Precious metals include platinum, gold and silver.
In the last few weeks we’ve seen most gold and silver dealers with ‘out of stock’ signs on their storefront.
That’s what the vast majority of silver bullion consumers have been getting since the end of January. Stories have been surfacing online about Silver bullion dealers seeing a rise in demand, one of the biggest they’ve seen in their lifetime.
Everyone is buying, and no one is selling the physical metal in the United States. Bullion Dealers are requesting 35% premiums…and that’s if you can get your hands on some.
And yet less than a year ago when pandemic took the world by it’s grip, Gold or silver bullion dealers were nearly completely sold out within a matter of days. In some cases silver premiums reached historic highs, near 100% of spot prices.
With the inception of the new #silversqueeze hype inspired by an army of retail investors on Reddit, silver has traded at an 8-year high, as demand was exploding.
Silver’s given back $2 since its $29 peak on Feb. 1. But it’s still up 20% since late November, and has gained 125% since its March lows according to Kitco news
To add to that, silver stocks in the United states have been surging. It’s all related to the now infamous WallStreetBets calls to action, the latest of which targeted silver. It was enough to cause Comex to raise silver margins by 18% after just two up days.
But silver’s story is still in its early days. Dramatically higher silver prices are still squarely ahead.
The silver market has been largely under-owned and underinvested until 2020, when silver began its bull rally and outperformed gold.
According to John Feeney from Guardian Vaults: Silver is looking more and more like the metal of the future and a substantial investment for 2021. The big driver that is here to stay is a global move into renewable energy, he said.
"Under the Biden administration, we will see a lot of money getting moved into solar panel production. That is happening globally too. If you look at the solar market, the outlook for the next 5-10 years is very bullish for silver."
Also, there is an argument to be made for the start of the commodity supercycle. "A lot of analysts think that we are at the beginning of it. There has been a lot of underinvestment in commodities over the last few years. A lot of capital moved into the tech sector and hardly any capital in comparison moved into the commodities sector," Feeney said.
Gold and silver as a whole are considered safe haven assets - an investment that’s expected to hold their value during market turbulence. However people are often skeptical about whether to invest in gold or silver! They often think of investing in these metals as a long term yet reliable opportunity.
So today we're going to break down in depth: how much gold and silver will be worth if the U.S Dollar collapses? Is it wise to invest in gold and silver or are there other options?
Considering gold and Silver is considered are considered safe haven assets as we’ve mentioned above, that makes it a likely choice for investors during political and economic upheavals because they have intrinsic value, carry no credit risk, and cannot be inflated. That’s why either gold or silver, investing in precious metals is one of the best types of investments you can make in 2021.
Owning just a small percentage of precious metals diversifies your portfolio, and therefore reduces volatility and risks. It can also protect your future buying power. Even in today’s cryptocurrency dominated world of investing, gold and silver hold a prominent place in the stock market.
To briefly summarize this article, I firmly believe silver and gold both are good resources for future investments and something you should own even when the U.S dollar collapses
Is Silver a Good Investment for the Future?
Investing in silver has a few advantages: you can own the physical commodity, it is more liquid than gold, is scarce, and has many practical uses. Not only that but its supply and demand ratio has been expanding all over the United States. For example, there is demand for silver in solar panel production, electronics, and medical devices. There is even an IRA backed by silver!
Because the silver price tends to decrease and become stable during times of economic prosperity and growth, it’s not a recommended buy.
However, when the market is declining, it’s a good investment option because it is expected to hold its value during that rough time and you can expect a higher ROI afterwards.
Also, if you are considering investing in both of these metals i.e gold and silver, then it can yield a great deal of benefits.
Different ways to invest in silver include:
Silver bullion bars - these bars of silver give investors physical ownership of the precious metal.
ETFs - the investor owns shares of the fund, but is not entitled to access the actual physical commodity.
Stocks in companies that mine silver - invest in silver indirectly. The potential downside here is that you are also investing in the potential risks of their facilities.
Stocks in companies that finance silver mining companies - the companies pay a dividend because as a financial institution, they want to increase cash flow.
Silver IRA - an IRA that is tax-deferred and allows you to hold silver coins and bars in your account. It’s similar to your regular IRA, but it is funded with physical assets instead of paper assets (stocks and funds).
When will Silver Hit $50?
Analyst John Feeney said the metal could rise into the $30s range between now and the end of the year in terms of price projections. He also highlighted that once Silver breaks above $30 an ounce, new investors will come in and begin to chase that price higher.
