HomeMarketsIs Silver a Viable Store of Value?

Is Silver a Viable Store of Value?

Investors and speculators are always looking for a proper store of value. Precious metals seem to fit that bill rather well. Whereas most people tend to focus on gold, one cannot overlook silver as an option either. 

Silver Remains the Little Brother

In the speculative precious metals industry, the demand for gold and silver are different from one another. Gold is kept in much higher regard than silver, even though both can serve the same purpose. 

When looking for a store of value, it is important to diversify one’s holdings. That applies to precious metals as well. 

Silver is well-known for being an investment vehicle. It has been well-suited for coinage, jewelry, and other applications. In all of these regards, silver outshines gold, yet its value has remained much lower. As such, it is, and will probably remain, gold’s little brother.

The Decline of Silver Reserves

Over the decades, the appeal of silver as  a store of value has changed a bit. Tens of years ago, silver was the “reserve currency” for financial institutions, rather than gold. The little brother of gold bullion was considered to be the go-to store of wealth at the time. 

A little known fact is how the United States led the charge in this department. They even introduced the silver standard. During those periods, all physical currency was backed by the silver reserves owned by the central bank. Later on, silver lost its position of power to gold.

Appealing to Investors

As gold now becomes more appealing to investors, one would expect interest in silver to taper off. It is true that this form of bullion is no longer as prominent as it was fifty or so years ago. That said, most investors still own silver as part of their portfolio. It is all part of the diversification game. It seems plausible that there will always be a demand for silver, in one way or another. 

Another factor at play is how investing in this precious metal requires less money. To hold any notable position in the gold market, one needs plenty of capital and be willing to lose it if push comes to shove. With silver, that situation is very different. 

It is a smaller market, which lowers the barriers to entry for investors. The downside is how it could be subjected to manipulation as well. The world’s wealthiest individuals could trigger a shockwave effect in the silver market on their own, should they ever decide to do so. 

Store of Value vs Fluctuations

All financial markets are subject to price changes on a daily, if not hourly basis. Precious metals are no exception in this regard. The price is silver is often considered to be a risk in terms of long-term wealth storage. 

At the same time, one could argue gold and other metals carry very similar risks. That comparison is only partially fair, as the position of these individual markets is very different from one another.

Those who explore precious metals as a store of value need to do so with the right mindset. The longer an investment period lastss, the bigger the chance to experience a loss of value. How big that potential loss could end up being, is impossible to predict. Financial markets will go through bearish and bullish cycles every year. Those factors need to be taken into account at all times. 

JP Buntinx
JP Buntinx
JP Buntinx is passionate about cryptocurrencies, fintech, blockchain, and finance. He currently resides in Belgium.


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