Is Silver a Good Investment for 2022?

There has been a growing demand for physical silver; it looks like the stage is set for silver to go through another rally.

Silver is often ignored or overlooked in favour of its cousin gold but last year the price of silver jumped by over 70% drawing interest from investors looking for a more solid and safe asset to put their money in. Some analysts believe that the price of silver is more likely to continue going up as long as the economy struggles to recover.

What silver trends can investors look forward to:

First things first, as a new investor you need to be aware that silver is very turbulent. Its price fluctuates more often than gold. Some jokingly refer to silver as gold with a “little rocket attached” or “gold on steroids”. When it rallies it does so faster and higher than gold.  The reason why silver is more volatile than gold is that its market is smaller. Buyers often struggle to find sellers willing to sell silver at a set price.

You also need to be aware of the demand for silver for industrial use. This also tends to fluctuate forcing the price to bounce up and down.

To get a sense of the price trend in the face of volatility we can look at the dynamics of silver from 2020 to 2021:

The period spanning from Mid-March 2020 to Mid-August, the price of silver shot up by 142.8%. The metal started the year at $27.27 an ounce before reaching $30 and then falling to $24 shortly thereafter. The rally was expected to continue as the world kept worrying about the Covid-19 mutating and the overall impact of the pandemic on the service industry. This has sustained the demand for silver at high levels.

What does 2022 hold for silver?

There are three possible scenarios:

  • Silver can reach and maintain a base of $33
  • On average, the price of gold can go up to $40
  • The bearish case has silver dropping to $25

The bottom line is that even with the base scenario the silver price can potentially surpass $30 an ounce. So, you might want to wait before you sell silver and watch where the price will rally to.

Because of the volatility of silver, the precious metal can surprise you with fast and big gains. 2020-2021 was an unusual time for a lot of sectors, silver became more attractive specifically to investors who like high-risk investments. The current price movements we’ve seen with silver are based on a couple of key drivers:

For instance, China has been planning a giant 400-gigawatt wind and a solar energy project which could change the global renewable energy map.

Silver has a lot of properties that make it a unique material to use in industrial applications. Silver is an excellent electrical and thermal conductor which makes it an important component in technological uses. Silver is also very reflective and because of that, it is used in high-tech scientific equipment like solar panels, telescopes, and microscopes. This is why it has such a major role in the manufacture of photovoltaic cells for solar energy, electric vehicles, mobiles phones even nuclear reactors.

Silver has been touted as the metal for the future because of how it enables clean energy conversion, storage, and consumption. The shift of the automobile manufacturing industry from petrol-powered cars to electric cars means that silver will increasingly be used in the automotive sector. According to the World Silver Institute, the increase of silver usage in the automotive sector will increase by 89 million in the next three years. This growing demand ensures that the price of silver will continue to grow.