While a move back to $50 an ounce is not out of the realm of possibilities, most analysts see a more nuanced rally for the precious metal, with many looking for prices to push above $30.
Feeney didn't rule out the $50 target either but did stress that it will take a few years to get there on a sustainable basis.
Keith Neumeyer, CEO of First Majestic Silver, predicts silver will hit an astounding $130 per oz in years to come! (Keith Neumeyer’s predictions and investments in silver rewarded him handsomely after the dot com bubble busted in the early 2000s.) Keith says the reason the resource markets are lagging is due to institutions not entering the metal market. Until there is a crack in the major markets, we will not see institutional money flow into the mining equities.
So when will silver hit $50 u.s dollar per oz?
Historically, the Federal Reserve hasn’t lowered interest rates down to near zero since 2008 in the United States. If current stock market trends follow the 2008 crash, it’s possible that silver could hit $50 per oz in the next few years. And the best time to buy would be now.
Gold and silver are historically renowned for their deflationary capabilities. Gold or silver should definitely be diversified in your portfolio.
But if you don’t buy now, it’s still a good choice to watch the price of silver this year - and perhaps for the next decades to come.
What to Own When the U.S Dollar Collapses?
Let's get back to to our initial question on how much will silver be worth if the dollar collapses..
Zooming out of individual stocks and assets, and focusing on a global scale and a longer time horizon, there is another issue - the ability of the US Dollar to continue dominating the global market.
Let’s back up for some historical context on gold and silver, and the United States dollar first.
For almost a century, the US Dollar has served as the de facto world currency and was seen as a safe haven asset.
This is because the US was proven to be economically and politically stable, and has an extremely efficient banking system. It is the largest world economy, accounting for almost 90% of global foreign exchanges. And the USD makes up 60% of the central bank foreign exchange reserve, followed by the Euro (21%) and then the Japanese Yen (6%).
Most commodities like metal, energy, and agriculture are globally traded in USD.
But more recently, opponents have raised concern and voiced their disagreements, claiming that the US has an unfair advantage because its national currency serves as the major global reserve currency.
For example, Ned Goodman, Canadian billionaire, predicted in 2013 that the end of the USD reigning as the global exchange reserve is near, and the global economy will transition out of the USD. And it won’t be pretty. Yikes!
Additionally, China has been public about the Chinese Yuan replacing the USD as a leading global currency. China is slowly and steadily working towards this end. In 2015, the yuan officially became a reserve currency. And we can expect more reforms from China in the coming years.
The US government’s national debt is owned mostly by Japan and China. Of the $22T debt that the US has, Japan owns $1.27T and China owns $1.09T. If enough investors including China and Japan are willing to drop the USD, that would definitely lead to a dollar collapse and the end of the US Dollar as the strongest global currency.
To recap, the key factors that lead to a dollar collapse are:
A strong, viable alternative currency, and
Enough investors pulling out of the USD.
Considering its possibility, what’s worth owning during a financial collapse? Will precious metals rise again as the safer way to store the value of money? If so, how much will silver be worth if the dollar collapses? Below we’ve listed some investments to consider.
In times of economic uncertainty, investors typically flock to safe haven assets. These include gold and silver (mentioned earlier in this article), other foreign exchange currencies, and defensive stocks.
- We’ve seen how silver doubled after the 2008 market crash. And if the dollar collapses, Keith Neumeyer’s predictions $130 per oz don’t seem too far-fetched.
Another investment to buffer against a declining dollar and protect your future buying power is buying businesses. This supports the American economy and the dollar value.
Additionally, Bitcoin could serve a market function similar to that of a safe-haven commodity, rather than an equity, due to its inherent scarcity and decentralism. Here’s a free bitcoin investing kit to get started.
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Key takeaways from this article:
USD declines over time as other countries develop and establish their economic independence and trustworthiness.
If enough investors pull out of the USD, the system will collapse.
During a recession and a declining/collapsing dollar, silver is a great investment due to its liquidity, scarcity, and industrial applications.
Historical trends show that investing in silver during a recession paid off well in the years coming out of it (Table 1).
Different ways to invest in silver including silver bullion bars, Silver IRAs, and stocks in the mining sector.
Silver is looking more and more like the metal of the future and a substantial investment for 2021, this is fueled by the Biden administration and the move towards renewable energy.
The truth is, no one knows what will happen in the future with complete certainty. And equally true is - the numbers don’t lie.
So, if you’re not getting the best returns on your investments, it might be in your best interest to reevaluate your strategy and portfolio.
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