“The desire of gold is not for gold. It is for the means of freedom and benefit.” – Ralph Waldo Emerson

 

The need for retirement income has never been greater as interest rates remain low and the stock market gains are becoming slimmer despite record market levels. Therefore, it’s worth taking a few moments to see how precious metals, specifically silver, have performed over various time frames:

 

The Great Depression

Silver reached its all-time low of around 45 cents an ounce in the middle of the Great Depression. But through the 1930s there were a number of upswings in the price of silver leading to a price of 87 cents an ounce by 1947.

 

Silver Thursday Ushers in a New Era 1980s

Between 1979 and 1980, a new decade ushered in unprecedented gains in the price of silver which moved from $6 per ounce to over $40 per ounce due to market speculation. The now infamous Hunt brothers in a bid to corner the silver market created a highly leveraged position that led to a one-day collapse of the silver market in March 1980.

Prices remained soft for much of the 1980s as industrial silver demand was in decline and a worldwide recession was underway. As traders absorbed the impact of the Black Monday stock market crash in 1987, silver prices remained robust rising from the price of $5.65 per ounce in January to $7.00 per ounce by November 1987.

 

Lower Mine Production in the 1990s

Mine production of new silver rose by only 4% from 1990 through 1999. The fundamentals for silver strengthened during the decade while the average price of silver rose back up to 5.22% from $4.83 from the beginning of the decade.

 

2000s: As Dot.com Boom Bursts, Silver Stays Steady

Remember AOL.com? Following, the burst of the tech stock bubble in 2001 and in the face of an enduring global economic slowdown, the silver price demonstrated resilience.

The average price of $4.60 per ounce in 2002, meant that silver recorded a 5% year-on-year increase over 2001. Silver retained its characteristics as a precious metal, rising in value during periods of crisis.

By 2006, the silver price experienced a 58% increase over the average price of $7.31 per ounce in 2005. The silver price reached levels not seen in 26 years and was the leader when compared with gold (36% increase) and platinum (27% increase). Driving the momentum was the continued strength of investment demand, which can be attributed to the successful launch of Barclays’ Global Investors iShares Silver Trust Exchange Traded Fund (ETF), (SLV ticker symbol) which was introduced in late April 2006.

During the first half of 2008, investors drove the silver price up above the $20 per ounce mark (a high of $20.92 per ounce was recorded in March) against a backdrop of generally firm fabrication demand. The second half of 2008 was a different story as the economic outlook deteriorated rapidly, and silver, as well as other metal prices, slumped. However, silver’s price in the first half of 2009 recovered a good part of the lost ground, according to price reports of the time.

In 2009, coins and metals fabrication grew to a new record of 78.7 million ounces. In the U.S. the increase in bullion demand was also accompanied by a surge in bar demand. For instance, the popular U.S. Silver Eagle bullion coin reached record highs of 28 million sold in 2009.

 

2010: The Beginning of a New Era

By 2010, silver had surpassed 1980 price levels as world investment grew by 40%. Exchange-traded funds like iShares drew interest. For example, iShares Silver Trust accounted for almost 40% of the increase.

More bars and coins were created to meet the growing demand. Posting record-level prices were the famed Australian Kookaburra, the Austrian Philharmoniker, and the Canadian Maple Leaf.

Continued strength in 2011 paved the way for another record silver price averaging $35.12, or more than double the price in 2009.

Going into the second half of the decade, many commodity markets saw substantial price shifts to the downside and silver was not immune. This was driven by a slowdown in Chinese economic growth and a stronger U.S. dollar. Experts point out though that the lower price environment has done much to help boost the physical demand that we see today as many investors saw in 2015 when silver traded at $15.68 per ounce as a good entry point into the market.

At the end of 2020, silver is trading at nearly $26 per ounce that represents a jump of more than 41% from 2019.

Due to low-interest rates, investors are looking to take on risk and many see bullion’s likely appreciation in the years to come as precious metals offer a hedge against currency depreciation and inflation in the uncharted macro-economic environment of a new post-pandemic world that has yet to emerge.

 

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