Is Silver on the Path to Hitting $100 Per Ounce?

Silver, the versatile precious metal, has a rich history as a form of money that spans centuries. Besides being a key player in the trade, Silver serves many industrial uses, prominently in electronics and ornamental jewelry. As a result, the silver price trajectory has seen many ups and downs over time. As a savvy investor, the question that might be lingering in your mind is whether it could eventually hit the $100 per Ounce mark.

Fortunately, we are here to provide a comprehensive analysis.

The Concise Response

In summary, the reply is a strong "Absolutely!" With sufficient duration, silver prices will eventually exceed the $100 threshold.

How so?

This could occur due to hyperinflation, where the dollar's value decreases to a point where $100 aligns with the current price of Silver. Alternatively, a gradual price increase could also lead to this outcome, allowing the price to hit $100 in 20, 50, or even 100 years.

The Extended Response

For those seeking a more profound understanding beyond the apparent, a more fitting approach to this inquiry is to examine if Silver can hit the $100 mark within a plausible time frame given today's evolving economic conditions.

The response remains a firm "Yes," indeed it's feasible, but several provisos and dynamic elements demand our attention. To aptly address this query, we must consider a broad range of influences, including the present economic climate, Silver's supply and demand dynamics, and the accessibility of alternative investment options.

What Dictates the Cost of Silver?

Silver's pricing is a delicate interplay among numerous elements. The strain on any component of this equation can nudge the Silver's value upwards.

Market Forces

The primary catalyst for Silver's valuation is the rudimentary economic theory of supply and demand. As the appetite from investors swells, Silver's price tends to ascend. This also applies when supply shrinks due to industrial usage, regulatory strategies, and cautious investors.

Dollar Strength

The strength of the US dollar can significantly sway silver prices. Since Silver is benchmarked in US dollars, a strong dollar can amplify the cost of Silver in overseas markets, whereas a weak dollar can render it more economical.

A sturdy dollar creates hurdles for foreign purchasers to acquire Silver and vice versa. As the dollar's value oscillates, the price of Silver follows suit.

Other Investment Options

The presence of alternative asset classes can impact Silver's price. For example, when diverse investment choices are accessible, investors might prefer to allocate their capital elsewhere.

This holds particularly true when equity markets are flourishing and other assets, like bonds and real estate, promise superior returns. Conversely, during volatile stock markets or when other investments offer scanty returns, investors might consider Silver as a secure choice, pushing its price higher.

Investor Mood

The mood of investors is another significant factor in determining the price of Silver. If the perception is that precious metals are a lucrative investment, they might purchase more, creating a surge in demand.

Contrarily, if there is pessimism about the future of Silver, they might offload their holdings, causing the price to decrease. Furthermore, investor sentiment regarding other asset classes impacts whether they will resort to precious metals as a safe refuge or invest their money in riskier avenues.

For instance, if equity markets plummet, Silver becomes an attractive haven due to stock sell-offs.

Synthetic Silver

Before we proceed, let's dissect what synthetic Silver means.

Synthetic Silver is a phrase describing physical Silver metamorphosed into a financial asset. This encompasses derivatives like futures and options and traded products like ETFs and ETNs.

These offer ways to own Silver without needing to possess the metal physically. The core disparity between owning synthetic Silver and physical Silver is that the former doesn't grant the owner any rights to the physical Silver. This essential detail should always be at the forefront of your mind.

When you venture into synthetic Silver, things become somewhat complex. This is because several of these products are anchored by physical Silver but might possess less than 100% backing. Moreover, there's a lingering fear that large financial institutions that sell synthetic Silver engage in rehypothecation.

Rehypothecation transforms a silver asset into a financial instrument that can serve as loan collateral. This method has gained popularity due to the historically low-interest rates we've seen in recent years, facilitating investors to borrow money by offering Silver as collateral.

Rehypothecation empowers investors to heighten their silver exposure without physically receiving the metal. While this practice can be advantageous in certain circumstances, it has risks.

Hence, it's crucial to thoroughly research before investing in Silver and stick to physical Silver unless you can identify a dependable synthetic instrument.

The Silver Volume: What's the Count?

An asset's prevalence significantly impacts its supply and demand dynamics, and Silver is no exception. As a valuable metal with various uses, including industrial purposes and extensive application in craftsmanship and jewelry, its availability is paramount.

Specialists in the field estimate that about three billion ounces of Silver are currently in circulation. As for the silver deposits yet to be extracted, predictions vary widely. However, industry leaders estimate it to be more than 500,000 tons.

How Has Silver's Price Behaved Over Time?

