Silver added an alluring luster to many portfolios in 2020. The precious metal enjoyed impressive gains across the year due to most governments’ aggressive monetary policy decisions in the wake of the coronavirus.
The spot price of the precious metal surged around 83% from March to July. In the same month, silver hit a six-year price high of $21.46 an ounce, around the same time gold reached a price peak not seen in nine years. The price of silver hovered around $26.00 per ounce as of late December 2020.
There are several factors that have boosted the prospects of precious metals like silver this year. Bullion investments have proven more popular as it gets easier to buy silver online from reputable dealers who offer multiple payment and shipping options.
Economic uncertainty and worry due to COVID-19 also sent silver prices trending upward as investors searched for safe-haven assets for protection during turbulent times.
Massive Demand Drove Up Silver Prices In 2020
Silver bullion dealers struggled during the first few months of 2020 to keep up with the demand for precious metals. Private mints were back-ordered by several weeks, driving up the price of bars and rounds as supplies dwindled. Sellers also had trouble acquiring silver grain and larger-sized bars (1000 oz.).
Since silver’s market is smaller than gold, the metal has greater potential to shift up or down in price in response to market conditions.
Economic stimulus packages across the world and actions by central banks in 2020 drove down confidence in fiat currencies, leading many to explore alternative assets to keep investments safe. Silver demand rose as it’s regarded as a cheap entry point into precious metal investments.
Prospects Of A Green Recovery Amid COVID-19
Silver has a wide range of industrial uses, and its value will only grow across the next few years. As one of the best thermal and electrical conductors among all metals, it is often used in conductors, fuses, contacts, and switches. Demand for industrial components like ceramic capacitors, silvered film, and conductive adhesives remains high.
According to cleantech materials growth company Itronics, 2020 silver sales were up 224% over the last year. They said increases came due to the sale of bullion, silver-bearing glass, and x-ray film that was silver-bearing.
Right now, the solar panel, automotive, and soldering industries are the three main industrial categories that require greater amounts of silver.
Jeron Blokland, senior portfolio manager at Robeco Asset Management, said in summer 2020 how silver’s industrial usefulness played into its price rise amid talk of a ‘green’ COVID recovery.
Blokland pointed towards the massive European Union aid package passed in July 2020 with roughly a $2.1 trillion dollar budget. The package included a COVID-19 fund in the hundreds of millions, partly based on common borrowing, to be sent to hard-hit nations as loans and grants. Much of the stimulus money was assigned to measures deemed as environmentally friendly, seemingly driving up demand for the metal.
As nations continued to inject stimulus money into their economies over the course of 2020, renewed interest in environmentally-friendly industries (like solar panels), coupled with a chance to ‘reset’ standard processes, saw more money going into green industries that require silver.
Expanded Options To Purchase Physical Silver Bullion
Lockdowns and social distancing meant many businesses had to get innovative with online sales by expanding their web presence or building e-commerce infrastructure from scratch.
Many online bullion dealers expanded payment and shipping options to attract new customers and keep up with demand by enthusiastic precious metal buyers. Private mints (when they were able to work) innovated and released a variety of new silver round designs to entice bullion collectors and those who admire unique, collectible items.
2020: A Strong Year For Physical Bullion
Investors who diversified their portfolios or added to silver stockpiles enjoyed a strong 2020, despite the turmoil and uncertainty with the coronavirus. Estimates for 2021 include a continued uptick in silver prices as melt yields improve and mining and refining operations continue to expand.