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If you browse the threads of Reddit’s WallStreetSilver on any particular day, you’ll hear plenty of talk about a coming silver shortage. This expected drastic decrease in supply has driven many investors to stock up on the precious metal. It’s not just Reddit, however, that predicts the shortage.
In fact, gold and silver dealers across the nation have already experienced an inability to meet demand over the last couple of years. There are often identifiable events that explain why this happens, but when looking at all factors, silver shortages might be more than just short-term occurrences.
If the many red flags of an impending shortage are right, it could mean several things for investors. Whether you already have your own stockpile or are just considering investing in silver, it’s imperative to understand the following information.
What’s Driving the Potential Silver Shortage?
Before understanding what a potential shortage in silver could mean for you, it’s first important to recognize why experts view this as a possibility. This will put you in a better position to make an informed investment decision, and in the investing world, those are the best kinds of decisions.
Even one of these factors could cause a significant drop in the supply of silver. When you consider the fact that they’re happening simultaneously, though, it’s difficult to imagine how a shortage isn’t on the horizon.
Silver Mines Depleting Their Supplies
News in the mining world has been abuzz with talk surrounding silver mines in recent years. Even as a variety of issues increased demand for the precious metal, mine production saw massive declines. What’s the likely outcome as demand increases and supply goes down? A silver shortage.
Plenty of discussion has focused on when the world’s silver supply may dry up, but several studies have already given us an idea of when this might happen. Research shows that the world may reach peak silver production by 2027, and it’s all downhill after that.
Increased Industrial Production
Many people don’t realize that they’re carrying around silver with them right now. In fact, if you’re reading this on your smartphone, you’re holding about one-third of a gram of the precious metal in your hand. That’s because one of the primary users of silver is the industrial world.
If it became necessary to predict the largest cause of a silver shortage, increased industrial production across the world would likely be the culprit. This is particularly the case in the computer and electronics industry. Between January 2009 and May 2021, production nearly doubled.
If this trend continues — which is a likely scenario thanks to growing economies and increased populations — the silver shortage could occur even before experts expect it.
Government Reserves Becoming Exhausted
Governments once held large reserves of silver in their treasuries, but this has largely changed in recent years. Even in America, most of a person’s pocket change contained silver prior to 1965. As the U.S. Treasury moved away from silver coinage, their need for stockpiles decreased.
This resulted in mass selloffs of their reserves. While global governments held over 350 million ounces of silver in 1970, this decreased to less than 50 million by 2018. Now that these stockpiles have become depleted, there’s little that governments can do if a silver shortage comes to pass.
Investor Demand Skyrocketing
As the COVID-19 pandemic spread across the world, investors started buying silver bullion bars, coins, collectibles, and many other precious metals. This happened long before the “silver raid” movement that seemed to pop up among WallStreetSilver members.
Many factors have contributed to the trend, but regardless of the key driver, there’s no denying that investor demand for the precious metal is currently through the roof. This means demand has become both a cause and effect of a potential impending silver shortage.
What Happens if a Silver Shortage Happens?
There are a variety of events that might occur if a shortage in everyone’s favorite white metal takes place. Fortunately for those who have invested heavily in silver, these will probably have a compounding effect on the rise of silver prices.
If you’re currently investing in precious metals, these are the most important factors to understand. Even if you choose not to purchase silver items, though, recognizing these issues is important. You’ll quickly see how each of these events can affect global economies.
Governments Rush to Purchase Silver
If a silver shortage occurs, national governments will probably be the first to know. A significant decrease in the supply of this precious metal isn’t something they can just ignore. If it becomes difficult to access silver, decreased industrial production can affect the entire market.
It’s difficult to envision a scenario where this occurs and national governments don’t intervene by purchasing massive stockpiles of silver. Unfortunately, they simply don’t have the reserves to respond to such an increase. As they engage in this action, the price of silver will only rise.
Banks Buy Silver Reserves
National governments won’t be the only entities that respond to a silver shortage by purchasing stockpiles. Of course, there will be different underlying reasons. While governments will want to ensure industrial production remains unaffected, banks will want to position themselves for massive profits.
As silver becomes even more difficult to find, banks will be in an ideal position to see massive returns on their investment. This means you’ll still be able to purchase silver — especially from the banks — but the spot price may get so high that increased premiums become barely noticeable.
Increased Electronics Prices
As a silver shortage becomes more serious, the price of electronics will probably skyrocket. Silver is the best material to use in these products, so replacing the precious metal is unlikely. As people pay more for electronics, silver will become progressively more valuable.
Futures Could Increase Spot Price Quickly
One of the major considerations of the silver spot price is futures contracts. Banks and investors predict how the price of precious metals will perform in the future, and they enter contracts based on these assumptions. These futures then have a direct effect on the current spot price.
This means the price of the white metal could increase long before a silver shortage becomes apparent. But once the major banks recognize when the shortage is likely to occur, the spot price and your ability to purchase silver could change at a moment’s notice.
Should I Invest in Silver Right Now?
No one can tell you exactly when to invest in silver. Like any other investment, precious metal prices can quickly change. A silver purchase of $259.00 on June 17, 2021, for instance, had a value of $258.00 the next day. Just five days later, though, the value jumped to $261.70.
While temporary fluctuations may worry some, it’s becoming increasingly difficult to ignore a potential silver shortage. If this happens, daily changes will mean very little in the grand scheme of things. A $5 drop, for instance, wouldn’t amount to much if prices had jumped $20 in recent days.
If you’re ready to invest now, keep the following tips in mind:
- Buy from verified sellers like Silver Gold Bull.
- Consider buying other precious metals —even if it’s one-gram gold bars.
- Store your silver safely (e.g., safe deposit boxes, precious metal storage).
- Expect to pay premiums — the extra price that covers silver costs.
- Pay attention to fineness (e.g., pure vs. sterling vs. jewelry, etc.)
The fact is that silver has always been a great investment. While corporate shares and mutual funds can lose all their value, this simply isn’t an issue for precious metals. Silver has held value throughout history, so even if a shortage doesn’t occur, your investment will have worth.
Don’t Let the Silver Shortage Sneak Up on You!
No one can perfectly predict how an investment will perform over time. It’s necessary to consider a variety of external factors that can affect commodities, stocks, and even entire markets. Armed with the information you now have, though, you’re in a better position to make an informed decision.
Even if they disagree over what it means, experts are all in agreement that a silver shortage is very likely, very soon. If you’re ready to take advantage of this and invest in your future, now is the time to act. In the coming years, it may become much more difficult to do so.
Visit our product pages at Silver Gold Bull today to see what we offer. From bullion bars to collectables, we can meet all your precious metals investment needs before a potential silver shortage makes it more difficult to do so.
