There are also silver-exchange traded funds that offer extensive exposure to silver companies and to the metal itself, while more experienced traders may be interested in silver futures. As such, the outlook for silver for the rest of the year seems rather bleak, with demand for silver even lower in the short and medium term. For extremely long periods of time, measured in decades, silver has proven to be an effective hedge against inflation. One of the main reasons why silver is so affected right now is because it is considered both an industrial metal and a precious metal, so it faces the disadvantages of both.
What will happen in the future is another matter, since the relative strength index (RSI) indicator on the silver price chart indicates that the commodity is practically oversold right now, suggesting that it could rise soon. Between 1988 and 1991 there was an average annual inflation of around 4.6%, but the average annual silver prices fell by 12.7%. Neumeyer expects a triple-digit price of silver, partly because he believes that the current market cycle compares with that of the year 2000, when investors were on the edge of the dotcom bubble and the mining sector was on the downside. Matt Watson, founder of Precious Metals Commodity Management, believes that, over the next decade, silver will greatly benefit from increased industrial demand, in particular from the electric vehicle, solar photovoltaic and electronics industries.
Some investors choose silver to cover their other shares, while others see it as a store of value that helps in times of uncertainty. As many analysts point out, silver is known to surpass its sister metal, gold, in times of economic prosperity and expansion. However, keep in mind that while forecasts can often be wrong, short- and medium-term predictions agree that the price of silver will fall slightly. Therefore, investors seek to exchange fiat currency for a commodity such as silver in the hope that its value will increase in line with inflation.
The boom in the photovoltaic industry could also play an important role in further boosting silver prices. These are the most common ways to invest in silver, from owning ingots to buying shares in companies involved in silver production. Although Neumeyer believes that we must break the ties between silver and gold, the reality is that most of the same factors that shape the price of gold also move silver. On the other hand, during economic uncertainty, silver values are affected by the decline in manufacturing demand.