What is (Silver)? Investment insight based on current trends

Over the past year, (Silver) has surged to multi-year highs, attracting serious attention from global investors. Today, we will help you understand why silver has become an attractive investment option and how to start investing in this asset class.

Silver Price and Current Market Trends

The price of silver reflects the dynamics of the global market, driven by macroeconomic factors and industrial demand. In a world without paper money or digital currencies, humans have used money for over 4,000 years to exchange and store value.

History and Role of Money in Civilizations

The importance of money in human history is profound:

• Ancient Era: Archaeological evidence shows that money was used as a medium of exchange in the form of rings and standardized ingots as early as 3000 BCE.

• Modern Era: In the 16th century, Spain produced silver coins, which became the first globally accepted currency across all continents.

• Standard Systems: Money continued to be used as legal tender for debt in the United States until 1857, although the silver standard system was discontinued in 1935.

Why Silver Became a Key Asset of the Modern Age

Silver’s unique physical properties make it central to future technologies, even surpassing gold in industrial utility:

Excellent conductor of electricity and heat: Making silver essential in all electronic devices.

Maximum reflectivity: Enhances efficiency in converting sunlight to electricity in solar panels.

Antibacterial properties: Used in medical applications from bandages and surgical tools to water filtration systems.

Flexibility and easy processing: Critical for microelectronics requiring small components.

These factors continuously drive demand, whether for the transition to clean energy, electric vehicle development, 5G networks, or AI infrastructure—all of which rely heavily on silver.

Price Drivers

Macroeconomic Factors

Monetary policy and interest rates: There is a clear relationship between interest rates and asset prices. The rate cuts in 2025 have been a significant catalyst for the rapid rise in silver prices.

US dollar index: Silver prices tend to move inversely to the dollar. When the dollar weakens, investors holding other currencies can buy silver more cheaply, boosting demand.

Inflation and geopolitical uncertainty: Silver is viewed as an inflation hedge and a safe haven during times of uncertainty.

Fundamental Factors: Supply and Demand

Data from World Silver Survey 2025 indicates that the silver market is facing a “structural deficit” (Structural Deficit):

Surging demand: Industrial demand hit a record high of 680.5 million ounces in 2024, accounting for nearly 59% of total demand, especially from solar energy, electric vehicles, 5G electronics, and AI.

Supply cannot keep up: While demand rises sharply, supply struggles to meet it due to production disruptions, by-products from other mining activities, and declining inventories. This situation has persisted for four consecutive years.

Comparing Silver vs Gold: Gold/Silver Ratio

Gold/Silver Ratio (GSR) is a tool to assess whether silver is undervalued or overvalued relative to gold, indicating how many ounces of silver are needed to buy one ounce of gold.

• During the COVID-19 crisis: GSR soared to 124:1 (record high) as investors flocked to highly liquid gold.

• In 2011: The ratio dropped to just 31:1 as confidence returned and investors turned to silver.

• Currently: The ratio is around 84:1, above the historical average, indicating the market still does not fully price in silver’s industrial fundamentals.

Market Size, Volatility, and Role

Gold market: Total market value is nearly $30 trillion USD, with low volatility, held mainly by central banks as reserves.

Silver market: Valued at approximately $2.7 trillion USD. Its smaller size means that inflows of the same amount can have a more significant impact on prices.

Volatility: Silver is 2-3 times more volatile than gold. During bear markets, it may decline more sharply, but in bull markets (Bull Market), it tends to surge higher and faster.

Role: Silver is a hybrid asset—part precious metal, part industrial commodity. Central banks do not hold it as reserves, so it is more linked to economic cycles, driven by industrial factors that gold does not have.

How to Start Investing in Silver

1. Physical Silver Investment

Purchasing tangible silver in the form of bars (Silver Bars) or coins (Silver Coins).

Advantages: Ownership of real assets, tangible, no counterparty risk, high privacy.

Disadvantages: High initial investment, bid-ask spreads (Premium), storage and insurance costs, low liquidity, risks related to purity verification.

2. Investing via Funds and Mining Stocks

Mutual Funds: Investing through funds that hold shares in silver mining companies worldwide.

Mining Stocks: Buying shares of major silver producers globally.

Advantages: High liquidity, easy trading on stock exchanges, no storage concerns.

Disadvantages: Company-specific risks, may not always track silver prices precisely.

3. Futures Market Investment

For experienced investors, trading futures contracts.

Advantages: Low initial capital, potential for profit in both rising and falling markets.

Disadvantages: Very high risk, complex, suitable for highly experienced investors.

4. Trading via CFDs

CFD (Contract for Difference): Speculative contracts based on price differences, without owning the actual asset.

Advantages: Low capital requirement, high flexibility, high liquidity, no hidden costs, easy and quick to open/close positions.

Disadvantages: Leverage risk, counterparty risk, requires choosing a trustworthy broker.

This method is suitable for short- to medium-term traders and those seeking high trading flexibility.

Pros and Cons of Investing in Silver

( Opportunities and Advantages

1. High Return Potential: Due to high volatility and lower price compared to gold, silver can generate higher percentage gains in a bull market.

2. Growing Industrial Demand: The long-term megatrends toward clean energy and digital economies will sustain demand for silver.

3. Affordable Price: Lower per-ounce price makes silver more accessible to retail investors.

4. Inflation Hedge: Silver has a long history of preserving value )Store of Value### and protecting against fiat currency devaluation.

( Risks and Disadvantages

1. High Price Volatility: While offering potential for large gains, it can also lead to significant losses.

2. Sensitivity to Economic Cycles: Over half of demand is industrial, making silver more sensitive to economic downturns than gold.

3. Costs and Risks of Holding Physical Silver: Storage, insurance, and theft risks.

4. No Interest Income: No dividends or interest; returns depend solely on price changes.

Summary

Silver )Silver### has become a vital asset in the modern global economy. Ultimately, whether silver will be a key part of your portfolio depends on your investment goals and risk tolerance.

Investing involves risks and may not be suitable for everyone. Always conduct thorough research and consult with professionals before making investment decisions.