How Does Inflation Affect Silver Prices?

Inflation Affects Are Positive On Silver

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When people think about the ideal inflation hedge, they tend to think of gold. However, silver is another precious metal that can protect you during times of inflation. Exclusive silver coins like the Silver Standing Lion Guinea Coin or the Silver Osprey Coin can help add value to any financial portfolio. The executives at Allegiance Gold can help you become more educated on how silver can protect and preserve your financial wealth. Let’s take a look at how inflation affects the price of silver. 

What Exactly is Inflation? 

Some people have a pretty good idea of what inflation is and how it affects the economy. However, it is a good idea to understand the exact causes and effects of inflation. Starting off, inflation is defined as a decrease in purchasing power. During times of inflation, money buys you less. This can be extremely punishing to those who spend a large part of their income on everyday expenses such as food and fuel. During times of inflation, economic hardships can increase and lead to long term instability. 

Why is Inflation Dangerous?

Inflation is particularly dangerous because many everyday items can become unaffordable to poor people and major purchases can become unaffordable for the middle class. For instance, food and fuel prices can rise at a double digit rate. That means that the poor can only afford smaller amounts of food. For the middle class, interest rates on home and auto loans can rise quickly. This can make purchasing a first home unaffordable to many. Finally, inflation can be dangerous to the upper middle class and rich since stocks tend to underperform during inflationary times. 

How Silver Performs During Sustained Inflation

One of the best performers during inflationary times are precious metals. In particular, silver can be an outstanding investment hedge against inflation. For example, the 1970s was the last time the United States experienced a sustained period of inflation. This inflation was spurred by Nixon’s closing of the gold window in 1971. At the time silver was trading at a low of $1.27 per ounce. As inflation began to spread during the 1970s, the price of silver began to rise exponentially. Eventually, the price of silver would reach a high of $50 an ounce in 1980. This was a 3,900% return in the precious metal at a time when the stock market only returned 188% during the same period of time. 

In fact, silver outperformed gold which returned 1,800% during the 1970s. For those who want to get the best gains during inflationary times, silver offers such an opportunity. 

What Makes Silver a Great Inflation Hedge? 

There are a number of reasons why silver is an excellent inflation hedge. Here’s a look at why the price of silver tends to do extraordinarily well during times of inflation.

1). Limited supply

As a precious metal, there is a limited supply of silver on the planet. During times of inflation, the huge demand in the precious metal tends to outstrip the supply. This can cause silver coins and silver bars to simply be unavailable.

2). History as a store of wealth

Silver has been a store of wealth for thousands of years. Contracts that to fiat currencies which only have a lifespan of a couple of decades. In times of instability, silver is a reliable store of wealth. 

3). Widespread industrial demand 

Silver also has widespread industrial use. Each year, 600 million ounces of silver is used for industrial purposes. That means that there is less supply for silver investors.

3). Destruction due to industrial use 

During the industrial process, hundreds of millions of ounces of silver are destroyed and unavailable for precious metal investors. This can drive silver prices higher. 

Ways to Invest in Silver

There are a number of ways that you can invest in silver. Here’s a look at the five most popular silver investment options. 

1). Silver coins 

Silver coins are one of the most popular ways to invest in silver. Allegiance Gold offers some of the most rare and exclusive coins on the market.

2). Silver bars

You can also purchase silver bars which are available in ounce and kilogram sizes. 

3). Silver ETFs

Silver exchange traded funds are a simple way to trade silver as easily as training stocks. 

4). Silver mining stocks 

Silver mining stocks can act as a leveraged play on the price of silver 

5). Junk silver 

Junk silver are coins such as dime and quarters with silver content in them. Junk silver is the cheapest way that you can own silver. 

Protecting Your Wealth with Silver During Inflation 

Silver can offer you outsized gains during times of inflation. The best way to get started is by purchasing silver coins at Allegiance Gold. We offer the best in quality for our silver coins and bullion, and our executives will always be there to help educate you more on the importance of owning silver. If you call us today at 844-790-9191, you will also receive the 2022 Survival Guide for your savings and retirement for FREE.  Call Allegiance Gold today!