Is silver a hedge against inflation?


Using silver as an investment instrument is attractive for those looking to expand their investment portfolio.

Silver, as a precious metal, has a long-standing reputation as a store of capital and as a hedge against inflation, and enjoys continued interest among investors.

However, for beginners who are just starting to invest in precious metals, this path may seem daunting.



In 2022-2023 investing in precious metals, especially silver, has gained popularity due to increased volatility in global markets and economies. Silver is an inflation hedge. It demonstrates resilience to maintaining value in the face of inflationary pressures, outperforming other asset classes. This makes silver an attractive investment option for those looking to protect their savings from inflation.

Additionally, investing in silver offers diversification benefits because its returns are not highly correlated with other assets such as stocks or bonds. By including silver in an investment portfolio, investors protect themselves from both inflation and deflation, which improves risk management. Unlike paper money, which is printed, the amount of silver is limited. Therefore, when the US dollar weakens due to money supply growth or inflation, the price of silver rises.

Another attractive aspect of investing in silver is liquidity: if necessary, it can be sold without significant losses. This makes silver one of the primary inflation hedges in the modern investment landscape.

What advantages does silver have over gold?

Throughout history, there has been no measurable relationship between silver and inflation. Many experts question silver as an inflation hedge, favoring alternative investments such as real estate and stocks. While it is difficult to say that there is a direct correlation between silver and inflation, there are benefits that make it worth considering including it in your investment portfolio:

  1. Availability: Silver is more affordable than gold on a per ounce basis. This makes it more accessible to a wide range of investors, including those with limited capital. For investors looking to start with a small investment, silver is a more practical option.
  2. Industrial Demand: Unlike gold, which is primarily a store of value, silver has a wide industrial use. It is used in electronics, solar panels, medical devices, etc. This industrial demand creates a more stable and diversified source of value for silver since it is not solely dependent on investment demand.
  3. Historical Performance: Silver exhibits higher volatility compared to gold, which plays into the hands of investors. During periods of economic uncertainty or runaway inflation, silver often experiences larger price fluctuations, potentially leading to higher returns for investors willing to take on more risk.
  4. Inflation Hedging: Both silver and gold are considered inflation hedges, but silver often outperforms gold in this regard. Silver’s value often keeps pace with or even outpaces inflation, making it an attractive choice for those seeking to protect their wealth from the ravages of inflation.

Expert forecasts for the silver market in 2023

Silver cost per ounce in USD. (March-September 2023)


Nicky Shiels, head of metals strategy at MKS PAMP GROUP, made forecasts for the silver market:

  1. Despite the looming threat of recession, both industrial enterprises and the public continue to show increased interest in purchasing silver. This demand is expected to act as a support mechanism, preventing the price of silver from falling below $22 per ounce before the end of the year.
  2. Forecasts show that industrial demand for silver is growing and could reach unprecedented levels. However, there are concerns about supply due to social unrest and labor disputes in Latin America and Mexico this year. These factors could result in a deficit in excess of 150 million ounces.
  3. Compared to gold, the availability of silver on exchanges and in LBMA (London Bullion Market Association) vaults is relatively limited. Simply put, there is less silver available for trade or use than gold.

A report from The Silver Institute notes that silver demand grew 18% last year, reaching an all-time high of 1.24 billion ounces. This growth has led to a supply shortage. In the future, the institute expects the silver deficit to continue, which coincides with Nicky Shiels’ forecasts.

The ARVAR group of companies is engaged in trading precious metals around the world. We offer access not only to the Russian market, but also to other 8 regions of the world, including the UAE and China. We are open to sharing our many years of experience and are ready to share our expertise in investing not only in silver, but also in other valuable metals.

We provide not only trading, but logistics, financial and analytical services to optimize clients’ investment strategies. Our advantages include our own financial institution and favorable price conditions for the purchase and sale of raw materials.

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