Silver: what now?

After coming onto the radar of the WallStreetBets gang, the silver price shot up by more than 10% before suffering a sharp drop the next day.

For most MoneyWeek readers, the Reddit saga began as an intriguing distraction, but not something with a huge impact – not many of us are invested in struggling US retail chains. However, then silver came onto the radar of the WallStreetBets gang. As a result, it shot up by more than 10% to over $30 an ounce earlier this week, before suffering a sharp drop the next day. So what should you be doing if you own it?

Our view is quite simple: write it off as a blip. Silver is volatile at the best of times. While the Reddit story resurrected many of the long-running conspiracy theories surrounding silver (mainly to do with investment banks manipulating the price, which is not entirely without basis in fact, but not something you can do anything about), anyone who owns silver now should be doing so because they believe in the bullish macroeconomic case for owning it, not because they expect an imminent short squeeze. 

As Eoin Treacy notes on fullertreacymoney.com, “the big difference between silver and GameStop is that there is a fundamental reason for being interested in silver. The world is awash with liquidity and governments are intent on achieving their inflation goals come what may”. So it’s worth having some exposure. But treat it as a speculative part of your portfolio. While gold broadly hangs onto its buying power over the very long term, it still endures long periods of underperformance, and silver is far worse on this front – it still hasn’t surpassed its 1980 and 2011 peaks in nominal terms, let alone adjusted for inflation. So in terms of asset allocation, view silver as being part of your equity allocation – same as your gold mining stocks – rather than part of your “buy and HODL” physical gold stash.

Recommended

The building blocks for an income strategy: resilience, growth and diversification
Advertisement Feature

The building blocks for an income strategy: resilience, growth and diversification

Iain Pyle, Investment Manager, Shires Income plc
7 Jun 2023
Saving vs investing: which is better to help you make more money?
Personal finance

Saving vs investing: which is better to help you make more money?

Saving has become a more attractive option with interest rates hitting the highest levels seen in years, but if you’re prepared to take some risk inve…
7 Jun 2023
Investment trusts for your ISA
Investment trusts

Investment trusts for your ISA

Depending on your investment aims, these are the investment trusts to consider for your ISA
7 Mar 2023
What is an investment trust?
Too embarrassed to ask

What is an investment trust?

“Active” investment funds come in two main varieties, one of which is investment trusts. But what exactly is an investment trust?
2 Mar 2023

Most Popular

Best savings accounts – June 2023
Savings

Best savings accounts – June 2023

Interest rates have been creeping up - we look at the best savings accounts on the market right now.
6 Jun 2023
Nationwide to give £100 cash boost to customers
Personal finance

Nationwide to give £100 cash boost to customers

Nationwide Building Society is giving customers £100 as it reinvests profits. Dubbed the Nationwide Fairer Share scheme, we look at who is eligible.
22 May 2023
How much will it cost you to retire early?
Pensions

How much will it cost you to retire early?

The pre-state pension income gap means couples may need an extra £136,000 if they want to retire at 60 – can you afford to retire early?
6 Jun 2023