Investing in metals: why silver might be the new gold

Investing in metals: why silver might be the new gold
Report highlights silver’s role in technology revolution, wealth protection.
OCT 18, 2024

Gold has been reaching new highs recently and continues to rank among investors’ favorite hedges, but while the focus is on bullion, is silver a giant in waiting?

A new report suggests that silver has a key role to play in the next steps of the tech revolution and that this commodity is not only undervalued currently but could be on the verge of a significant rise in value.

With three decades in the metals industry, Los Angeles firm Lear Capital has published a report called ‘Sky High Silver Ahead’ highlighting the expanding applications of the metal and its potential as a strategic investment.

Key to its growth potential is its essential role in certain technologies including renewable energy technology such as photovoltaic cells used in solar panels along with uses within the electric vehicle and consumer technologies industries.

Industrial demand for silver rose by 11% in 2023 to a new record high according to the Silver Institute. The year was the third in a row where demand exceeded supply despite demand for jewelry and silverware demand having fallen. Mine production was down 1%.

Lear’s report cites a 2022 Wiley estimate that solar demand alone could consume 85% of global silver reserves by 2050, raising the prospect of a supply crunch.

"Silver's importance is growing exponentially as the world transitions to more sustainable and technology-driven solutions," said Kevin DeMeritt, founder and chairman of Lear Capital. "Our report underscores how increasing demand from both industrial applications and investors seeking portfolio diversification presents a unique opportunity in today's uncertain markets."

The report, written by former Wall Street analyst John Rubino, notes that silver is cheap compared to gold and is also a long way from its own record high of $50/oz, suggesting it has the scope for significant growth.

There is also greater scope for investors to use silver as a hedge, considering factors such as its performance relative to other precious metals and its potential for long-term appreciation.

"Experts view silver as a hedge against inflation because it has a tendency to increase in price during periods of economic uncertainty," DeMeritt added. "At the same time, silver has become a highly in-demand asset, yet the supply hasn't increased. This imbalance between supply and demand presents a unique investment opportunity."

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