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Is Silver a Good Investment? Here Are The Facts

By the time of writing this article, silver was trading at 14.18 with a spread margin of 0.1 (-0.42%) against gold’s 1,201.40 at spread margin of 1.00 (-4.70%).

For thousands of years, silver has maintained a positive market demand as an investment, currency and store of value. Silver’s market demand is still dominated by bullion coins, industrial products and jewelry. This precious metal also features in the stocks exchange as a traded product.

Silver price in the stock market is mostly based on speculation. Supply and demand are the main causes of silver price changes and thus when compared to gold, silver is rather volatile.

So, Is Silver A Good Investment?

 

Silver lists among the most traded precious metals. This commodity is a store of value, a way to counter inflation hedge and an added advantage towards protecting against other financial and economic crises.

Silver has an edge as an investment tool. The following are some of the contributing factors that enable silver as an investment to stand out.

  • The element property of silver adds value by giving it more industrial applications
  • It’s been in existence for thousands of years as a currency and medium of exchange
  • The supply and demand categories for silver contribute to its unique characteristics


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There is a higher industrial demand for silver when compared to its biggest competitor, gold. Increased demand may categorize silver a risky investment due to possible economic slowdowns.

However, experts have indicated that industrial applications are increasing at a very high rate. This means that the susceptibility of a sluggish market will not cause negative effects on the commodity.

As a product that has been available over a period of more than 4 millennia, investment demand is still sky rocketing. New uses for silver are identified almost every day.

But this is not the case with supply; production companies are therefore facing serious challenges as they try to satisfy growing market volumes.

How to Invest in Silver

There are a few different ways to invest in Silver. Below, i'll discuss the 2 most popular.

1. Buy physical Silver bars or coins

The good ole days of buying silver bars and coins are still alive and well. Of course, there are some advantages and disadvantages to buying physical sliver.

Some Advantages:

  • It's easy – You can buy Sliver just like you would buy any other physical good online. In fact, you can even now buy it on Amazon
  • Peace of mind – You can go to bed easy knowing exactly where your Silver is stored. You don't have to worry about technology meltdowns or outages.
  • It's “cool” and impressive – It's definitely cool to own physical Silver bars. It's empowering to hold it in your hand and it's also a topic that people find interesting to talk about.

Some Disadvantages:

  • It's more costly – There are additional costs to buying physical silver. Firstly, there is the cost of shipping. Secondly, the cost to store it. Even if you're storing in your house, you should buy a safe. Finally, the cost of insurance. Just like anything else valuable in your home; it should be insured against theft.
  • Possibility of theft – As mentioned above when you buy physical silver, there is a chance it gets stolen or misplaced.
  • It takes up valuable storage space – Granted, this may not be a big problem for most people. But if you're keeping it in your home, you still have to find somewhere to store it. That's less place available for your shoe collection!

2. You can buy a silver ETF

The rise of exchange traded fund (ETF) has played a key role towards investors who want to start trading precious metals. It is now possible to own physical silver bullions, futures contracts among other techniques.

In case you're not familiar with ETFs….

Is silver a good investment? This is a question that has culminated to a heated debate. A common retail investor can now own silver funds through iShares Silver Trust, a stock traded as SLV on NYSE.

Expert reviews have indicated the volatility nature exhibited by silver makes ETF’s better than physical bullions.

Another dictating factor for traders investing on silver is cost. Bullions may incur extra charges, mostly between 10-20 (%) commissions on silver coins. The same percentage may also apply on bullions. This percentage has not reflected on safety deposit boxes where a monthly charge is applicable to help secure and insure the safety of your bullions or coins.

How much is Silver Worth?

In most cases, young investors on silver will be disinterested in owning physical coins and bullions. Precious metals are chosen for insurance purposes. ETFs as an option to invest on these metals may seem a lot easier and securer.

Therefore the best silver to buy largely depends on underlying objectives of the investor, to either trade or make quick money or for long term reasons.

The below table represents spot prices for silver on 22/9/2016 and the change column showcases how much each ounce, gram or kilo was worth on that day.

Silver Spot Prices Today Change
Silver price per ounce $14.18 -0.01
Silver price per gram $0.46 0.00
Silver price per kilo $455.90 -0.32

Best Silver to Buy

If you anticipate that the financial markets could come crashing down any time soon, the best silver to buy would be the physical form, bullions and coins. However, if your objective is to make some quick cash by calculating the daily spread changes, and anticipating the next trade, then perhaps investing on ETF’s would be the best way to go. There are three major categories of ETFs.

  1. a) iShares Silver Trust (SLV)
  2. b) Physical Silver Trust (SIVR)
  3. c) PowerShares DB Silver Fund (DBS)

Experts have noted that SLV and SIVR are recommended ETFs for investors who prefer to match independent prices for silver without necessarily owning bullions or coins. DBS on the other hand is suitable for investors who long to access futures movements on silver prices. Silver is a store of value when traded as jewelry.

Why Invest in Silver

Investing in silver coins and bullions is a favorable way to hedge against inflation and other financial market changes.

For example, investors would rather look at silver and other alternatives if the stock market has not been performing well. This is however the opposite if the stock market had been showcasing exemplary performances.

Bottom Line

Investors entering the silver market for the first time may find themselves divided especially on the preferred category to choose. Silver can be invested in its physical nature or as an exchange traded fund (ETF).

Either of the categories is an acceptable option and the end results are dictated by the investor’s interests either to make fast cash or hold an insurance against stock market changes.

To find Silver ETF's to invest in using a stock screener can be a HUGE help. Our partner FinViz has worked well for many of our users. Check out our latest review on FinViz here!


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