The Silver Price Today
The silver price today pushes past $21 per troy ounce, after a long day inching towards $20. This is the highest level for the silver price in 6 years. Despite hitting a low around $12/oz in March, silver rises today steadily out of market volatility that kept investors at bay during the start of COVID. The silver price today is now up more than 70% from the COVID March low.
Gold to Silver Ratio Today
Why is it so important that the silver price today is about $21 when the gold price today reached above $1850? Gold and silver trade at the hip and are often referred to as sister metals. In fact, many investors use the Gold/Silver ratio to help determine if it is a good time to buy or sell.
Most often, investors tend to buy silver when the ratio is high because silver is cheaper than gold at this time. A lower ratio could indicate that it is a good time to buy gold since it is cheaper. This is a tool for diversification because investing in only one thing is not very practical. As one investment suffers, the others can make up for those losses.
The Gold to Silver ratio in March reached a high around 1:120, meaning 1 oz of gold was worth 120 oz of silver comparatively. However, the new silver price today pushed the ratio down into the 80’s. At the time of writing, the Gold to Silver ratio was approximately 1:87.
This month, the silver price surpassed gold in gains, agreeing with analysts’ predictions back in April-May. Gold only rose about 21% year-to-date, but silver rose about 26% YTD. Commerzbank stated that demand in silver will continue to push silver even higher. Some even speculate that silver could be $30 by 2022 and $40 in 2023. This is determined by a combination of inflation, supply, and demand factors.
What is Driving the Silver Price Today?
The pandemic and continuing rise of COVID cases obviously weigh heavily on the silver price today. More factors identified by the London Capital Group’s Head of Research, Jasper Lawler, that influence the silver price today include:
- Industrial demand for new technologies. More specifically, developing better technology for batteries.
- Overall global economic concerns. This includes fears over failing and weakening fiat currency and political tensions on the rise.
- Supply shortages with high demand. A shortage may be coming because there is reduced base metals mining at this time. Imbalance in supply and demand will always foster higher prices.
Additionally, many worry about the US-China relations at this time as tensions rise all-around at this time. From a rising space race to the unresolved trade war, uncertainty is a breeding ground for precious metals demand.
How Today Different from the 2007-2009 Crisis?
The financial crisis back in 2007-2009 also saw precious metals rise as investors sold off their stocks and turned to gold. However, this financial crisis had to do with debtors defaulting on mortgages, and Real Estate Investment Trusts filing bankruptcy. Today, the pandemic is the main concern. Because this wasn’t a crisis fueled on the economic front originally, there was more of a chance for a speedy recovery. Now, investors are not too sure because of the Fed printing money.
During the 2008 crisis, silver was largely ignored. In fact, platinum was the precious metal to shine in 2008. Today, silver is attractive to investors because it is cheaper and more accessible to a wider audience than gold is. Now could indeed be a good time to invest in silver and hold onto it for the long term.
How Has COVID Affected Precious Metals So Far?
Gold and silver demand surged, and continues to, in 2020 from the COVID-19 pandemic. This is primarily due to concerns surrounding the economy. Other metals, such as platinum and palladium, have not seen steady growth. This could potentially be because these metals rely heavily on industrial demand. Without this front, platinum group metals are comparatively less valuable than gold.
Additionally, the journey of the supply chain was severely impacted by COVID. The journey gold and silver take moves from production to delivery, refineries/mints, traders, and the individual investor.
- Production. Because of the pandemic and subsequent quarantine, many mines temporarily closed to reduce the risk of COVID exposure. This means less supply of raw materials.
- Delivery. Travel regulations harshly limited imports and exports on anything that wasn’t necessary. Medical supplies took priority over all else, and delivery costs increased.
- Refineries and Mints. These rely directly on production. Since there is insufficient supply, it limits labor.
- Traders. Most impacted by the cost of delivery and limited supply because they also see the higher demand on the front lines. The extra cost for limited production and supplies bounces back onto the individual buyers.
- Individuals, or “end-users”. High demand and low supply lead to increased costs, especially for delivery.
All these also pour into main markets including futures, ETFs, physical metals for finance/commerce, and coins & small bars. Because COVID continues to be a prevalent issue, even resurging in certain areas, this disruption of the supply chain could continue and even increase.
How to Buy Gold and Silver (And Avoid Counterfeits)
If you want to buy gold or silver today, it is important to be sure you are buying from a legitimate source. Too many people fall victim to eBay scams or overpaying from less than reputable dealers. Additionally, buying directly from mints or refineries isn’t always an option. So how do you buy silver without accidentally buying a counterfeit? For starters, only buy from legitimate dealers.
Bullion Exchanges is a trusted precious metals retailer located in the heart of NYC. On top of having an online store you can explore from in the comfort of your own home, we also have a physical shop you can visit. Our main priority is to offer legitimate products to our customers at competitive prices. Additionally, we offer free appraisals when you come into the store with your precious metals. We have access to the best equipment available to test your precious metals and numismatic coins without damaging them. But if coming into the store isn’t an option, you can always test your precious metals at home.