How — and Why — to Invest in Silver

How — and Why — to Invest in Silver

Silver is a great investment. It has intrinsic value that isn’t tied to the value of currencies or the vagaries of the stock market. In uncertain times, its value goes up — and it can even see wild fluctuations in spot price, as industrial demand for silver ebbs and flows.

But how do you even buy silver? The traditional way is to buy bullion bars or coins from a dealer, but you can also invest in silver streaming companies and mining operations, exchange traded funds (ETFs), and mutual funds. Here’s how to add silver to your portfolio — and why you should.

Buy Bullion Bars or Coins

For many investors in precious metals, nothing beats knowing that they own a safe or vault full of bullion bars and coins. It’s immensely satisfying to have a stockpile of precious metals to hand, even if it may not always be the most convenient way to invest in silver.

But if you want to have access to pure silver that you can lay your hands on whenever you want, you can’t beat buying bullion. Silver is the cheapest precious metal — for the price of less than two ounces of gold, you can buy a 100 oz silver bar. Silver coins are a better choice if you’re after portability, however, but make sure you only buy silver coins that are made for investment purposes — coins made for circulation or even as collectors’ editions may not be made with pure silver.

Physical silver is a great choice if you want some economic hedge against uncertain times. It can be harder to liquidate physical silver than some other forms of silver investments, but silver coins are usually easier to sell on short notice than bullion bars. If your silver is a longer-term investment — say, a way to protect some of your retirement savings against inflation — then you may not be that concerned about selling it yet anyway. And investing in physical silver eliminates counterparty risk, since you’re not reliant on another party to honor their part of the deal.

Invest in Silver Companies or ETFs

If you want to invest in silver, but don’t have the space to store it at home, don’t want to pay for insurance or worry about someone stealing it, or don’t want to pay for storage at a depository, then you should consider investing in silver companies or exchange-traded funds (ETFs). These so-called paper silver assets are tied to the value of silver without actually being backed by the commodity. That means you can’t demand delivery of an amount of silver equivalent to your investment, but you’ll get returns that track with the value of silver on the commodities market.

Silver companies include both mining and streaming companies, and buying stock in them is a way to add some silver into your portfolio without filling up your home safe. These stocks will perform based on how well the silver company is doing, which will depend on the demand for silver and/or the productivity of the mines. Silver ETFs and mutual funds may hold assets in the form of physical silver or investments in silver mines and companies. Exchange traded commodities (ETCs) and exchanged traded notes (ETNs) are debt instruments, similar to bonds, but tied to the value of silver.

All of these options are easy to buy through most brokerage accounts, and you can keep them in your investment account with all your other stocks. They don’t take up space in a depository, safe, or vault. They don’t require insurance. You can sell them whenever you want, just like you can with stocks. This is a great option to add precious metals commodities to your portfolio while still retaining the option to liquidate your assets easily. That comes in handy whenever the price of silver occasionally spikes, and you want to profit from it.

Strengthen Your Portfolio with Silver

An investment in silver can stabilize your portfolio, hedging against inflation and protecting against market volatility. When the stock market goes down, precious metals go up, as investors seek the security of silver and gold. When interest rates are low, silver continues to perform well. And it holds onto its value over time, so that money invested in silver is protected against inflation — the value of silver remains constant regardless of the value of the currency used to buy it, so when the currency is devalued, the price of silver goes up in response, counterbalancing the effects of inflation.

Silver can be a great investment, especially if you want to protect your portfolio from market risk and your nest egg from inflation. Whether you choose to buy physical silver or paper silver, you won’t regret adding a commodity with intrinsic value to your investment portfolio.

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Christophe Rude

Christophe Rude

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