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The Silver Edge to Inflation Hedging

There are bright sides to the dark cloud of inflation, and for some investors one of them may be silver.Silver is generally seen as gold’s sister metal — not as valuable, and not nearly as ubiquitous in terms of demand, but that doesn’t mean it…

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There are bright sides to the dark cloud of inflation, and for some investors one of them may be silver.

Silver is generally seen as gold’s sister metal — not as valuable, and not nearly as ubiquitous in terms of demand, but that doesn’t mean it should be counted out of a diverse portfolio.

Because of its precious metal status, silver can be a decent hedge against inflation as its worth is derived differently from paper currencies. Unlike paper currencies, silver cannot be printed, and has a limited supply. When the US dollar weakens (either because of increased money supply or inflation), the silver price tends to rise.


This limited supply posed a problem to the US Department of the Treasury back in the 1950s, when coinage was still made from silver. As the US recovered post-war, demand for industrial silver and coinage both boomed, forcing the treasury to sell its silver holdings to keep the price at its monetary value. If it hadn’t done so, individuals would have had the incentive to melt silver and sell it for a higher price than its monetary value.

Silver is no longer used for general coinage, but it still has great use from an investment perspective. And aside from being a precious metal (and thus a store of wealth), silver has many industrial applications: in batteries, smartphones, glass coatings and water filtration, to name just a few. The industrial use of silver accounted for nearly half of silver demand in 2020 (up 8 percent from the year before,) according to the Silver Institute.

The silver market has seen volatility over the years. Silver hit its highest price (US$48.70 per ounce) in the 1970s on the back of a confluence of factors, including perceptions of limited supply and high inflation. Prices then declined steady until the 2000s, when they began a slow uptick, nearly reaching the US$50 level again in 2011. Another steady decline followed until mid-2020, when fears over surging inflation (on the back of pandemic stimulus) and renewed economic output (as economies opened) once again drove prices up.

Inflation and silver: Understanding the correlation


Historically, silver and inflation haven’t had a direct relationship that can be neatly quantified. Many experts argue against it as a hedge, opting for other assets like real estate and stocks. And while it’s tricky at best to say silver and inflation have a direct correlation, silver has certain attributes that make it a useful investment in a portfolio.

The first is that silver tends to move in tandem with gold: when the price of gold rises, so too does the price of silver. Gold and inflation have a stronger correlation, and thus silver benefits from this once-removed relationship.

Secondly, because of silver’s greater ties to industry (compared to gold, which saw just 8 percent usage in technology in 2020), when demand for goods and services outraces supply, and inflation hits and prices rise, the price of silver tends to increase in tandem. For example, the price of silver jumped 70 percent between May 2020 and May 2021 as economies around the world reopened after a year of muted growth. In fact, Ole Hanson, head of Commodity Strategy at Saxo Bank, told CNBC that industrial demand was the “main reason” that silver outperformed gold in that time period. Furthermore, US inflation was up 5 percent in that time.

Thirdly — and this is important from a gold vs. silver perspective — silver is much more affordable than gold, and so its price tends to move much faster, affording a far greater return on investment. From May 2020 to May 2021, gold only rose 6.4 percent compared to silver’s 70 percent. As Jodie Gunzberg, managing director and chief investment strategist at Morgan Stanley Wealth Management Institutional, told US News, “It takes a much smaller investment in silver than gold to hedge against inflation.”

And finally, as the world attempts to switch to a green economy, silver’s industrial demand is only set to increase. CRU International’s report "The Role of Silver in the Green Revolution" highlights three key industries where silver is critical: solar energy, nuclear energy and appliance charging. All three industries are pegged as set to grow in the race for net-zero emissions, locking in silver demand for the near future.

If you’re looking for ways to invest in silver, give this guide a read.

Inflation and silver: It’s no silver bullet


Like all investments, silver comes with its own list of drawbacks.

The white metal is extremely volatile — far more volatile than gold, other commodities and even the S&P 500 (INDEXSP:.INX). This is because of the multiple use categories for silver, where industrial demand coupled with investment demand can drive prices up or down quickly.

