By the Legendary Mike Maharrey
When it comes to safe haven assets, most people think of gold. But what about silver?
Despite being more volatile than gold and having a significant portion of its demand driven by industrial use, silver has historically outperformed gold during times of geopolitical and financial uncertainty. A recent report by Capitalight Research for the Silver Institute highlights this trend.
Understanding Safe Haven Assets
Safe haven assets are preferred by investors during periods of political or economic uncertainty. These assets are expected to maintain or increase in value during chaotic times when traditional assets are declining. Investing in safe haven assets can help hedge a portfolio and minimize overall losses.
Assets with low counterparty risk are considered the best safe havens. Counterparty risk refers to the possibility that the other party in a transaction may not fulfill its obligations, leading to disruptions in financial markets.
Silver’s Performance During Geopolitical Tumult
Capitalight Research’s analysis shows that silver has performed well during times of geopolitical chaos. For example, safe haven demand for silver increased as tensions in Ukraine escalated, reversing a previous downward trend in the silver price.
Looking back at geopolitical events since 1979, it is evident that certain events have had a significant impact on the silver price, driving safe-haven demand for both gold and silver.
Silver’s Role During Financial Crises
Silver has historically provided a safe haven during financial crises as well. During the 2023 banking crisis, gold saw a 23.7% gain, while silver has also shown impressive performance during previous financial downturns.
Capitalight Research concludes that investors should consider adding silver to their portfolio to take advantage of its safe haven qualities during times of uncertainty.
From this analysis, it is clear that silver is a valuable asset to consider for hedging against geopolitical and financial risks. Don’t overlook the power of silver in your investment strategy!