On the heels of the historic January 2021 short squeeze involving GameStop, silver has been targeted by a new wave of social media investors. With a precious metal like silver such a far cry from the retail stocks commonly targeted by social media investors, why is silver now such a sought-out investment? Read on to learn more about the factors driving a newfound interest in silver and where it could be headed in the future.
Why Silver Is So Trendy
Amidst the COVID pandemic, silver had already begun receiving attention from a large audience, even before the #silversqueeze phenomenon triggered on Reddit.
Here are the top reasons driving its popularity:
- The Industrial Properties of Silver
Even before the spike in prices seen in early February, investors have been friendly to silver due to its industrial properties. While this interest in silver might not cause an immediate increase in value, it will likely show in the medium and long-term timeline. Silver has more potential to outperform gold as it is said its industrial demand will rise 9% from 2020, according to Reuters.
- Silver Is a Monetary Metal
At its core, silver is a monetary metal and has been used as money for thousands of years. Even when government fiat currencies devalue, silver and gold tend to hold their value as prices increase in dollar-terms.
- Silver Is Historically Undervalued
Finally, silver is still historically undervalued compared to gold. To understand why we must understand the silver-gold ratio.
The silver-gold ratio tells us how many ounces of silver it takes to buy 1 ounce of gold. In the modern era, the average has been between 40:1 and 50:1. Gold has always been more expensive than silver, but if the ratio fell below 1 this would no longer be true.
As it stands now, the silver-gold ratio tells us that silver is still undervalued. This means, theoretically, silver is on sale.
Silver Is a Potentially A Good Long-Term Investment
With industrial and monetary values driving the interest behind silver, it’s no wonder why so many are looking at it as a good long-term investment. If you’re interested in investing in silver, consider buying silver bullion and coins at a reputable precious metals refiner like Manhattan Gold & Silver. We sell our bullion at fair prices and offer many options to store investments safely.