2023-05-25 03:16:47 ET
Silver followed on gold’s steps in May and dropped from the 2023 highs as the dollar strengthened. But despite the steep correction, silver might be a good addition to a portfolio for investors with a medium to long-term horizon.
So here are three reasons to buy silver:
- Silver outperformed main fiat currencies in the last 22 years
- The 2050 net zero target implies strong demand for silver in the years ahead
- The medium to long-term technical picture remains bullish
Silver outperformed main fiat currencies in the last two decades
Historical performance is one of the best reasons to add silver to a portfolio. That is, besides the fact that it is not correlated with the stock market. As a rule of thumb, the less the correlation, the better the decision to add an asset to a portfolio.
When compared to a basket of currencies made of the US dollar , euro, British pound, Australian dollar, Canadian dollar, Chinese Yen, Japanese yen, Swiss franc, and the Indian rupee, silver has outperformed on average in the last 22 years by: 9.4%, 9%, 10.2%, 7.8%, 8.1%, 8.5%, 10.4%, 6.5%, 11.5%, 9.1%.
So, in the end, it is not about having a preference for precious metals, but it is about adding the right asset to a portfolio.
Strong demand for silver should support higher prices
The price of silver also depends on industrial demand. Most of it derives from solar photovoltaics, and demand grew 28% YoY in 2022.
Moreover, to meet the net zero emissions goal by 2050, solar PV power generation will need to grow a staggering 25% YoY until 2030.
Silver’s medium to long-term technical picture remains bullish
Since trading as low as $12, the price of silver bounced strongly. It failed at $30 during the COVID-19 pandemic, but what followed looks like a bullish pattern.
More precisely, the consolidation area looks like a bullish flag. Its measured move, seen in orange, points to $44. Conversely, a drop below $16 would invalidate the pattern.
Summing up, the bullish case for silver has not been so appealing in a long time. So is it silver’s time to shine?
The post Is it time to buy silver? Here are 3 reasons to do so appeared first on Invezz .