Another reason — and this is true for gold as well — is that monetary policy action can reduce the investment glamor of silver. As inflation persists, interest rates will increase, pulling investment favor back to the US dollar and strengthening it, likely to the detriment of precious metals.

Finally, silver’s returns aren’t a sure bet. Before its surge in 2021, the silver price had been on a steady decline since 2011. Comparing its action with the robust returns of the S&P 500 and real estate makes it an unlikely candidate to dethrone other favorites in the investment space.

Some market watchers say that silver is ready for another breakthrough, citing similar patterns from 2004 to 2006, when silver began to skyrocket. From a macro perspective, as the world economy recovers and the green economy becomes increasingly important, the fundamentals are in place for strong market support.

From an inflation hedge perspective, other commodities (oil, gold) and other categories (real estate) can offer better returns and more stability. However, there is historical precedent that when silver starts a bull run, investors can benefit deeply and significantly add to their portfolios, instead of just as an inflation hedge.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Pallavi Rao, hold no direct investment interest in any company mentioned in this article.

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Economics

Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions

Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions
PR Newswire
NEW YORK, May 17, 2022

NEW YORK, May 17, 2022 /PRNewswire/ — The United States Council for International Business (USCIB) joined today nearly…

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Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions

PR Newswire

NEW YORK, May 17, 2022 /PRNewswire/ -- The United States Council for International Business (USCIB) joined today nearly 100 other global trade and industry associations to urge WTO members to renew the Moratorium on Customs Duties on Electronic Transmissions at the 12th WTO Ministerial Conference in June.

According to the statement, allowing the Moratorium to expire would be a historic setback for the WTO, representing an unprecedented termination of a multilateral agreement in place nearly since the WTO's inception – an agreement that has allowed the digital economy to take root and grow. All WTO members have a stake in the organization's continued institutional credibility and resilience, as well as its relevance at a time of unprecedented digital transformation.

Continuation of the Moratorium is critical to the COVID-19 recovery. As detailed by the United Nations, the World Bank, the OECD, and many other organizations, the cross-border exchange of knowledge, technical know-how, and scientific and commercial information across transnational IT networks, as well as access to digital tools and global market opportunities have helped sustain economies, expand education, and raise global living standards.

Continuation of the Moratorium is also important to supply chain resilience for manufacturing and services industries in the COVID-19 era. Manufacturers – both large and small, and across a range of industrial sectors – rely on the constant flow of research, design, and process data and software to enable their production flows and supply chains for critical products.

The Moratorium is particularly beneficial to Micro, Small and Medium-Sized Enterprises (MSMEs), whose ability to access and leverage digital tools has allowed them to stay in business amidst physical restrictions and lockdowns.

Failure to renew the Moratorium will jeopardize these benefits, as customs restrictions that interrupt cross-border access to knowledge and digital tools will harm MSMEs, the global supply chain, and COVID-19 recovery – increasing digital fragmentation. As UNCTAD has explained, such fragmentation "reduces market opportunities for domestic MSMEs to reach worldwide markets, [and] ... reduces opportunities for digital innovation, including various missed opportunities for inclusive development that can be facilitated by engaging in data-sharing through strong international cooperation.... [M]ost small, developing economies will lose opportunities for raising their digital competitiveness." 

The rest of the statement can be found here.

Media Contact: Kira Yevtukhova, kyevtukhova@uscib.org

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SOURCE United States Council for International Business

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Government

“The Real President Is Whoever Controls The Teleprompter”: Musk Delivers Scathing Criticism Of Biden

"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch…

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"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch Times,

Tech billionaire Elon Musk this week warned that the United States must take steps to address inflation or it will end up like socialist Venezuela.

Musk, who is currently in the process of acquiring Twitter, told a virtual conference that he believes the government has printed too much money in recent years.

“I mean, the obvious reason for inflation is that the government printed a zillion amount of more money than it had, obviously,” Musk said, likely referring to COVID-19 relief stimulus packages worth trillions of dollars that were passed in recent years.

U.S. inflation rose by 8.3 percent in April, compared with the previous year. That’s slightly lower than the 8.5 percent spike in March, but it’s still near the 40-year high.

“So it’s like the government can’t … issue checks far in excess of revenue without there being inflation, you know, velocity of money held constant,” the Tesla CEO said.

