I Bought Silver Instead of Gold .. and Here's Why You Should Too

Summary

The video discusses the unexpected rise in demand for silver during Dhanteras, where silver sales surged by 30-35%, outpacing gold despite higher prices. The script explores silver's industrial uses, such as in electric vehicles, solar panels, and electronics, which contribute to its increasing value. It also highlights key factors driving silver’s price, including supply shortages, rising industrial demand, and inflation. The video emphasizes that silver could be a strong investment option, especially given its underperformance compared to gold, and advises on various investment methods, particularly through ETFs and mutual funds, offering an accessible and cost-effective way to invest.

Takeaways

• 😀 Dhanteras 2024 saw an unusual surge in the demand for silver, surpassing gold for the first time, despite both metals experiencing price increases.
• 😀 Silver's demand is increasingly driven by industrial uses, including mobile phones, laptops, electric vehicles (EVs), space exploration, and renewable energy solutions like solar panels.
• 😀 The price of silver is influenced by factors like supply and demand, industrial output, and inflation. Silver has historically shown strong performance during inflationary periods.
• 😀 Silver has delivered an impressive 20% CAGR since March 2020, but its volatility requires careful market timing to maximize profits.
• 😀 Silver is viewed as a safe-haven asset during times of crisis, much like gold, and has a moderately strong positive correlation with gold.
• 😀 The supply of silver has been struggling to meet demand for the past few years, and this supply deficit is expected to tighten further, especially with rising demand from industries like EVs and solar panels.
• 😀 By 2050, solar panel manufacturing could consume up to 98% of global silver reserves, further driving demand.
• 😀 A key factor in silver's value is the rising interest from central banks, such as Russia's Central Bank, which is now adding silver to its reserves.
• 😀 The gold-silver ratio is currently high, indicating that silver may be undervalued compared to gold, making it a potentially attractive investment opportunity.
• 😀 Investing in silver through ETFs and mutual funds is a practical way to gain exposure to silver without the drawbacks of physical silver, such as impurities, maintenance, or storage costs.

Q & A

What is Dhanteras, and how is it traditionally celebrated?

Dhanteras is celebrated on the 13th day of Krishna Paksha in the month of Kartik, marking the beginning of Diwali. It is traditionally observed by purchasing precious metals, especially gold, to bring good fortune and wealth into one’s life.

Why did the demand for silver during Dhanteras surge in 2024?

For the first time ever, the demand for silver during Dhanteras was higher than that for gold. This was partly due to a 28% rise in gold prices, while the price of silver also rose by 36%, but it was more affordable. Additionally, people began recognizing silver as a valuable investment, especially in the context of industrial applications.

What are some of the major industrial uses of silver?

Silver is extensively used in industrial applications, including in mobile phones, laptops, electric vehicles (EVs), space exploration, and renewable energy solutions like solar panels. For instance, electric vehicles use twice as much silver as conventional cars, and solar panels contain significant amounts of silver.

What are the three key factors that drive the value of silver?

The three main drivers of silver's value are: 1) Supply and demand, particularly the supply deficit in silver mining; 2) Industrial output, with a rising demand for silver in manufacturing; and 3) Inflation, as silver tends to rise in value during inflationary periods.

What is the historical performance of silver as an asset?

Silver has experienced significant volatility over the past 30 years. After a period of stability in the 1990s, it saw a 600% price increase from 2004 to 2010, followed by a 70% crash. Since March 2020, silver has delivered a compound annual growth rate (CAGR) of 20%, reflecting its cyclical nature and sensitivity to various market factors.

Why is now considered a good time to invest in silver?

Several factors suggest that now is a good time to invest in silver. There is a significant supply deficit, increasing demand from sectors like EVs, solar panels, and electronics, and the potential for geopolitical instability, which typically drives investors toward precious metals. Moreover, the gold-silver ratio is currently high, suggesting silver may be undervalued.

What is the gold-silver ratio, and why is it important for investors?

The gold-silver ratio is the price of gold divided by the price of silver. It helps investors gauge whether silver is undervalued or overvalued relative to gold. A higher ratio indicates that silver might be undervalued, while a lower ratio suggests that silver is more expensive compared to gold. The ratio is currently above its long-term average, indicating potential for silver price growth.

How can one invest in silver in India?

There are several ways to invest in silver in India: physical silver (jewellery, bars, coins), digital silver through platforms like MMTC-PAMP and Digigold, silver ETFs (Exchange-Traded Funds), and silver-related mutual funds. Physical silver is often less ideal for investment due to impurities, maintenance costs, and storage fees.

What are silver ETFs, and how do they work?

Silver ETFs track the price of silver, allowing investors to gain exposure to silver without physically owning the metal. These funds invest in physical silver, typically stored in 30kg bars, and divide it into smaller units for individual investors. This makes it easier to invest in silver without the costs and risks associated with holding physical silver.

What are the benefits of investing in silver ETFs or mutual funds?

The key benefits of investing in silver ETFs or mutual funds include ease of access, no making or storage charges, better liquidity, and the ability to invest in small quantities. Additionally, these financial products are backed by 99.9% pure silver, helping investors gain exposure to silver without the issues of physical storage and maintenance.