The Tale of Silver During Global Crisis
Precious metals are particularly responsive to a socio-cultural and economic crisis.
Although the buoyed demand for gold amid the pandemic proves that investors consider it a safe haven and a hedge against inflation, experts have revealed that the precious metals market witnessed major unprecedented fluctuations in 2020, more dramatic than ever before.
At the start of 2020, when the first positive case of the COVID-19 crisis originated, initially, the price of precious metals plunged as many large financial institutions and investors began selling their precious metals in an attempt to cover margins calls.
Findings from a USA-based study showed that the price of silver dropped by over 34% within a week during this period.
The versatile white metal is known for its catalyst and conductive abilities and is used in automotive, medicine, solar panels, and many other industries.
It’s speculated that the plunge was mainly due to a halt in manufacturing industries during COVID-19 lockdown measures, as about 60% of silver’s demand is induced by these industries.
The COVID-19 impact was especially evident in China as, given its extensive colossal manufacturing and industrial sector, it’s one of the world’s largest consumers of silver.
On the other hand, when the silver prices were low, the Global North also underwent major stock market crashes causing the demand for silver to skyrocket as a result.
The demand for silver further increased when the containment measures eased, and the industrial activity went through a rebound.
Coronavirus significantly impacted mining; according to The Silver Institute, the national closure of the second-largest silver mine in Peru impacted the net balance.
Heightened uncertainty and record low interest rates have a positive impact on precious metals markets.
When investors lose faith in gold investments, it has a direct effect on platinum and silver demand.
The creation of a systematic shortage in supply and lockdown measures resulting in Mint closures made the demand for silver bullions and coins to rise rapidly, enabling people to sell them at significantly higher premium rates.
Silver’s intrinsic value has made it a popular precious metal for investors looking to diversify their portfolios.
Analysts have predicted an optimistic outlook for silver in 2021.If you’re looking to safeguard your hard-earned money and are interested in silver investing options, we suggest consulting expert custodians at Orion Metal Exchange.
We have extensive experience of over 50 years in the precious metals market, and we’ve been chosen as the top IRA company by Consumer Affairs.
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