“If the federal government writes checks, they never bounce. So that is effectively creation of more dollars. And if there are more dollars created, then the increase in the goods and services across the economy, then you have inflation, again, velocity of money held constant.”

If governments could merely “issue massive amounts of money and deficits didn’t matter, then, well, why don’t we just make the deficit 100 times bigger,” Musk asked. “The answer is, you can’t because it will basically turn the dollar into something that is worthless.”

“Various countries have tried this experiment multiple times,” Musk said.

“Have you seen Venezuela? Like the poor, poor people of Venezuela are, you know, have been just run roughshod by their government.”

In 2018, Venezuela, a country with significant reserves of oil and gas, saw its inflation rise more than 65,000 percent amid an economic crash that included plummeting oil prices and government price controls. The regime of Nicolas Maduro then started printing money, thereby devaluing its currency, which caused prices to rapidly increase.

During the conference, Musk also said the Biden administration “doesn’t seem to get a lot done” and questioned who is actually in charge. 

“The real president is whoever controls the teleprompter,” he said.

“The path to power is the path to the teleprompter.”

“The Trump administration, leaving Trump aside, there were a lot of people in the administration who were effective at getting things done,” he remarked.

Musk’s comment about the White House comes as Jeff Bezos, also one of the richest people in the world, has increasingly started to target the administration’s economic policies. Bezos, in a series of Twitter posts, said the rapid increase in federal spending is the reason why inflation is as high as it is.

“Remember the Administration tried their best to add another $3.5 TRILLION to federal spending,” Bezos wrote on Monday, drawing rebuke from several White House officials. “They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40-year high.”

Tyler Durden Tue, 05/17/2022 - 15:05

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Economics

Summit Healthcare REIT, Inc. COO/CFO Elizabeth Pagliarini participates in the 9th Annual IMN Real Estate CFO & COO Forum

Summit Healthcare REIT, Inc. COO/CFO Elizabeth Pagliarini participates in the 9th Annual IMN Real Estate CFO & COO Forum
PR Newswire
LAGUNA HILLS, Calif., May 17, 2022

LAGUNA HILLS, Calif., May 17, 2022 /PRNewswire/ — Elizabeth Pagliarini, COO…

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Summit Healthcare REIT, Inc. COO/CFO Elizabeth Pagliarini participates in the 9th Annual IMN Real Estate CFO & COO Forum

PR Newswire

LAGUNA HILLS, Calif., May 17, 2022 /PRNewswire/ -- Elizabeth Pagliarini, COO/CFO of Summit Healthcare REIT, Inc. ("Summit") joined five other industry leaders on the Executive Roundtable at the 9th Annual IMN Real Estate CFO & COO Forum at the Monarch Beach Resort in Dana Point, California. The panelists shared their thoughts and experiences regarding the post pandemic environment, namely the recovery progress and how businesses are changing, trends in tenant lease terms, and the transition back to working in the office and its implications for new hires. They also provided insights into the availability of financing and how terms have changed over the past six months, how they are managing supply chain crises, rising costs of sourcing and materials, and staffing shortages, the changes made to core processes over the past 18 months and whether these changes would be permanent, and how investor communications have changed in recent months.

About Summit Healthcare REIT, Inc. 
Summit is a publicly registered non-traded REIT that is currently focused on investing in seniors housing and care real estate located throughout the United States. The current portfolio includes interests in 53 facilities in 14 states. Please visit our website at: http://www.summithealthcarereit.com

This material does not constitute an offer to sell or a solicitation of an offer to buy Summit Healthcare REIT, Inc. 

This release may contain forward-looking statements relating to the business and financial outlook of Summit Healthcare REIT, Inc. that are based on our current expectations, estimates, forecasts and projections and are not guarantees of future performance. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from any forward-looking statements contained in this release. Such factors include those described in the Risk Factors sections of the Company's annual report on Form 10-K for the year ended December 31, 2021, and the quarterly report for the period ended March 31, 2022. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events. We claim the safe harbor protection for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

CONTACT
Chris Kavanagh
(800) 978-8136
ckavanagh@summithealthcarereit.com

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SOURCE Summit Healthcare REIT, Inc.

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