Silver has indisputable qualities as a priority material used in jewellery industry. But could it be more beneficial for the commodity market? The expansionary monetary policy hold by the most developed countries, together with the instability of the dollar, and the inability to overcome the global financial crisis, determine the interest of investors in precious metals.
The efforts of leading central banks to support the development of the global economy by printing huge amounts of money, create conditions for advent of inflationary environment in the coming year. In terms of inflation, market participants recognize as a major haven for their capital precious metals. Actually, now gold and silver hold the real money, not currencies that central banks print.
Silver as a metal has much wider industrial applications than gold, resulting in its demand that significantly exceeds the amount of its offering. During the recent years there is a constant and growing deficit in the production of silver and thus it is more difficult to meet the needs of its use. Its yields are not sufficient to meet the increasing demand and this is a problem dating from the 90’s of last century. This trend is likely to continue in the future, taking into account the increasing consumption of this metal, together with its limited amounts. A familiar rule in economy is that when the demand for an asset exceeds its supply, this leads to its appreciation.
Is this evident pattern going to be valid for silver? Is it the new “golden egg” for investors in difficult impassable times or maybe it is just another bubble?
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