Over the years, Silver has seen spectacular peaks and daunting troughs. In 1964, the price per Ounce of Silver was a mere $4.57, skyrocketing to $50.41 in 1980. From that time, despite occasional volatility, it has maintained a reasonably steady state over the previous decade. As of January 2021, Silver averaged $25.59 per Ounce.

So, how does Silver's price behave in response to the economy's status?

Interestingly, while Silver's behavior during economic downturns can be somewhat erratic, it's unquestionable that it serves as a secure asset.

For instance, during the significant economic downturn of 2008-2009, the silver price saw a substantial rise. This increase was driven by investors flocking to precious metals for security and a surge in industrial demand.

However, the price tends to oscillate during a recession. Its overall pattern is more complex than correlating it with whether the economy is flourishing or collapsing. Even amidst a bear market, Silver often experiences temporary surges that drive its price upward.

What is the Timeline for Silver Hitting the $100 per Ounce Mark?

Predicting the precise moment silver will crest the $100 mark is akin to gazing into a murky crystal ball; it's uncertain. However, using informed estimations, we can arm ourselves with the knowledge to scout potential market openings.

Silver's price will escalate if its supply dwindles and the US dollar continues its downward spiral against other currencies. So what signs should we look for that suggest these circumstances are taking shape?

Inflation's inherent currency devaluing effect has been more pronounced in 2022 than in past years. As a result, if inflation appears to spiral out of control, it could foreshadow a surge in Silver's value.

Switching from the Fed's interest rate hikes to money creation could also catalyze a silver bull market. As long as the fresh tide of low-interest dollars doesn't keep investors chained to the stock market, they might seek refuge in precious metals.

This latter situation is particularly plausible if interest rate reductions precipitate economic mishaps. By mishaps, we're hinting at the bursting of overblown bubbles, often when least expected.

When might these scenarios unfold?

Maintain a vigilant watch on the Fed's actions. Although interest rates are projected to keep rising, the Fed might decelerate the hikes or reverse course. As a result, fundamental shifts could surface in the coming months.

Also, keep tabs on sectors heavily reliant on Silver, like renewable energy, digital device manufacturing, and healthcare. An upsurge in demand from these sectors could drive Silver's price up.

Lastly, monitor geopolitical events with the keen-eyed scrutiny of a hawk tracking its prey. As China and Russia respectively hold the second and fifth places in global silver production, any escalated tensions between the West and BRICS countries could make Silver harder to find in the open market.

Is the Current Climate Favorable for a Silver Investment?

Determining if it's an opportune time to invest in Silver is subjective, largely dependent on your perspective. Nonetheless, it's worth mentioning that the present market value of Silver is relatively low, enticing investors seeking to diversify their investment pool.

Moreover, due to the prevailing economic situation, various aspects could trigger an uptick in Silver's price soon. These factors encompass rising industrial needs, geopolitical strife, and possibilities of currency depreciation.

If you prefer a cautious strategy, adopting a dollar-cost averaging technique is recommended. This process implies purchasing a consistent dollar amount of Silver at regular intervals, irrespective of the prevailing price.

Adopting such a strategy aids in normalizing the silver price over a more extended period, thereby mitigating the risk of making a substantial investment in one stroke and facing a significant loss. It also safeguards you from missing potential gains due to indecision. Using dollar-cost averaging, you can leverage the current market situation and ensure your investment is balanced.

Investors inclined towards risk might wait for the existing economic situations to unfold. Any indication of a shift by the Fed could instigate a brief bull market in stocks. This shift could divert attention from precious metals, possibly leading to a further dip in silver prices.

However, for those who lean towards risk aversion, avoiding attempting to predict an asset's absolute lowest point is advisable. The endeavor to pinpoint the rock-bottom price of an asset is often a far cry from an exact science.

Unraveling the Perspectives of Precious Metals Specialists

Analysts in the realm of precious metals remain divided over the immediate future of Silver. Some contend there's still ample space to drop, while others think Silver has hit its lowest and anticipate an upward trend.

Enthusiasts of Silver continuously extol the virtues of this luminous metal's potential. Hence it's crucial to view such optimistic chatter from your perspective. Moreover, to get a well-rounded analysis, it's advisable to juxtapose the perspectives of silver experts with those advocating for fiat and cryptocurrencies.

Final Verdict

Over time, it's almost guaranteed that Silver will hit the $100 an ounce mark, yet pinpointing that moment remains challenging. This is because we're navigating a transformative period in the economy, shifting from extensive quantitative easing to a more restrained fiscal policy.

The compelling fundamentals of Silver and its scarce supply illustrate a promising horizon for investors. However, these dynamics also endow Silver with the possibility of a dramatic surge, especially in a global financial catastrophe. Given the existing geopolitical and economic landscapes, dismissing such a circumstance would be imprudent.