How Does Silver Fit into Your Retirement Portfolio?

Silver could be the right investment for your retirement. As you get closer to retirement, you need to find ways of reducing risk in your portfolio. Markets hit retirees the hardest, as a recession or stock market crash can wipe out your savings at exactly the same time that you need them.

While stocks can be a good way to grow your savings between crises, retirees need more certainty. There are a number of ways they can find it, including bonds, real estate, dividend-earning investments, and safe havens like silver.

Silver vs. Gold vs. Stocks

Silver is a crisis-friendly asset, just like gold. When stock markets are in a tailspin, silver prices tend to rise, which benefits anyone with low-risk tolerance.

Looking at value increases since 1971, gold has seen returns of 3700% vs. the S&P 500, which overall has shown returns of 2400% since 1971. Silver has not done as well, with returns of only 1800%, but it regularly moves in reverse of the stock market.

High Production Costs

Silver is a difficult metal to produce. Compared to many other commodities, the price is highly influenced by investor sentiment, meaning that even while industrial demand is on the rise, the outsized influence of central banks and private investment firms continue to pressure prices downward. Meanwhile, silver costs more and more to produce.

In the third quarter of 2018, the world’s biggest silver producers posted major losses due to the growing cost of producing silver and stubbornly low silver prices. The average All-In Sustaining Cost (AISC) of producing an ounce of silver was $16.10 per ounce, while prices at the time were closer to $14. Since then, silver prices have gone up, but still under the average AISC.

Why are production costs so high? Rising labor and energy costs are to blame, but the biggest driving factor is silver scarcity. Silver supplies in active mines are dwindling and it is becoming harder and harder for mining companies to find new sources.

New Silver Is Hard to Come By

The silver supply crunch is heading for a crisis. According to the BBC, if no new silver deposits are discovered and consumption continues at today’s pace, global silver reserves will be depleted by 2029. Until prices increase, it’s not economical for mining companies to explore for new sources of silver. Once prices do rise to reflect the new reality of scarce silver, new deposits could be found, but the metal is a finite resource. Eventually, the world will run out.

Invest in Silver at Low Prices

The prime time to invest in silver is when prices are low. How do you know silver prices are low? Compare today’s prices with silver price history and you will see that within the last 20 years silver prices topped above $40 per ounce. While today’s prices are significantly higher than they were in 2000 when silver was around $5 per ounce, prices are competitive and there is a window of opportunity to profit.

You can find a huge selection of silver bullion for sale online. The best sources of silver are online silver shops that sell silver bullion – 99% pure silver products such as silver coins and silver bars. There is also a market for junk silver (around 40% silver), but pure silver coins and bars are the most reliable type of investment for novices and experienced silver investors alike.