Gold Hits Highs, But Why is the Silver Price Rising?

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Many are talking about gold breaking $1,800/oz this week, but the silver price also reached new highs this week in both futures and spot. Futures rose to a high of $19.40/oz this week for September Comex silver. Also, multiple factors contributed to the silver price jump to $19 per ozt. Some of these reasons include the gold price breakout, geopolitical climate, COVID-19, economic news, and the upcoming election. Additionally, industries are resuming business, which also increases the demand for silver. As a result, the silver price is poised to reach as high as $20 per ounce this year if the current economic climate continues.

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Silver Price Rising

Industrial Usages for Silver

Silver has so many practical applications because it is a fantastic conductor for thermal and electrical currents, and it’s also highly reflective. As stated in a previous article, reopening economies leads to renewed silver demand for industrial usage. Scientific application is one of the biggest contributors to the silver price. In fact, according to the Silver Institute, industrial demand consumes more than half the annual supply of silver. Some of the top industries that use silver include batteries, touch screens, cars, cell phones, computers, and solar panels.

Each year, demand ticks higher as countries such as China and India comply with the Paris Climate Change Agreement. Therefore, there is a higher demand for solar panels as countries reopen and continue plans to become greener. Thus, the silver price has a steady source to keep growing.

How do Solar Panels Use Silver?

Solar panels on average use about 20 grams of silver. Although this doesn’t seem like much, cellphones use 200-300mg of silver and computers tend to have only 1g of silver. In solar panels, a silver paste coats the silicon photovoltaic cells. Together, they capture the sunlight and the silver converts it into electrical energy.

The silver paste is an essential component because it collects electrons from the energy and harnesses the converted electrical current. Silver is the most effective metal for the job because it captures more energy from the sun than other metals do. Once captured, the silver paste channels the energy from the cells to be used or stored. Solar panel production may increase in the coming months because businesses are reopening.

The Silver Price Today

Today, people anticipate silver to reach $20/oz as gold expands to $1,850/oz. International politics, social unrest, COVID, economic news, and the upcoming election contribute to the price of most safe-haven assets. Additionally, new investors are on the scene, which drives up the price alongside the longtime collectors. RBC Wealth Management managing director George Gero claims that low-interest rates and high debt from stimulus checks contribute to the gold price jump. Furthermore, TD Securities strategists suggest that silver can outperform gold from both safe-haven and industrial demand. Because most people are long silver at the moment, inventory for silver may tighten in the near future.

Investors particularly like silver because it is cheaper than gold, and also industries are reopening. So, the price of silver is bolstered by the hope that the economy will continue to bring up industrial and investor demand. During the beginning of quarantine, silver actually outperformed gold with a growth rate of 33%. As industries and businesses reopen and demand resurges for solar panels, cars, and more, the silver price continues to expand. Also, don’t forget: as gold increases, so does silver. However, because of silver’s fantastic performance, the Gold-to-Silver ratio declined.

Additionally, as politics, the economy, and global health becomes increasingly volatile, investors want to protect their assets with something solid. This can only further amplify the price of silver, which is also a safe haven metal. With demand on two fronts, the silver price has a solid base to continue growing. TD Securities also believes that the silver price may reach $22.50 by the end of 2021. This makes silver a highly strategic investment for your portfolio. Consider investing today.