Diversify your investment portfolio

There is a lot of speculation about the shortage of physical silver these days. Moreover, silver’s future price is becoming too volatile. On top of that, the price of silver is trying to take revenge vs. gold. Let’s see how the difference between gold spot prices and silver spot prices are changing. It almost has doubled to ratio 65.8 from 123.4 since in March 2020, when silver’s price dropped to 12 USD/oz. This week the spot silver prices has reached 27 USD/oz. (in 2019, the average price of silver was 16.2 USD per ounce).  Is there a room for further growth in silver? No doubt, the question only is when. Believe it or not, in 1980 silver reached ~49.5 USD per ounce.

In May 2020, some Russian analysts predicted that by the end 2020 the ratio Gold/Silver could stabilize at 100x, but the truth is, that the ratio should be less, and thus a history illustrates that even at the ratio 80x, silver is inexpensive relative to gold, so after 80x silver went on to rally 40%, 300%, and more!

Considering that most silver producers are polymetallic companies, and a share of silver in revenue in most cases between 9 and 40%. The key reason is that it is a by-product of mining other metals such as copper and gold. The shortage of silver in the nearest future is rather obvious.

As a precious metal, silver is often used in the industry for currency as coins, jewellery, and silverware. It has the highest electrical and thermal conductivity of any metal, which makes it extremely demanding for industrial applications, such as electrical contacts and conductors and as a catalyst in the chemical industry. Nowadays, silver is crucial for solar panels and necessary for producing mobile phones.

So, how can you diversify your investment portfolio with silver?

• to buy the physical metal itself in coins or bars (coins might be very tricky if you are not pro in antiques or billionaire - collector);
• buy some shares of silver mining companies, considering their financial statement including debts, corporate governance culture and political risks in countries where company operates;
• Equity ETFs that include silver mining companies (SIL, SLVP, SILJ);
• Physically backed ETFs, such as SIVR or SLV. However, before making any investments, please find some time to read prospectus of the funds.

NB: This article does not constitute any recommendation to buy or sell any security. This is only an opinion, and I am not a registered investment advisor. Making investments you should consider all kinds of risks and be responsible for your decisions.