Silver is chronically undervalued and more affordable at just $35 per ounce, whilst gold hovers around $3500 per ounce (oz). Just 1 ounce of gold buys you around 100 ounces of silver. Silver, the industrial money-metal has over 50 modern day applications in solar panels etc.
Silver the ‘poor man’s gold’ plays ‘second fiddle’ to gold, but don’t underestimate it. Global demand for both silver & gold consistently surpasses available supply, driving prices up.
Pure gold & silver coins/ bars are smart hard assets to buy in a turbulent world of wars, fickle financial markets, geopolitical turmoil, and overprinted paper money and paper bonds.
Silver production in 2024 was 1 billion ounces, but consumption was 1.2 billion – a 200-million-ounce shortfall.
The demand shortfall has grown by around 18% for the last 5 years. Gold demand in 2024 was almost 5000 tons, whereas supply was only 3300 tons (World Gold Council), leaving a demand shortfall of around 1700 tons. Just 3 players consumed 3300 tons produced: (1) industrial buyers bought 10% or 330 tons (2) jewellery manufacturers 57% or 1877 tons and (3) central banks almost 33% or 1045 tons. These 3 groups consumed almost 100% of the 3300 tons produced in 2024.
That means virtually 0% was left for 8 billion potential individual buyers globally! Individuals are buying from the existing 240 000 tons of gold produced since the beginning of mankind. Global gold is finite, filling just 4 Olympic-sized swimming pools! Currently individual gold purchases are just gold trading hands: this gold is not coming from new mined & minted gold but from existing gold. What happens when gold stops trading and starts vanishing? What happens when you want to buy gold (or pure silver), but can’t get your hands on any? How will this impact you……? Consider this carefully, proactively anticipating potential future implications & plan accordingly. Foresight is required….
What gold and silver should newbies buy?
South African Gold Krugerrands can be bought as 1/10th oz, ½ oz or a 1 oz coin – whatever you can afford. If you are British, consider Britannia Coins. If Canadian, consider Maples, American consider Eagles. Residing in European, consider Austrian Philharmonic coins or Pamp Suisse bars. Now to silver: 100g, 250g, 500g or 1kg pure silver bars can be bought from reputable mints. Johannesburg’s reputable Gold Reef City Mint (www.grcmint.co.za) sells a 1kg fine silver bar at R25 120 at today’s spot price (both gold & silver always trade at today’s spot price). Remember smart investors ONLY buy from reputable, well-established mints & dealers. Do a careful check before buying physical gold & silver.
Article by: Dr Craig Voortman – MBA (Wales University), MA (Cum Laude), D Phil (University of Johannesburg), and partially completed a Postgraduate Diploma in Financial Planning
