Silver is a good investment from a risk perspective. For one, precious metals, including both silver and gold, typically are counter-cyclical. This means that they generally maintain value or increase in value during a recession. Additionally, silver has many practical, industrial uses, which guarantees that silver will remain in demand (read: at a reasonable market price) as long as other currencies remain strong. [2] X Research source The current gold-silver price ratio, which reflect the price of gold against the price of silver, stands at about 82:1 ($1230/oz for gold, $15/oz for silver), well above the historical ratio, which is generally about 15:1. This may mean it is a good time to “buy low” on silver, but the historical price volatility of silver makes for difficult predicting. [3] X Research source Do your homework, consult your investment advisor, and make your best educated guess.
The current price difference per troy ounce of gold and silver stands at roughly a 82:1 ratio; in historical terms stretching back two-plus centuries, the ratio has typically been closer to 15:1. This may mean silver would appear to be severely undervalued compared to gold and a good buy vis-a-vis gold right now, but of course there is no guarantee of that. [4] X Research source Silver’s lower value may make it less efficient to invest in when compared to gold. $5000 of silver takes up substantially more space than the same value of gold, which is something to consider in regards to the costs of transportation, storage, and protection. [5] X Research source Silver has more industrial applications than gold, as it is a common component in consumer electronics, for instance. This tends to give it a greater price volatility than gold. [6] X Research source Silver’s price does, however, tend to rise faster than gold’s during a “bull market” for precious metals (for instance, during the 1970s). [7] X Research source
Whatever its form, precious metals investing should not normally be the dominant focus of your portfolio. Use it as a way to further diversify your investments and to act as a hedge against some of the more volatile aspects of your portfolio. Every expert will offer his or her own particular advice, but one rule of thumb is to keep precious metals investments at roughly 10%-15% of your overall portfolio. [8] X Research source Some experts will tell you that if you are going to invest in silver, it is best to go straight to the source and buy tangible amounts of the real thing. In the end, however, the choice on how to diversify (or not) your silver portfolio is yours.
People who are wary of buying stock in technologies that seem to become obsolete overnight or in commodities that only seem to exist on paper (or in the digital realm) can be particularly drawn to the lasting value of a tangible item like silver. However, silver’s longstanding status does not shield it from the ups and downs of the market, and it should not normally be the primary focus of an investment portfolio. As always, diversification is preferable. Owning the actual silver bullion (as bars or coins) and keeping it in your home or safe deposit box can offer a sense of security that stock certificates or online brokerage accounts can’t match. But remember, possessing the actual item means you have to store it and protect it. [10] X Research source
Of course, your local shopping plaza isn’t likely to have a shop selling silver bars. Silver bars can, however, be purchased from many banks as well as from bullion dealers. Do your homework to make sure you are buying from a reputable dealer, however, to ensure that you are getting the amount of pure silver that you’re paying for. Make sure you have a plan for securely storing and protecting your silver bars. A bank safe deposit box can be a good choice, or a high-quality home safe if you prefer to keep your bullion on your own property. Look into insurance for this substantial investment as well.
For instance, the U. S. Mint sells silver bullion coins at a $2 markup per coin. [13] X Research source Bullion coins are essentially much smaller, disc-shaped silver bars; they are priced and sold in a similar fashion, with their price determined largely by the prevailing market rate and how much silver is actually contained in the coin. To help you in purchasing silver bullion coins from reputable dealers, the U. S. Mint’s website offers a searchable list of dealers in your area at http://catalog. usmint. gov/bullion-dealer-locator?_ga=1. 74213714. 1728674329. 1421249845.
Typically, the numismatic values of collectible coins are far greater than the value of their silver or gold content. [14] X Research source
Typically, the numismatic values of collectible coins are far greater than the value of their silver or gold content. [14] X Research source
Stock certificates or an online portfolio are indeed less tangible than a stash of silver in your safe, but that makes them much easier (and cheaper) to buy, sell, transfer, and possess. Some people think physical possession of precious metals makes good sense during times of economic distress, or even some apocalyptic scenario when our digital world comes crashing down. However, if the worst-case scenario does happen and society as we know it is in tatters, how practical will it be for you to trade a silver bar for food or shelter anyway?
Shares in silver ETFs are backed by actual silver bullion stored in vaults; owning shares, however, does not give you the right to access or “trade in” for this actual silver. [16] X Research source There are many silver ETFs available for purchase, with the iShares Silver Trust (SLV) as one of the most popular. As with any investment, do your research before buying. Owning a silver ETF will save you the costs and worries of holding, protecting, and transporting your silver, but you lose the benefits of tangible possession and have to pay management and other fees, which cut into the value of your investment. [17] X Research source
If you want to invest in companies that mine specifically for silver, your options are actually rather limited. Only about 30% of the world’s supply is mined by silver-focused companies. [19] X Research source You are more likely to invest in companies that inadvertently dig up silver while extracting other metals, which is known as “silver streaming. ” Surprisingly enough, seventy percent of the world’s silver supply is mined as a by-product of mining another element. Whichever options you choose, remember that investments in silver mining stocks are susceptible not only to fluctuations in the price of silver bullion, but also factors like labor unrest, supply chain problems, environmental concerns, and so forth. It is probably best to compare mining company investing to buying stock in other industrial sectors, rather than to buying actual silver.
