Silver prices are tethered to gold’s performance in the current market environment, but looking at its three-year chart, the precious metal is actually keeping pace with the S&P 500.
The apex of the pandemic’s negative effects on the markets in 2020 saw silver prices skyrocket close to 90% before coming back down to earth in 2021. Meanwhile, the S&P 500 has made its V-shaped recovery and extended well beyond that en route to its almost 60% gain.
However, inflation has been a continuous topic of discussion in the capital markets, which is causing investors to fret over economic growth or lack thereof. Talks of stagflation are now circulating, which relates to an economic landscape marked by high interest rates and low economic growth.
This could make the perfect backdrop for safe haven assets like silver. Moreover, should silver prices bounce back, it can provide an ideal hedge against inflationary pressures.
“If we have a weak economy coupled with a drive towards needing and using more silver, you’re going to have base metal mines shutting down that produce silver as by-product, just as an enormous demand for silver comes to the fore,” said James Anderson, CEO and chairman of Guanajuato Silver Company. “In that environment, you could easily see silver go to the $40 price range. But it is more likely we will see silver at $30 before it hits $40. I can see it hitting $40 halfway through next year.”
Getting Hassle-Free Silver Exposure
Looking to load the boat on silver, but don’t want the hassle of storing the precious metal for safe keeping? This is where the Sprott Physical Silver Trust (PSLV) can help.
PSLV is a closed-end trust that holds unencumbered, fully-allocated London Good Delivery bars of silver bullion, stored in the custody of the Royal Canadian Mint. Shareholders also have the ability to redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions), and such redemptions do not dilute the trust’s exposure for remaining shareholders. The trust intends to invest primarily in long-term holdings of unencumbered, fully allocated, physical silver bullion and will not speculate with regards to short-term changes in silver prices.
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