馃 SILVER: COULD IT BE A SAFE-HAVEN ASSET? 馃
Excessive public spending by governments in this wave of State Neo-Feudalism, which began during the pandemic, has depreciated fiat currency (that backed by central banks). This has been reflected in the worst wave of inflation in recent decades and in the loss of purchasing power. Despite having been contained, geopolitical tensions have aggravated fears of a disruption in supply chains due to a tripolar model (commanded by CHUSssia: China-USA-Russia) and, with it, new recessionary/inflationary shocks.
In response, investors and global central banks have begun buying gold. At the very least, this metal has protected the hegemonic countries' profitability by 2% to 3% over inflation in recent decades. The problem lies in the current price versus the potential scarcity and the question of valuation regarding how much "gold" is enough. Finally, while Monetary Theory (David Ricardo) advocated a gold standard as a form of control over the value of money, history has shown that a large amount of gold is unproductive because it does not generate satisfactions on its own, as Keynesianism (J. M. Keynes) proposed.
Faced with these dilemmas and in search of alternatives... Could silver serve as another safe haven asset? The short answer is no, but perhaps it could in some cases. From 1975 to 2025, gold experienced better returns with less volatility than silver [Proxy Ratio Sharp: Silver 0.08 vs Gold 0.11]. As the chart shows, silver has occasionally outperformed the statistics; it might be useful for a trader or speculator, but it would be a nightmare for any government seeking to back its currency with it.
The real reason lies in who controls the system. Gold is highly coveted for jewelry, unlike silver, which is preferred for industrial uses. However, the richest and most important traders and strongest players are located in the US, Europe, Russia and China, and they would have to cede their power over gold in favor of silver. In a way, they would also give power to silver holders; this doesn't sound strategic. Nevertheless, silver could play a role precisely because of its industrial uses, making it a potential bargaining chip, like rare earths, for example.
Do you think that could silver be a safe-heaven asset?
The best analysis is yours!
J. Joel Padilla
Copyright: Joel Padilla 2025
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