Silver is seen as a good investment now and beyond. This precious metal is known for its volatility and this characteristic has been on display since 2019. What does the silver market look like in 2022?
In 2021, the price of silver fell by more than 10%. There are many reasons why this happened. However, the price rebounded and the silver market looks more bullish in 2022.
- A resurgence in the demand for silver by retail investors
- Various production delays in various mints across the globe
- The growth of the solar energy industry
- The growth of clean energy power generation
- The demand from Chinese industries that use silver
- The global silver mining deficit
Silver tends to play catch up especially with gold when it is in a bull market. The gold-silver ratio has risen to 80/1 and this is expected to improve in silver’s favour this year and beyond.
In addition to the usual price drivers for silver, the Gamestop Reddit #SilverSqueeze meme created a buzz in the silver market. The price rose higher because of this phenomenon and more people started to buy silver bullion at a frenzied rate that if a large group of traders could coordinate a short squeeze against certain hedge funds this would push the price of whatever was being traded up. This seemed to work at first but shortly after the buzz was created everyone started to see the gambit for what it was and the silver market returned to where it would normally have been.
Despite failing in its initial plan to send the price of silver straight to the moon, this hashtag Gamestop flurry got more eyes on silver as an investment asset. The rise in awareness met that a lot more people started to look for ways to buy silver bullion now more than ever.
Is Silver undervalued?
A lot of analysts and economists believe that silver is a very undervalued precious metal. Even as it hit new highs, the precious metal seemingly continues to be undervalued. Considering the fact that many applications and industries that use silver have been growing means that the price of silver should have increased much more. Strangely, in 2021 the price of silver went down despite the rise in industrial uses.
The strengthening of the U.S dollar, as well as the stock market, has also had an impact on the silver price. This will continue to be the case for the rest of 2022. In 2021 silver reached highs above $29/oz. and fell back to $20/ounce. Analysts predict that the silver price might even peak at $30/oz. before the year is out.
To forecast the price of silver different investors and financial analysts use different methods to conduct their forecasts. Some get it right; some just go well off the tracks. There is a common thread that links all the theories. Silver is available in finite amounts and the amount of silver from the mines is already dwindling. So, the reduction in supply will affect the price going forward. The demand is sure to rise when the rise in the use of solar panels grows and more people switch to electric vehicles. These are irrefutable facts, one can optimistically say that over the next decade, the price of silver can reach $50 and even go beyond it.
