One thing we can all agree on is that 2020 has been a year of market extremes.
During the sell-off, investors rushed to the exits, bringing down nearly every stock and asset class. Even investments that would stand to benefit in the new environment were sold amid the widespread panic.
But these extremes have presented tremendous short- and long-term profit opportunities.
As talks of stimulus began, beneficiaries of the situation became clear, and money began flooding into a previously stagnant asset class: precious metals.
Economics suggest the Federal Reserve’s relaxed monetary policy and money printing should lead to a weaker U.S. dollar and asset inflation. This is exactly what has happened.
With the expectation of more stimulus on the way, precious metals still have plenty of upside.
And one metal in particular has taken off and has room to run.
The Precious Metal Behind the Great American Reset
Gold often takes the spotlight as the metal to buy to hedge against a weakening dollar and serve as a store of value.
But the metal to buy at this stage in the game isn’t gold. It’s silver.
Despite silver’s 144% gain since it bottomed in March, the ratio between gold and silver prices is still historically low:
The Silver Price vs. Gold Price Ratio Is Historically Low
(Source: Bloomberg)
Silver’s cheapness in relation to gold isn’t the only reason to buy it.
Demand for the metal is expected to skyrocket during the Great American Reset due to the growth of electric vehicles (EVs), Internet of Things (IoT), solar energy and self-driving cars.
This is because silver is regarded as the best conductor of electricity in the world and is essential for the creation of new technologies.
Automotive Electronics
The Silver Institute estimates that silver’s market opportunity within automotive electronics is $1.1 trillion and will continue to grow.
Currently, electronics make up 45% of a vehicle’s cost on average. And this number is expected to increase as the arrival of fully autonomous vehicles gets closer.
This will result in high demand for silver, as it is used in many automotive electronics.
Factor in the electrification of the vehicle drive train as EVs replace gas guzzlers, and silver’s market opportunity gets even bigger:
(Source: Bloomberg)
The Internet of Things
As the IoT universe expands over the coming decade, the number of consumer electronics within it will skyrocket, which is bullish for silver:
(Source: Transforma Insights)
Devices such as laptops, tablets, desktop computers, displays and smartphones contain several silver products.
Silver’s market opportunity within consumer electronic devices currently sits at $1.9 trillion. And as the number of devices grows, so will the market opportunity.
Solar Energy
Silver is a crucial component in solar panels, which means it will be in high demand as solar capacity surges 215% in the next decade:
(Source: Bloomberg)
Between now and 2030, solar panel manufacturers are projected to consume 888 million ounces of silver, according to CRU.
That is 51.5 million ounces more than the combined output from global silver mines last year.
So, as you can see, silver is still historically cheap in relation to gold.
And it is a key ingredient for several disruptive technologies that will lead the way during the Great American Reset.
Regards,
Research Analyst, Automatic Fortunes
