Investment is a promising route to a comfortable financial future. When people think about an alternative investment to traditional stocks and bonds, they naturally turn towards gold. They tend to overlook the precious silver that tends to shoot up in price from time to time.
So, can silver be a good investment? Certainly. However, silver comes with its own risks and considerations that investors need to be aware of.
This post is a guide to silver as an investment alternative to golf and for intrinsic qualities of its own. Read on.
Silver as an Investment
Silver is a commodity like gold, platinum, and other natural resources, as it is a tangible asset. When the prices of stock and bonds are going down and the stock market has poor prospects, commodities like silver generally increase in value. Therefore, investors turn towards silver when the stock market is in crisis or in times of political turmoil.
Silver is not only an investment metal but also an industrial metal which significantly affects its performance in the market. Its demand is influenced by the industrial sectors that require silver for production. These sectors have changed silver into a need and made it a worthwhile investment.
Silver is a physical asset that holds its value in the long term. It also fares well when interests are low. Furthermore, this metal acts as a hedge against inflation due to its intrinsic value, unlike bonds or currencies.
The unique characteristics and relative scarcity of this precious metal makes it function like gold as an investment. In many ways, silver plays a similar role of a “safe haven” as gold. It is used in various things, from jewelry to batteries and medical equipment.
The demand for silver will only see an increase in the coming years due to rapid technological advances.
Is Silver a Good Investment?
Investors are interested in silver for reasons that are similar to liking gold and other natural metals. Here are some reasons why silver can be a good investment option:
Value
Silver is cheaper than golf and its spot price in the financial market has remained constant for a long time. Silver is much more affordable and tends to hold its value for longer periods. It even gains value over time and has the potential to offer more profits to the investors.
Liquidity
Silver is a highly liquid asset because of the large number of investors who buy and sell this commodity. It can easily be converted into cold cash in your pocket without losing value.
Volatility
The silver market is smaller than the gold market and silver is more thinly traded. Therefore, silver shows greater volatility as compared to gold. The increase in volatility helps investors to estimate the fluctuations that may occur and increases the potential to make more money.
Diversification
Since silver is less correlated to other markets, like stocks and bonds, it can be a way to diversify a portfolio and reduce risks. It also means that silver can act as a hedge against those markets and potentially increase returns.
Types of Silver
There are two main ways to invest in silver. You can either buy silver directly (owning physical silver) or indirectly (owning silver-related securities). You can invest in different types of physical silver, ranging from silver coins to bullion coins, and bars, depending on your budget and expectations.
These are the purest form of silver investment and owning tangible silver gives you psychological satisfaction too. While physical silver is subject to storage related problems and expenses, it is also easy to access.
These are the types physical of silver you can invest on:
Silver Coins
Silver coins are a physical commodity that are produced by government-backed institutions. They are a traditional way to invest in silver and you can convert them into cash very easily. Dealers around the world are familiar with this type of silver and the government approves the purity of the coins which makes it easier to authenticate them.
Bullion Coins
Bullion coins are highly concerned pieces of silver that are 99.9% pure. They maintain high liquidity and you can easily convert them into cash. Bullion is minted specifically for investment purposes and its high purity makes it more valuable than junk silver.
Silver Bars
Silver bars are rectangular shaped bars made of 99.9% pure silver. They carry serial numbers which makes them easier to authenticate. However, it is relatively more complicated to convert silver into cash.
Junk Silver
Junk silver are common-date coins that are 90% silver and have no numismatic value. Coin collectors don’t have much use of junk silver but it still holds the bullion (melt) value assessed by its weight.
Junk silver is a less expensive way to invest in silver and helps diversify portfolios. It remains highly desired by silver investors for its silver content.
Best Place to Buy Silver
Silver is gradually recovering from its recent lows which makes this the right time to invest in silver. The demand for silver is increasing and there is limited risk to this metal considering the recent market trends.
The physical silver commodity does not produce cash flow which is why you can make a profit on silver coins or bullion only when the price of silver rises.
Due to the increased demand of silver from both the industrial and financial sector, now might be the best time to take the plunge and make an investment.
The best place to buy silver are online stores such as The Canup Coin Company. The brand offers many collectible coins and specializes in a few different items like Soviet era Russian coins and German coins.
Takeaway
We know that the purchasing power of the dollar bills decreases with time and commodities keep their value based on supply and demand. When paper money loses its value, investors turn towards commodities like silver to hedge against currency uncertainty.
The value of silver is increasing with its growing demand in the industrial sector. It is predicted to substantially rise in the coming years due to the rapid technological advances. However, silver prices fluctuate due to various factors which is why you have to closely keep track of silver rates.