Precious metals such as silver and gold have traditionally seen a spike in demand during economic downturns. Their ability to maintain their value during periods of political and economic uncertainty makes them extremely attractive to investors who are looking to preserve the value of their assets and investments.
However, a surging dollar coupled with consecutive interest rate hikes by the U.S. Fed kept silver prices in check for a significant portion of the year and eroded some of its appeal as a safe haven asset.
Even so, there are signs that silver may rally in 2023 and even achieve the nearly decade-high levels it reached in early 2021. Spot silver prices have gone up by 20% over the past three months, and they may go up even higher over the course of 2023 due to a variety of factors.
For starters, looser monetary policies and quantitative easing by the Fed may increase the appeal of silver as a tool for portfolio diversification. With new research from Oxford Economics indicating that investors can boost their portfolio by allocating 4% to 6% of it to silver, we may see more retail and institutional investors increase their silver holdings.
Investors could also benefit from going long on silver as the metal is poised to play a significant role in the proposed green economy. Silver will be one of the many metals that will be instrumental in building infrastructure to support a green economy, such as electric cars, renewable energy production and stationary power storage.
Given that the metal is essential in the production of both solar panels and electric vehicles, investors could see the value of their silver holdings increase over the long-term as the demand for silver increases. Governments and automakers are already investing billions of dollars into the development of EVs, public charging infrastructure and stationary power storage.
On top of that, silver also plays a major role in several industries and is a crucial ingredient in a wide variety of electronic products. According to the Silver Institute, the demand for silver for electronic products is poised to increase by 54% from 48 million ounces in 2021 to 74 million ounces in 2030. The institute also noted that demand from the Indian market has boosted silver prices, with Bloomberg predicting that silver demand in the country will increase by around 80% by the end of the year.
Record-low silver inventories at the London Bullion Market Association and New York Comex exchange, coupled with a tight silver physical market, have also pushed up demand and increased prices. All these conditions suggest that extraction companies such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are likely to benefit from the upturn in the market as demand rises.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
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