British Bullion Company bets big on silver, should you?

A leading London bullion dealer is increasing premiums to increase their silver stockpiles. Analysis of silver’s prospects suggests that investors should consider buying silver too.

Auronum, a British gold and silver bullion dealer is betting big on the silver price by them raising their silver bar buyback rates to the highest in the industry in a push to increase stockpiles of silver bullion.

Silver is often cited as the most undervalued commodity on the planet. This is largely due to the fact that at the current price of $20.95/oz, the spot silver price will need to rise by 137% just to retest its previous all-time high of $49.51/oz set in 2011 which was more than a decade ago.

When adjusted for inflation, silver prices look even more attractive. The fact that mainstream financial media outlets are completely ignoring the silver bullion market is another tick in the box for contrarian investors that like to buy out of favour investments.

Silver bars and coins look to be an excellent play for investors that pride themselves in buying from the pessimist and selling to the optimist. This ensures that buys are done at a low price and sales are done at a high price, the exact opposite of what novice investors usually do.

It is important to remember that silver has got a lot of the same fundamentals that gold has as well as a few more. When we talk about electrifying the world, silver conducts electricity more efficiently than any other metal, better than copper or any other metal that we see in electronics. Silver enjoys all the precious metal demands that make investors excited about investing in gold – but there is also that industrial aspect.

The more silver that we have in our smartphones and electric vehicles the better the battery performance in these electronics. This is very important in terms of improved efficiencies and ensuring that we do not waste precious energy. Silver will play a central role in that space and will be key to governments reaching their ambitious carbon reduction goals given that silver is a key part of solar panels.

Importantly, the percentage of silver being used in high-efficiency electronics and antibacterial applications in growing year-on-year which will help underpin demand and potentially cause silver to outperform gold in the next few years.

The supply picture also supports this theory, as there are not a lot of good silver projects out there as rich silver deposits are difficult to find. Generally, silver is produced as a byproduct from lead and zinc mines, it is not often we see large lead or zinc mines come onstream. Investors have been discussing the positive picture for silver for some time now, yet the silver price has not performed very well.

The gold price saw its best January in a decade in 2023 yet global physically backed exchange-traded funds saw outflows of 26 tonnes of gold. Investors should not be fazed by this factor however as physical bullion demand remains high. Central bank buying was extremely strong in Q4 2022.

It is likely that this was a response to the weaponization of the U.S. dollar as we saw the restrictions placed on Russia for the SWIFT currency exchange system. This made a lot of central banks around the world nervous about the U.S. dollars that they have in there. What we are currently seeing is a big swap of U.S. dollars to physical gold and silver bullion.

In a world of high inflation, silver and gold will play an important role in maintaining one’s wealth over time. Silver presents a fantastic opportunity for investors to exchange their depreciating currency for a financial asset that is out of the orbit of central banks and governments.

Silver has a rich history in international money and is likely to become more important as the developed world continues to push for new carbon-reducing technologies. Silver’s properties ensure it will be a strategically important metal for generations to come.

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