It’s widely known that stocks have been consistently hitting record levels this year. Even the gold bugs have been celebrating – as the precious metal recently reached its highest level ever.
But now, another asset is quietly hitting its best level in more than a decade…
I’m talking about silver. Not only is it breaking out, but it’s outperforming both the stock market and gold this year. The iShares Silver Trust (SLV) is up 41% in 2024 so far while the SPDR Gold Shares (GLD) has gained 31%.
The silver rally is being driven by several factors that have been converging in recent months…
The first is uncertainty. When investors are concerned about and questioning the future, they tend to look for safe havens such as gold. That leads to interest in other precious metals – silver being one of them. What’s more, with continued conflict in Israel and the Middle East, plus the upcoming U.S. presidential election, investors will likely continue seeking safety in these metals.
Another factor is government spending and the ballooning debt that the U.S. is adding to its deficit. Precious metals are considered a store of value if the U.S. dollar falls in value as the government prints more to pay its bills. Both presidential candidates’ plan to keep spending elevated, so I don’t expect this trend to slow in the near term.
Unlike gold, silver has more practical uses and is critical in the future of multiple megatrends. Take the solar industry, for example. The average solar panel contains about 0.64 ounces of silver. By 2030, analysts expect 185 million ounces of silver will be consumed by the solar industry.
Silver is also used in electric vehicles (EVs) and the batteries that power the next generation of transportation. For years, solid-state batteries were expected to be the next breakthrough in battery technology for EVs.
Now, back in August, Samsung Electronics announced its latest advancements in the area. The company will begin production on a solid-state battery with a range of 600 miles. It can be charged in nine minutes and last up to 20 years.
The battery is made of a silver-carbon composite. If 20% of car manufacturers use this type of battery, it could lead to a massive shortage of silver as EV batteries alone would account for more than half of silver production. Add that to the increasing demand for silver in solar panels and a potentially weakening U.S. dollar in the coming years, and there’s a solid case for higher prices ahead.
The silver bulls are awakening, folks. And now might be the time to start building exposure to the trend in your portfolio – either via exchange-traded funds (ETFs) that track the price of silver or by creating a basket of silver mining stocks.
Both strategies have their pros and cons for long-term investing. Mining stocks will typically have more leverage against the price of silver and therefore are considered more aggressive.
So before you jump into the world of precious metals, make sure to do your homework first. And then get ready for the ride.
Here’s to the future,
Matt McCallEditor, Market Insights
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