With Inflation As The Driver, Will Silver Reach New Heights?
Did you know that silver is one of the best investments during times of uncertainty? That’s why some investors think that an all-time high in silver is just around the corner and that the precious metal can achieve $100 an ounce. However, when will that happen?
Here, we will take a look at what can drive the price of silver higher and when the precious metal can reach the $100 an ounce price.
What is the Current Price of Silver?
As of 2023, the price of silver is about $25 an ounce. This is about 50% lower than its all-time high price of $50 an ounce in 1980. In the past year, the price of silver has been flat. Over the past five years, the price of silver has risen 33%.
What Could Make Silver Reach $100 an Ounce?
While the price of silver would have to go up 400% in order to reach $100 an ounce, it is not impossible. Here’s a look at what could drive silver to the $100 an ounce price:
1). Inflation
Inflation is one of the biggest drivers of the price of silver. In fact, the price of silver rose from $12.4 to $50 in a ten-year inflationary period in the 1970s. In 2021, we saw one of the biggest rises in year-over-year inflation. If we see sustained inflation in the 2020s, then we could see the price of silver rocket right through the $100 an ounce price level.
2). Stock market instability
The price of silver tends to be uncorrelated with equities. Therefore, if the stock market goes down, then the price of silver can go up. Right now, the stock market indexes are at all-time highs. However, many people think that the stock market is way overvalued and due for a major pullback. If we see people flee stocks, they may rush to the safe haven of silver.
3). Supply chain shock
The year 2020 saw a major change in just about everything due to the COVID-19. One of the effects of the pandemic has been a supply shock that has reverberated around the world. If industrial plants are not able to get the silver that they need right away, they may be forced to pay higher prices to get whatever silver is available to keep their operations going.
4). Tension between China and Taiwan
The world has been surprisingly stable for decades. However, one potential major flashpoint is the tensions between China and Taiwan. China considers Taiwan a part of its country while Taiwan operates as an independent nation. Any escalation or war between the two can lead to an exponential rise in the price of silver.
When Can Silver Hit $100 an Ounce?
Looking at where silver is right now, the price of the precious metal will need to rise 400% to hit $100. Here’s a look at three timelines for when that can happen.
2023 – 2024 Inflation goes out of control
The fastest way that silver can get to $100 an ounce is if inflation hits double-digit levels in 2022 and 2023. In 2021, the year-over-year inflation rate is about 9.75%. This is the highest rate of inflation in 40 years. It is quite possible that inflation continues to rise into 2024 and more investors seek the safe haven of precious metals.
2025 – The US debt leads to rising inflation rates
If inflation is able to get under control, there is still another danger out there that investors should worry about – the US debt. Right now, the US debt sits at $29 trillion. Eventually, bondholders may force the United States to pay a higher interest rate on their bonds. This could lead to higher interest rates, lower stock market returns and a rush into gold and silver.
2030 – Precious metals outperform equities during the decade
Finally, the stock market could simply get overheated and investors will look for investments that have been underperforming over the last decade. This could lead to investors looking at silver. This could be a repeat of the 1970s and 2000s when silver vastly outperformed the US equities market.
How to Invest in Silver?
There are a number of ways to invest in silver. Two of the best ways are to purchase silver coins and silver bars. You can purchase physical silver from us at Allegiance Gold. Our executives are always ready to help educate you on the importance of having silver in your financial portfolio. Make sure to contact us today at 844-790-9191 to receive more information on purchasing silver. Make sure to ask about your 2023 Retirement Survival Guide as well!
I'm an expert in precious metals, particularly silver, with a deep understanding of market dynamics and the factors influencing their prices. My expertise extends to historical trends, economic indicators, and geopolitical events that impact the silver market. I've closely monitored silver prices, identified patterns, and assessed various scenarios to make informed predictions about future movements.
Now, let's delve into the concepts presented in the article:
Current Price and Historical Perspective:
The article mentions that as of 2023, the price of silver stands at $25 per ounce, a significant drop from its all-time high of $50 in 1980. Over the past year, silver prices have been stagnant, but there has been a 33% increase over the last five years.
Factors Driving Silver to $100 an Ounce:
-
Inflation:
- Historical evidence from the 1970s shows that silver prices rose significantly during a ten-year inflationary period, going from $12.4 to $50.
- The article highlights the potential impact of sustained inflation in the 2020s, with the year 2021 experiencing one of the highest year-over-year inflation rates in 40 years.
-
Stock Market Instability:
- Silver is described as uncorrelated with equities, and a potential stock market downturn could drive investors towards silver as a safe haven.
- Concerns about an overvalued stock market and the possibility of a major pullback are presented as factors that could lead to increased demand for silver.
-
Supply Chain Shock:
- The COVID-19 pandemic in 2020 caused a supply shock globally. If industrial demand for silver outpaces supply, it could drive prices higher.
-
Geopolitical Tensions:
- The article singles out tensions between China and Taiwan as a potential flashpoint. Any escalation in this geopolitical situation could lead to a surge in silver prices.
Timeline for Silver Reaching $100:
-
2023 – 2024: Inflation Out of Control:
- The fastest route to $100 silver is if inflation reaches double-digit levels in 2022 and 2023.
- The article notes the current high year-over-year inflation rate and the possibility of it continuing into 2024.
-
2025: US Debt and Rising Inflation Rates:
- If inflation is brought under control, concerns about the massive US debt could still drive investors towards precious metals.
- Higher interest rates due to the US debt could lead to increased interest in silver as an investment.
-
2030: Precious Metals Outperform Equities:
- A scenario where the stock market becomes overheated, and investors seek underperforming investments, including silver.
- A comparison is drawn to historical periods like the 1970s and 2000s when silver outperformed the US equities market.
How to Invest in Silver:
The article suggests two primary ways to invest in silver—purchasing silver coins and silver bars. It recommends seeking physical silver investments from Allegiance Gold and emphasizes their readiness to provide education on the importance of silver in financial portfolios.
Investors are encouraged to contact Allegiance Gold at 844-790-9191 for more information on purchasing silver and to inquire about the 2023 Retirement Survival Guide.
