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How Can Silver Outperform Gold in 2022?

How Can Silver Outperform Gold in 2022?

There is no question that 2021 gold and silver prices generated strong debates among investors and analysts regarding precious metals’ performance numbers. But with the start of 2022, many investors and analysts are highly optimistic about silver’s potential of outperforming gold.

Silver struggled in 2021, down 13.5% year-to-date. Market factors ranging from mixed economic data, lower industrial demand, and a stabilized dollar affected the price of the precious metal.

Despite the stabilizing dollar, analysts continue to be bullish on both silver and gold. With fears regarding rising inflation rates and slower-than-expected economic growth, the precious metals market might get the boost it deserves.

Demand for silver weakened in 2021, most notably in the industrial use sector. Silver is a hybrid precious metal, used heavily in the industrial sector and amongst investors as a hedge against inflation. With manufacturers cutting down production due to energy shortages, supply chain bottlenecks, and government-mandated shutdowns, demand for silver decreased, leading to excess market supply. 

Investors are taking advantage of decreased industrial demand for silver, looking at the precious metal as a bargain compared to gold. The gold-silver ratio is now 80:1 - an attractive ratio for investors.  

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