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Precious metals are considered a haven in the volatile markets, and some investors are optimistic about such metal trends, expecting the white metal to gain significantly once it gains momentum.
The global economy is progressing after the 2018 setback, where the US economy expanded 3.2 per cent in Q1, and the year 2019 had one of the best starts since 2015, where, especially, gold remained volatile and stronger.
The precious metal was marginally low compared to the 5-year average, where the yellow metal lost 3.7 per cent in 12 months, and silver dropped 10.2 per cent. The gains in the last part 2018 extended to Q1 2019, where gold gained over 10 per cent, and silver gained 3 per cent.
Even though the white metal is precious and rare, it underperformed due to poor weak supply and demand fundaments, where it is considered a popular hedge against fluctuations.
Its strongest point is the huge value of the metal outside the investment zone. About 55 to 60 per cent of the metal goes into industrial processes, and 25 per cent is spent on jewellery, utensils, and silverware. Only 15 to 20 per cent is invested in coins and bars.
The demand for industrial processes and jewellery applications remained low, and investors did not seek silver during the secure market uptrend. The metal hit its peak of $50 an ounce in 2011, and it took nearly five years to reach $13.
The current value is $14.89 an ounce, which is almost one of the multiyear lows, where the geopolitical factors are not supporting the price.
Silver may not look appreciable at the current levels, but some investors find the current prices attractive. The metal is almost 4 per cent down from the end of 2018, while, in the past, it lost up to 9 per cent.
Some investors expect it to perform better than the yellow metal. There exists a lack of retail investment in the white metal, while its physical demand grew 4 per cent in 2019 to 3 a high of 1.03 billion ounces (the Silver Institute’s World Silver Survey).
The survey report by Refinitiv finds the metal faces a minor deficit of 29.2 million ounces in the last year, and the IMF expects the global economic expansion to be at 3.3 per cent in 2019, where silver does not constitute the end product.
It does not form the larger part of electronics, cars, or medicines; hence, an economic slowdown will not affect the metal per unit, and the solar equipment that uses it is mostly protected from economic growth, and the government policies and subsidies drive the solar PV investments.
The key driver for such investment is ROI, where the World Silver Survey finds the investment in bars and coins constituted 20 per cent of the total in 2018, while the demand for bars increased by 53 per cent, and the production fell by 2 per cent in the last year.
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