Why There Are Gold Bugs & Silver Stackers

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Can precious metals like silver truly act as stable stores of value in an uncertain economic landscape? Some investors believe that silver's intrinsic qualities make it an effective hedge against inflation over the long term. Yet, critics argue that silver is too volatile to rely on.

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In this article, we will analyze the characteristics that make commodities reliable inflation hedges, judging how well silver stacks up and whether it deserves consideration as a secure asset.
Silver as a Store of Value

Metal's Demand
Silver has diverse applications, from jewelry and coinage to electronics and solar panels. This industrial usefulness creates a baseline level of constant demand.

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Additionally, silver has enduring appeal as an asset with a store of value, generating investment demand. Healthy demand exists for both physical silver and paper vehicles like ETFs.(I do not recommend ETFS. They too are part of the paper house of cards)

Scarcity of the Metal Commodity

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Like gold, silver is rare and limited in quantity. While estimates vary, the total worldwide stocks of silver are around 530,000 metric tons. That may sound abundant, but it's very small compared to annual demand and production. Scarcity supports silver's value.

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Silver does exhibit volatility, sometimes even more than gold. But over long periods, silver has proven itself a stable way of preserving purchasing power.

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For example, with U.S. inflation averaging 3.8% from 1913 to 2022, silver has kept pace, appreciating in real terms. Periodic volatility is a trade-off that comes with silver's upside potential.(not taking into consideration compound interest, to be fair)

Transportability

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Silver is a precious metal with remarkable density, measuring nearly 20 times denser than gold. This unique characteristic makes it an excellent choice for those who value compactness and convenience.

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Unlike other commodities that can be quite bulky and cumbersome, silver is much easier to store and transport due to its high density. Even if you possess a significant amount of silver bullion, you can keep it secure and safe by storing it in a vault or private location.

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This feature is particularly advantageous for those who want to keep their investments protected and accessible at all times.

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