Most people have a good idea of what inflation can do when it comes to common purchases like gas and food. Inflation can also have an impact on your precious metals investments, but not necessarily in the same way. To understand what drives the price of silver in a variety of forms, including silver bullion, San Diego silver investors should keep reading to learn what tends to happen with silver when inflation goes up.
What Inflation Is
Inflation is a decrease in purchase power. This means it takes more money to buy things you need or want because the prices for those things are higher than what’s typical. In the world of precious metals investments, higher inflation rates often contribute to:
• Increased demand
• Higher prices due to the increase in demand
• Hesitancy among newer investors to buy
• The possibility of making a decent profit if you’re selling
How Silver Performs when Inflation Spikes
Precious metals, in general, have a long history of performing well during times of economic uncertainty and high inflation. This is especially true with gold and silver. Silver, in particular, is often sought by investors looking to add some stability to their portfolios when inflation is contributing to economic concerns.
A good example is what happened in the 1970s, the last time there was a sustained period of high inflation in the United States. In the early 1970s, silver was trading at just under $1.30 per ounce. However, as inflation spiked throughout the decade, silver prices rose rapidly. By 1980, silver was trading at $50 per ounce. It even performed better than gold over the same general period.
Why Silver Is Worth Buying when Inflation Is High
As with any other precious metal, there’s a limited supply of silver. When inflation is higher, the increased interest in silver means there’s not enough of it to meet demand. This can make it difficult to find the type of silver you prefer to invest in if you don’t act as soon as possible. Plus, if you purchase silver now and hang on to it, you can be reasonably confident there will continue to be some value attached to it.
Silver also has a wide range of industrial uses that further help it retain its value. According to Monex.com, silver is trading at $21.69 an ounce as of June 2022. Granted, this isn’t at the 1980 high of $50, but it’s still a noteworthy gain.
Investing in Silver when Inflation Goes Up
Fortunately, there are many ways to invest in silver today. With physical silver, popular options include bars and coins. You can also purchase exchange traded funds (ETFs) or stocks issued by companies that mine silver. Another option is what’s referred to as “junk silver,” which is basically anything you can find that contains some silver.
We mentioned some newer investors may be hesitant to invest in silver when prices are higher due to inflation. However, it’s possible to invest wisely and still benefit from the added financial security this particular precious metal offers. If you have concerns about silver as an investment, talk to a precious metals expert or a financial advisor familiar with silver prices and trends.
Whether they’re looking for expert advice on silver prices or they want to buy gold, San Diego collectors should work with trustworthy precious metal dealers who offer high-quality service and have years of experience. Call on the industry-leading professionals at First National Bullion when you’re ready to invest in precious metals, including gold, silver, platinum, and palladium. Give us a call today at (858) 304-7580.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.