Silver is a precious metal that is highly traded by investors. Historically, the metal has been used as a medium of exchange and a store of value. While the metal is less popular in comparison to gold, traders often turn to it due to its intrinsic value to diversify their portfolios. The metal can also be a potential hedge in times of high inflation.
Last week, the price of silver dropped to $30.06 and showed signs of recovery soon after, hinting at an increase that could see the metal’s price potentially reach the $32.00 mark. The metal’s highest price is $32.33 an ounce, set earlier in May this year.
This comes as one survey determined that silver spot prices performed better than gold thus far this year. The data showed that silver’s spot prices rose by nearly 40% in the first six months of this year, driven mainly by an increase in global demand for silver and U.S. expectations of interest rate cuts.
First Majestic Silver CEO, Keith Neumeyer, believes that the metal’s price may go even higher, even reaching the $100 mark. Neumeyer has voiced this opinion for a couple of years now, explaining that silver’s undervaluing, consistent deficit and industrial demand will drive the increase in price.
The recent bounce back has sparked investor interest, as some work to exploit the volatility in the metal’s market. Despite this, the Fed’s policy decisions still have great influence over future movements in price, especially when it comes to rates of inflation.
High inflation may increase the price of silver while devaluing the dollar. While the current $32 high may seem attractive to investors, active management of one’s portfolio and added vigilance are advised as precautionary measures. Investors are also advised to keep in mind that the metal’s market can be influenced by external factors, such as a range of macroeconomic factors and geopolitical tensions. To temper this, investors are urged to maintain a diverse portfolio to help soften the impact of any uncertainties that may arise.
Additionally, investors are directed to focus on their long-term investment strategies and avoid impulsive decisions based on sudden fluctuations. Investors can buy physical silver in bullion or in coins, or trade it via vehicles such as ETFs. Silver stocks, such as Hecla Mining Company (NYSE: HL) and other major producers, and futures contracts are other ways to invest in silver. It should be noted that investing in the financial market always carries risks. This makes the need for professional advice as well as due diligence on the investor’s part important.
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