The availability of gold and silver assets has helped fuel their inclusion in self-directed individual retirement accounts, according to Everett Millman, precious metals specialist at Gainesville Coins.
“No one invests in physical lithium,” Millman says. “But you can easily do that with silver and gold because governments issue gold and silver coins; private companies mint gold and silver bars.”
Certain qualities may prompt investors to specifically focus on silver assets.
“Silver is far and away the top alternative to gold when someone is investing in metals,” Millman adds. “The price point is much lower, [so] it’s more accessible to any investor.”
Numerous elements can affect the silver market, ranging from a reduction in jewelry fabrication-related demand to mining company staffing and distribution issues.
If you’ve been thinking about making silver part of your savings plan, you may want to take the following factors into account.
The Growing Interest in Silver
Partially due to silver’s use in green energy components such as photovoltaic solar panels, the industrial demand for silver reached new record levels in both 2022 and 2023, according to the nonprofit Silver Institute.
Roughly 50% of the demand for silver stems from its use in jewelry. The remaining portion tends to involve industrial needs, Millman says.
“Really, this is what distinguishes silver from gold,” he says. “Less than 10% of gold demand comes from industrial purposes; the other 90% is all either investment or jewelry. A lot of the people who are buying gold are just holding on to it.”
Silver’s wide-ranging industrial applications, Millman notes, can require substantial quantities of the metal.
“[Silver] is [utilized] in technologies [and] the medical field,” he points out. “Solar panels, electric vehicles — all of these [uses] require massive amounts.”
Silver’s Challenging Supply Scenario
Production hasn’t kept up with the demand for silver in recent years.
Amid reduced output from mines in locations such as Peru and China, the silver market weathered one of its most severe deficits in history in 2022; in 2023, the demand for silver exceeded the available supply of the metal for the third consecutive year, according to the Silver Institute.
“With the industrial uses, so much silver gets consumed and used up each year that there is relatively less available for investment purposes,” Millman says. “Periodically, there have been backlogs and difficulties procuring supply of silver, at least in the volumes that people are demanding it.”
With a continued need for silver and an anticipated decline in recycling activity, the Silver Institute has forecast the supply of the precious metal will again fall short in 2024.
Given the way silver is utilized in some applications, future availability issues could potentially result in the price for the precious metal climbing higher, according to Millman.
“The price hasn’t responded to it yet, but that 50% portion of silver demand that’s [used in] industry all gets consumed,” the Gainesville Coins precious metals specialist says. “It gets destroyed essentially every year. That means that the silver supply is definitely at risk of being undersupplied, relative to demand.”
Written in partnership with Tom White.
