If you study the price charts for silver over a longer period of time, you will see that this precious metal is rightly considered a “safe haven” where assets can be reliably protected against inflation. Investors who have owned silver in recent decades have repeatedly had the opportunity to not only maintain the value of their money, but to increase it as well.
At the same time, silver is considered a “moody” metal: Those who buy “white gold” should be aware that this precious metal is subject to the ups and downs of market prices as well. This is because the value of silver is based on investor sentiment, the price of oil and gold, the development of inflation and industrial demand.
Those who buy silver think long-term
However, those buyers who view precious metals as a hedge against inflation are not scared off by this – quite the contrary: While only 7% of global silver production went to investment products in 2004, this figure reached 20% in 2014.
Clearly, many people recognise that silver – for reasons that are not always rational – is still undervalued, although, unlike gold, it has significance for the real economy and recoverable reserves will only last another 20–25 years. It is not without reason that in German a company’s core values are referred to as its “silverware”.
Milestones in the price development of silver since the 20th century
The close relationship of the price of silver with economic development can be seen in the period when it reached its lowest price, during the global economic crisis in 1923, when it was worth an inflation-adjusted USD 4.40. However, the price then rose: With the Silver Purchase Act, the US undertook to buy silver at a fixed price from that point on. There was major turbulence in the 1970s, when silver became an object of speculation and had increased by more than 400% with the space of a year. It reached its high point in January 1980 at nearly USD 50 – and then quickly plummeted by about 90%. The price of silver reached its next high in a period of inflation fears and the euro crisis in 2011, when it rose to USD 49.83. In the uncertain political climate the following year, with the ever-present fear of a global recession, the price of silver fell and has since ranged from USD 15 to USD 30.
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