There is a famous Quote “Every Cloud has a Silver Lining”. Well this does remind us of one such problem we are facing today and that is Recession 2020 owing to the corona pandemic (read this). What if we tell you that this cloud as in crisis has also one such opportunity.
As discussed on our YouTube video (click here to checkout) about identifying market trends and utilising it to profit from opportunities arising out of Recession 2020, today we will discuss one such investment opportunity out of that initiative.
The opportunity we are discussing here is Silver!
Yes you read that right its thats simple, this commodity is not only the one with good fundamentals infact ace investor like Warren Buffet has over $ 1 billion invested in this commodity. He only invests when he has enough reasons to do it owing to his great investment rule “Never lose Money”.
Today we will give you reasons to invest in Silver. Here goes the list:
1. Debt on countries owing to stimulus packages
The U.S is $26.5 trillion in debt (source) and this debt is only increasing day by day with India’s debt $564 Billion (source) before the start of this year. With this, almost whole world is printing currencies day in and out to get out of current financial crisis, owing to series of lockdowns and quick recovery out of it. This debt would definitely result into increased inflation which may also result into hyperinflation if not taken care of properly.In that case gold, stocks & definitely Silver may come to your aid.
2. Precious metals retain their value over time
Money has lost nearly 98% of its purchasing power over the years which means we can only buy 2% of the stuff we were able to and this will get worse in the future. So, if you have your money in savings accounts, what you can buy today you won’t be able to buy tomorrow & that’s why its better to convert part of our wealth into precious metals as it’s will act as a time capsule to preserve our money as it deflates.
3. Ancient monetary uses
Silver has been considered valuable since more than 6,000 years. History suggests, it was used by the Egyptians for its water purifying properties. It’s the longest tradable commodity that’s been used in monetary form since the beginning of mankind.
Silver is an undervalued asset when compared to gold. The gold and silver price ratio is around 85:1 however, its mining ratio is merely 8:1 and historically this ratio has maintained around 40:1. This means either Silver price has to appreciate or gold prices need to depreciate. This means that this metal has a lot of potential.
5. Demand of Silver
Silver has high electrical & thermal conductivity. Its properties are compatible with electronic circuits like no other metal especially at such a cheap price it is.This gives silver a big heads up over other metals. With advancement in technologies the demand of silver is only rising and supply going down with exhausting mines. This basic economics basically shows that the gap between gold and silver prices will cover upto normal extent soon.
6. Recycle feasibility and consumption
A lot of silver is consumer in form of electronics, weapons, etc. as its recovery cost is way beyond its current market price. In case of gold, people in general tend to melt down their jewelleries, bars and coins. When it comes to silver, it’s not as profitable to scrap it out of cell phones & other stuff. Even though mining ratio is 8:1, a lot of silver isn’t recovered at the rate the gold is. So this overall ratio actually becomes lesser when it comes to uses.
7. A potential currency
Silver has been used as currency since ancient times & was used as a means to trade and barter in uncertain times. Silver has always been seen as money and if a situation arises, silver would be the new form of trade as it retains its value. Our own fiat currency is just piece of paper. Gold and silver have real value which would re-attain its monetary form if something tragic happens in the economy.
8. The perfect hedge
Gold and silver investing being tangible is considered a perfect hedge against stock market or economy collapse. Silver being much cheaper than gold makes it easily accessible to all classes and a good potential investment.
9.Best way of wealth transfer
Since ancient times, we Indians have always believed in culture of gold and silver. Not only we use them as religious symbols but also consider them an important form of wealth to transfer (marriages, inheritence etc.).Considering these precious metals retain their value over time and beats inflation, this is the best form of weath transfer inherent in our culture.
10. The whole world is going digital
Nowadays, almost every other investment is digital. There’s also boom in cryptocurrency market, stocks etc.Since markets, futures contracts, ETFs are all digital. At the end of the day it all boils down to data connecting assets to each individual.
Now Imagine compromising of this data owing to a big catastrophe. Humans created the whole digital platform can so can destroy or negatively use it as well. In such a case most of our wealth will be at stake apart from tangible assets like real estate(read here for investing), precious metals etc. Though such chances are rare but we must definitely protect ourselves against such scenario.
Check out our interactive video(in hindi) below to improve your perspective about such precious metals:
If you like this article please like, share, and comment down below & let us know if you like any of the reasons stated.