Silver is on a roll in 2024! Prices have already jumped nearly 35%, and experts say this might just be the beginning. Let’s dive into why silver is rising, and why it might be a smart move for you to buy some silver now or add it to your IRA or 401(k).
Spot Silver Surges to Highest Price Since 2013:
Much like the gold market, there are several reasons that silver prices are moving higher in 2024. Many silver investors and traders view the potential for a U.S. rate cut as a good reason to own precious metals.
If a rate cut does materialize in 2024, that would theoretically weaken the U.S. dollar. Traditionally, that can provide a lift to valuations in the commodities markets. Lower interest rates reduce the opportunity cost of holding non-yielding assets like silver and gold, making them more attractive. Additionally, lower rates can spur inflation, against which precious metals are often viewed as a hedge.
On top of the above, other supply-demand dynamics appear to be giving a boost to the silver market. One of those is an expected supply deficit. Unlike gold, silver is used for various industrial uses, such as electronics, electric vehicles, and solar panels.
In recent years, the silver market has faced a supply deficit. Instead of freshly mined silver, some silver buyers have been forced to purchase existing silver out of storage. From 2021 to 2023, the Silver Institute estimates that the global silver deficit totaled roughly 474 million ounces, which equates to about 14,743 tons.
Silver supply deficits are expected to extend through 2024 and likely beyond. Importantly, the supply deficit isn’t the only factor driving silver prices higher in 2024. In addition to supply-side issues, the silver market has also experienced increased demand in recent years.
This year, the Silver Institute forecasts that silver demand will rise by 8%, climbing to nearly 632 million ounces. According to the Silver Institute, the bulk of the demand growth is attributable to the industrial sector. According to the Silver Institute’s World Silver Survey 2023, industrial applications account for more than 50% of the total silver demand, whereas only about 7% of total gold demand is attributable to the industrial sector.
Taken all together, it’s easier to understand why silver prices have been rising. Commodity prices are extremely sensitive to shifts in the supply-demand balance. In 2024, both sides of the equation are contributing to bullish sentiment in the silver market.
Economic Instability and Inflation Hedge
In times of economic uncertainty, silver is a reliable hedge against inflation and economic turmoil.
- Wealth-Haven Asset: Silver, like other precious metals, is seen as a wealth-haven asset. With inflation rising globally due to big spending policies and supply chain issues, silver helps shield against the falling value of money. It keeps its value stable, offering security in uncertain times. The fluctuating strength of the US dollar and inflation rates will make silver an attractive investment. Investors are looking to silver for stability during economic and financial uncertainties.
- Portfolio Diversification: Adding silver to your portfolio is a smart way to spread out risk. Silver’s price often moves differently than stocks and bonds. So, when the stock market goes down, silver might go up, balancing out losses in other investments.
Affordability and High Returns
Silver is more affordable than gold, making it easier for more people to invest. This lower price means you can purchase smaller amounts, which is great for both small and big investors.
- Diverse Investment Options: You can buy silver in various forms like coins, bars, and bullion. This variety lets you choose the best option for your strategy, whether you want to make big purchases or add small amounts over time.
- High Returns: Silver has performed really well recently, often better than other investments. In 2024, silver prices have surged nearly 27% due to increasing industrial demand and supply limits.
- Geopolitical and Market Sentiment: Geopolitical factors and market sentiments also play a crucial role in silver pricing. Political instability, trade tensions, and currency fluctuations can disrupt the supply and demand dynamics of silver, leading to price fluctuations. This year, significant events like the ongoing Russia-Ukraine conflict and shifts in US monetary policy are contributing to silver’s price volatility.
Adding Silver to Your IRA/401(k)
Adding silver to your IRA or 401(k) offers tax benefits and diversification.
Here’s a quick guide:
- Self-Directed IRAs: To invest in silver through your IRA, you need a self-directed IRA (SDIRA). This lets you invest in a broader range of assets, including precious metals. Choose a custodian specializing in SDIRAs, open an account, and fund it through a rollover or direct contribution. Then, buy IRS-approved silver, which will be stored in an approved depository.
- 401(k) Options: For 401(k) accounts, see if your plan allows rollovers to an SDIRA. If so, transfer a portion of your 401(k) funds to an SDIRA and buy silver. Make sure all transactions comply with IRS rules to avoid taxes and penalties.
- Compliance and Storage: Ensure compliance with IRS regulations when adding silver to your retirement accounts. The silver must be stored in an IRS-approved depository to maintain its tax-advantaged status. These depositories are secure facilities that specialize in storing precious metals.
Silver $100 Ounce? Experts Predict ‘Explosive Growth’ Amid Market Chaos!
Several experts provide a positive outlook for silver beyond 2024. Top experts forecasts silver to continue rising throughout 2024 due to strong industrial demand and the fading of adverse factors like high-interest rates.
Peter Schiff predicts explosive growth in silver prices because of economic instability and inflation.
Bank of America highlights the potential of silver prices to see steady support from electric vehicles and solar industries throughout 2024, which could also get a boost from a potential rebound in industrial demand. These factors suggest a strong growth trajectory for silver investments, making it a promising asset to consider.
The possibility of silver reaching $100 per ounce this decade is also on the table, according to InvestingHaven. Under exceptional market conditions like extreme shortages, hyperinflation, or a series of rate cuts by the Federal Reserve, silver could potentially hit $100. While this level is unlikely in 2024 or 2025, the path to $50 seems much more attainable and could be the precursor to even higher prices.
Conclusion
In 2024, buying physical silver is a smart move for diversifying your portfolio, hedging against inflation, and benefiting from industrial demand and tech advancements. Silver’s crucial role in many industries and its historical value as a wealth-haven asset make it a strong addition to any strategy. Adding silver to your IRA or 401(k) offers tax benefits and fortifies your financial future.
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