In recent months, the price of silver has seen a significant increase, following an upward trend that has also impacted gold.
Historically, silver and gold have shown a close relationship in terms of their fluctuations in value. This correlation has its roots in several economic, geopolitical and market factors that influence both precious metals, driving their value to new heights.
Silver: a highly valued treasure that always shines in the world of investment
Silver, a chemical element with the symbol Ag, is a noble transition metal, known for its characteristic white shine and high electrical and thermal conductivity. Throughout history, humanity has valued silver for both its beauty and its useful properties.
Historically, silver has been used as currency and a medium of exchange. Also, its beauty and value make it a highly appreciated material in jewelry making. In industry it is used in the manufacture of electronic components, batteries, solar panels, catalysts and alloys. And without forgetting its applications in medicine, silver has antibacterial properties and is used in some medical treatments.
In addition to its industrial uses, silver is considered a safe asset and is used as an investment to protect wealth. Its price is influenced by economic and geopolitical factors and market supply and demand.
Yes, silver is a precious and versatile metal with a wide range of uses, from jewelry to technology. Its attractive and shining charm in its quotable deity, as well as its properties and historical value, make it a highly appreciated material worldwide.
At the close of Friday, an ounce of silver delivered in December reached $32.05, a value not seen since 2012. So far this year, this precious metal has registered an appreciation of 33.8%.
Silver Chart. We see how this year, 2024, its value has increased by more than 33%. Source: Yahoo Finance.
Factors behind the stratospheric increase in the price of Silver
In summary, we could summarize it like this:
One of the main drivers of the rise in the price of silver has been inflation. With production costs rising and the purchasing power of currencies weakening, investors have turned to precious metals to protect their capital. This dynamic has led silver to follow gold’s upward path.
Tensions in various parts of the world have contributed to an increase in demand for precious metals. Trade wars, regional conflicts and global political uncertainty have created distrust in stock markets and fiat currencies. Investors seek safety in tangible assets, which has increased the price of both silver and gold.
- Increase in industrial demand
In addition to its role as a safe haven, silver has a strong industrial component. It is used in the production of technology, electronics, solar energy and medical products, which has skyrocketed its demand in recent years. The growth of sectors such as renewable energies has increased the need for silver for the manufacture of solar panels and high-capacity batteries. This factor adds upward pressure on its price.
Despite high demand, the supply of silver has been insufficient to meet market needs. Silver mines have experienced difficulties, from logistical problems to reduced production in key countries. This shortage has contributed to the rise in prices, aligning with the increase in the value of gold.
Correlation between Silver and Gold: an ancient link
Gold and silver have always been linked as safe haven assets. During times of economic uncertainty, inflation or geopolitical tensions, investors seek refuge in these metals to protect their wealth. Since both are considered safe, their prices tend to move in the same direction, although with some differences in the magnitude of the movements.
The correlation between silver and gold is due to several reasons:
- Safe Haven Demand: In times of instability, both gold and silver experience an increase in demand as they are perceived as assets that preserve value.
- Inflation and monetary policy: Inflation drives investors towards precious metals. With low interest rates, such as the weak dollar, and expansionary monetary policies, silver has followed gold in its upward trend.
- Limited offer: Silver Mining, although more common than gold, remains limited. As demand grows for both industrial and investment use.
The future of Silver for investors
Precious metals market analysts expect silver to continue its upward trajectory, in part due to its high correlation with gold. However, volatility could also be higher compared to gold due to the duality of demand for silver: as a financial asset and as an industrial raw material.
If global inflation persists and geopolitical factors are not resolved, silver will remain an attractive asset for investors. Industrial demand could cause silver to even surpass gold in terms of percentage growth, suggesting that silver may have even greater appreciation potential.
Ultimately, the increase in the price of silver is closely linked to the performance of gold, and both precious metals continue to be preferred options to protect capital in times of uncertainty. Supply and demand dynamics, along with macroeconomic and geopolitical factors, have generated this rise in the value of silver. With growing industrial demand, silver is likely to remain a key asset in the coming years as global markets navigate a volatile environment.
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