(INTELLIHUB) — If the world economy takes a tumble, what is the best precious metal to invest in? There are many factors to consider: supply, demand, price, usage variation, historic highs and mining trends.
Many indicators point towards silver as being one of the wisest precious metal investments of all. Did you know that silver, unlike gold is often a mining byproduct versus a target extract? That’s right. 35% of the silver which makes its way to the market today is extracted during mining operations for non-precious metals.
Mexico and Peru, two of the world’s largest silver export countries, are responsible for contributing to 36-40% of the world’s silver production, and over the past to years, they have scaled down in their mining operations, possibly in part due to a slowdown of the Chinese economy.
When electronics production increases, the demand for silver increases. Two huge drivers for silver demand are consumer electronics and solar panels. So even if China’s consumer electronic production decreases during a global slowdown, solar panel utilization — spurred by the green movement can serve to keep the demand for silver high.
According to the MotleyFool:
“….silver is a core ingredient in the manufacture of photovoltaic cells, which are used in solar panels because of its conductive properties.
In fact, it takes about eight million ounces of silver to construct enough photovoltaic cells to generate one gigawatt of electricity.
With over 40% of electricity globally produced by coal-fired power plants alone, a substantial amount of silver will be required.
This means that, along with already ambitious solar energy targets established by countries such as China, Brazil, the U.S., India and Canada, the demand for silver can only grow substantially. China alone intends to boost its installed solar electricity capacity by 200 gigawatts by 2020, which is six times higher than its current solar capacity.”
Now while gold and platinum hold a distinct advantage over silver for maintaining a higher price per gram, if one looks at silver’s historic high compared to gold, it has more room to move. The “psychological ceiling” for silver is more than three times its current value.
Back in January 1980 silver hit $49.45, and it took nearly three decades to get close to that historic high again. In April of 2011, it popped to over $48. But that $49 in 1980 is not comparable because inflation is not taken into account. The inflation calculator at Savings.org indicates that $49.45 in 1980 was equal to $143.31 in 2011, and $152.49 in 2016. That means without calculating any other variations that at least one of the ceilings indicates that silver could increase in value by at least 900% over today’s price.
In August of 2011, gold popped above $1900, which means that it is presently valued at more than 50% of it’s historic high. Another factor to consider is that there is a much larger commercial demand for silver than gold, and gold-only mining operations are still viable since they turn a profit.
Now there are numerous other factors to consider which will either positively or negatively impact the value of both gold and silver in the long run. But here is a final point which may help you decide before your next investment. As long as certain global powers and countries push for “green energy” and “carbon reduction,” carbon fuel usage will decrease, and the push for clean energy – such as solar panels will increase.
Whether one is a global warming proponent or not, the success of the global warming and carbon reduction agenda will inevitably effect the value of silver. As long as the demand for solar panels and photovoltaic cells increases, so will the demand for silver.
About the Author:
The author of this article, who prefers to use the nom de plume “XKeyscore” in order to maintain his anonymity, is a Doctoral Candidate and multiglot with two Master’s Degrees and a Baccalaureate specializing in Middle Eastern Studies. He holds one Master’s Degree specializing in Intelligence and Counter-intelligence operations, and a second Master’s Degree in Security Studies. XKeyscore has studied under a United States intelligence agency analyst and now-retired, high ranking, American military officers. XKeyscore writes exclusively for Intellihub News & Politics. Read more articles by this author here.
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