Silver has certainly caught the attention of investors of late, having risen to its highest price point in nearly eight years. As a result, it hit $30.03 per troy ounce for the first time since February 2013, before dropping down to $28.60 just 24 hours later.
Interestingly, such fluctuations in value were partially driven by Internet trading communities on resources such as Reddit, with silver allegedly the latest asset to be targeted by investors who want to manipulate price points (although this has been refuted by the infamous WallStreetBets forum).
This also shouldn’t detract from the appeal of silver and similar commodities in 2021. In this post, we will discuss commodity assets in more detail while appraising the most popular assets of this type in the current market.
What are Commodity Assets?
Silver isn’t the only asset of its type to have enjoyed price growth in 2021 so far, with precious metal up by approximately 17.9% over the course of the year.
Even on a fundamental level, commodities are an important aspect of most Brit’s daily life, as they represent the basic goods used in commerce and are interchangeable with other, similar items.
From an investment perspective, commodities are also important as they enable individuals to diversify their portfolio beyond traditional securities. This has particular relevance when you consider that commodities tend to move in the opposite direction to stocks, which encourages some investors to rely on assets such as gold and silver during periods of market volatility.
Typically, commodities are sorted into four distinct categories; namely metal, energy, livestock and meat, and agriculture. These niches cover a broad range of marketplaces, which is another reason why commodities offer such value as diversification tools.
However, commodities are also considered to be relatively risky investment propositions, largely because the market that supports them is impacted by factors that are impossible to predict.
These factors have a direct and real-time impact on supply and demand, while they include examples such as natural (and man-made disasters), unusual weather patterns and epidemics.
What are the Most Popular Commodities in 2021?
There are at least a number of ways to invest in commodities, which allows investors to mitigate their risk in certain circumstances.
These include ETFs, options and even gold and silver contracts for difference (CDFs), the latter of which makes it possible to speculate in commodity price movements and profit without assuming ownership of the underlying asset.
This definitely offers increased value in the current climate, as the global economic climate remains relatively precarious and commodities likely to fluctuate considerably in value during the first half of 2021 at least (particularly with the coronavirus pandemic continuing to remain prominent).
Silver undoubtedly offers superior value to gold at present, however, particularly with global growth likely to peak at 5.5% by the end of 2021. Thanks to silver’s largely industrial nature, this will see the asset’s price increase as economic prosperity returns, while gold is likely to decline as the demand for safe-haven assets continues to fall.
Silver is also mined prolifically for the purpose of building batteries and medical devices, which both represent growth industries in the current marketplace.