Physical Silver vs Silver Stocks

A number of experts are looking at precious metals and considering where they are going go next with the current spot price markets. In that examination one thing remains clear – there is a lot of liquidity and cash flow buzzing around with the repeat stimulus spending from national governments, and that’s not a natural form of spending. In other words, a good portion of the money in the economic systems is temporary and yet to be replaced by real cash from income and revenues via transactions, business, and normal spending. Given the presence of artificial cash, many are concluding that precious metals like silver aren’t like to stumble around or falter but are more likely to increase if the stimulus buffer dries up too quickly. And that could easily happen, creating a gap if real revenues don’t materialize soon enough for the stimulus support runs out.

The Logic Behind How Much Silver Costs

Currently, silver’s spot price has been in the mid-$20s (USD). In recent years this has been positioned well above what is considered the technical position valid for silver at a lower point of $21. Although these price points seem low to some of the recent figures of over $30 at the beginning of February 2021, the spot price has settled back into the mid-$20s where it has stayed stable since that early, beginning of the year bull run. More interestingly, however, that spot price has then since been creeping and solidifying slowly into higher levels at $26.50. Much of that has been due to the fact that contracts for buying have been outpacing those to short the silver price. When that occurred, it began building consolidation and support for demand. Basic economic laws take over at that point; silver goes up in price point as a result. After the notable correction, the slower rise in silver stands to reason for most experts to be a real price point that is going to stay put.

Remember, from recent history, silver has already been on a run since it found legs to move well above $20 per Troy ounce. That occurred in July 2020. It had been a lot lower in previous years, but this time the bounce back did not go all the way to the prior basement points. It kept building upward and really started moving in a reverse falling up snowball effect in the beginning of 2021.

Investing in Physical Silver

Pressure From Below If Things Get Sticky

Give the above analysis, then we add in the element of the economic outlook in the major nations. It has two places to go right now: up or down. In every aspect, economic outlooks have been quite frankly very rosy. In fact, they’ve been on a bull run for a very long time and a bumpy ride with corrections is well overdue. Since 2019 many financial market watchers have been waiting for a downturn and reassessment of the markets wholesale. And, when that occurs, there’s a very strong possibility people and investors will move into precious metals to hold their long-run value instead of giving it up to falling stock market prices.

Don’t Forget the Miners

It’s important to remember the supply of silver matters just as much as the demand side. And the supply only occurs when the mining companies that produce new silver units stay on track. 2020 was not a good year for production given how organized operations were hampered by pandemic-related changes. As a result, far less production hit the market for both industrial as well as bullion interests. Normally, the major mining companies provide investors in silver a protected position, enjoying the demand for the metal but also the revenue-based value of a for-profit company. However, because silver demand fell and production was slowed considerably, many of the mining companies have fallen in value stock-wise, representing a less attractive position for investors. That too puts a pinch on capitalization cash flow. If 2021 picks up, however, then most of these companies will realize a double-improvement. The demand for silver itself will be met, likely increasing industrial demand as the spot price lowers with more inventory, and mining companies will move more production, which is revenue in their pocket primarily. In short, the miners’ good fortune could work as a dampening effect on the spot price of silver, holding back from moving upward to $30 per ounce or higher.

Gold Bullion and Silver Bullion Deals

Silver Will Still Have its Namesake Volatility

Whether silver moves higher or moves lower overall, one thing is for certain. The metal is going to bounce daily like one of the 1970s Slinky toys kids liked to watch walk downstairs. And all that daily fluctuation provides for a lot of daily peaks and valleys to buy in or sell out as needed. In fact, this is the kind of variation that day traders love to see, practically making profits every day when the changes are timed right. The volatility tends to increase in frequency and range when the markets are unstable and looking for safe harbors or want to move money back into other market investments quickly. These changes can swing by as much as 20 to 30 percent of silver’s base price, which can be a handsome profit position for those who are comfortable in fast-moving price environments.

Local New Zealand Help is Always Available

Kiwi silver investors young and old, beginner and pros, should always remember that MyGold is one of the most reliable places to buy silver for investment as well as keep track of the latest silver prices associated with the spot market. Because we are one of New Zealand’s largest providers of silver and high-quality silver bullion products, like those from the Perth Mint, we are able to keep investors in tune on any day with what’s happening on the silver spot price dynamics. No matter what the spot price market comes up with in terms of surprises, MyGold will always be available to give you stability in your awareness of the silver market for your interests.