Do you own gold? If so, you’ve taken a great first step towards diversifying your portfolio with precious metals. But owning precious metals can involve far more than just buying gold.
If buying gold is one great move, another is diversifying within your precious metals holdings just as you would within your stock and bond portfolio. For example, in some years, silver has outpaced the price gains of gold, while at other times, gold has gained over silver. By holding both, you may find that the two metals work together to support and protect your portfolio.
Here are five reasons why the demand for silver may increase in 2022—and why you might want to pay attention to this versatile metal.
1. Silver interest continues to grow in every demand category.
According to an April 2022 report from the Silver Institute, the global silver market saw a surge in every demand category in 2021, marking the first time that all key sectors rose together since 1997.
Exceeding pre-pandemic volumes, total global silver demand in 2021 hit its highest level since 2015, surging 19%, to 1.05 billion ounces. Paving the way was an all-time high demand for silver’s use in industrial applications, which climbed 9%, to 508.2 million ounces.
That growth bodes well for silver demand in 2022. The Institute forecasts a 5% rise in global silver demand this year, mainly based on stepped-up industrial uses.
2. Solar is gaining ground.
Silver’s use in photovoltaic (PV) applications jumped 13%, to 113.7 million ounces, last year as global solar installations increased, the Silver Institute reports. Photovoltaic devices generate electricity from sunlight.
The International Energy Agency expects new global solar capacity to reach 190 gigawatts this year, up 25% from 2021. The agency predicts that solar will account for 60% of the overall increase in global capacity for renewable energy this year.
If that happens, solar-sourced energy may drive up demand for silver. The Silver Institute anticipates projected growth in solar installations to trigger an all-time high in silver demand within the solar industry this year.
3. Remote-work movement adds luster to silver.
Sales of consumer electronics gained momentum last year amid a more robust remote-work presence in the global workforce. At the same time, investment in 5G infrastructure—which helps fuel remote work and the use of mobile devices—keeps expanding. Both of those sectors depend on silver.
This year, global sales of consumer electronics are expected to rise nearly 5% compared with 2021. Even more impressive, the global market for 5G services is predicted to soar 137.5% year-over-year in 2022. If these projections pan out, silver may see significant benefits.
4. Silver jewelry remains accessible and popular.
There’s no shortage of interest in silver jewelry. According to the Silver Institute, global production of silver jewelry increased by 21% in 2021. The Institute anticipates that silver’s use in jewelry will rise 11% this year. But the metal’s popularity goes beyond its ability to accessorize.
Silver “is believed to…assist with heat production and circulation. As a result, many people are wearing silver rings,” reports ResearchandMarkets.com.
The Silver Institute says India “remains the driving force” behind the ascendance of silver jewelry. The easing of pandemic restrictions “and efforts by jewelry retailers to increasingly push silver to urban consumers will favor jewelry sales across India,” the Institute adds.
5. Asset holders flock to silver amid inflation concerns.
Last year, global sales of silver coins and bars climbed 36%, the highest increase since 2015. Why? People in North America and Europe turned to silver as a safe haven amid inflationary concerns, the Silver Institute says.
Given that the International Monetary Fund is forecasting inflation rates this year of 5.7% in advanced economies and 8.7% in emerging and developing economies, silver coins and bars could remain popular among asset holders who are worried about inflation and want to diversify their portfolios.
Contact U.S. Money Reserve to discuss today’s silver prices and check out special pricing on silver coins and bars.
