store of value for more than 4,000 years. Over the course of time it’s gone from being used as legal tender to a crucial element of many industrial applications. Like all valuable commodities, silver’s value is predicated on numerous factors, and a considerable amount of speculation goes into price and value predictions.
One of the most popular uses of silver is commodity and future exchange. Silver coins, bullion and ETF’s are purchased and traded as investments. However, silver maintains itself to be a volatile investment.
Over the past 20 years, silver has gone from $5 per ounce to $18. While these numbers seem reassuring, it’s important to note that silver underwent - and continues to undergo - significant spikes and dips in value.
What does this mean overall? It indicates that silver and gold do not always comprise of a “safe haven” or perform well as a means of holding value. Precious metals fluctuate in value due to a number of different variables.
POLITICS AND INTERNATIONAL RELATIONS
One of the biggest causes of fluctuation in silver pricing is politics. Trust in the economy - and in world currencies as a whole - has a great deal of impact on the value of silver. Generally, the more stable the global market, the less volatile the price of silver.
Conversely, in times of doubt and turmoil, the price of precious metals will often increase. This often includes interest rate changes, unexpected downturns and political instability . Of course, this isn’t always the case. Historically, silver investments are chiefly made out of a lack of faith in the global economy, and often made as a hedge against failing world fiat currencies.
TECHNOLOGY AND MARKET PRODUCTIVITY
Supply and demand is the founding principal of economics. Low supply and high demand result in an increase in cost. Silver creates its own value as a finite resource, sought after for an assortment of applications. These include:
- Electronic Devices
- Digital Media Production
- Chemical Production
- Engine Production
- Solar Energy
Recent reports indicate technology manufacturing and service sectors are regaining dominance among the most innovative companies, both in the U.S. and globally. As technology manufacturing and development increases, so does the demand for silver and its value.
As trade tensions ease and tariffs gradually start to lift, the flow of technology goods increases. Going forward in 2021 and 2022, many analysts expect to see silver’s demand and price increase.
It is impossible to say exactly what will happen during 2020 or beyond. However, silver appears to be a promising investment, especially with the disparity between supply and demand over the past few years.
As technology manufacturing increases, global trade opens up and trust in fiat currency continues on a downward trend, silver presents itself as a smart buy. Most analysts forecast a bullish market within the upcoming year!