Silver’s Silent Rise: Outpacing Gold and Major Market Indexes

By Doug Young – 30 November 2024

Silver’s Impressive Performance: Quietly Matching Gold’s Gains

While gold has been stealing the headlines this year with its impressive surge of 31%, silver has been making its move under the radar, matching gold’s gains with a climb of 30%.

In fact, silver has even outperformed major market indexes, positioning itself as a standout performer in today’s economic landscape.

Multifaceted Demand Profile: Key to Silver’s Supercycle Potential

Analysts and investors are buzzing with anticipation for what lies ahead.

Capitalight Research predicts a potential silver supercycle that could last up to 20 years, driven by skyrocketing demand and persistent supply shortages.

Silver’s allure lies in its multifaceted demand profile, which sets it apart from other commodities. Unlike commodities that rely heavily on a single demand source, silver’s dual role as a safe haven asset and a critical industrial metal gives it a unique strength. Silver’s industrial demand now accounts for 55% of its overall demand.

Back in March 2020, silver showcased its muscle by launching an incredible run fueled by its double function advantage. Since then, silver’s price has outperformed many other commodities, driven by industrial demand, investment interest, and macroeconomic factors.

Driving Factors Behind Silver’s Price Surge

Silver’s remarkable performance can be attributed to a combination of industrial demand and macroeconomic factors.

The post-global health crisis environment has created a surge in industrial demand for silver, particularly in the booming renewable energy sector and the electronics industry. Silver plays a critical role in the production of solar panels and is widely used in various electronic devices, positioning it as a key component in these rapidly growing sectors.

Long-Term Outlook and Supply Shortage: Silver’s Super Cycle Potential

The future holds tremendous potential for silver, with rising geopolitical tensions and concerns over government fiscal health driving its appeal.

This potential supercycle is further amplified by a chronic supply shortage, as restrictions on exploration and development hinder the industry’s ability to meet the growing demand.

According to the Silver Institute, silver is expected to close 2024 in a supply deficit for the fourth consecutive year, and this deficit is projected to persist in the foreseeable future.

Silver’s Resilience to Monetary Policy: Thriving Amidst Changing Tides

Throughout history, silver has demonstrated resilience in the face of changing monetary policies.

Analysis of historical data reveals that silver has risen in six out of the seven easing cycles since 1981, with an average gain of 16.8%. Even during tightening cycles, silver has performed well, with an average gain of 10.9%.

This track record further solidifies silver’s status as a stable investment option, capable of thriving regardless of the monetary policy landscape.

Conclusion

Silver’s silent rise in the market has slowly caught the attention of analysts and investors alike. Competing with gold and outpacing major market indexes, silver’s impressive performance and potential supercycle have captivated the market.

With its multifaceted demand profile, resilience to monetary policy changes, and persistent supply shortage, silver presents a compelling opportunity for those seeking long-term investment prospects.

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