Are you looking for a brilliant investment opportunity that could benefit your portfolio the most? If so, investing in silver can be the perfect place to start. While often overshadowed by gold, silver has a history of solid performance as a precious metal.
Silver has been gaining more attention in recent years as an investment option, and many experts believe now could be the perfect time to add it to your portfolio. Many want to put their hands on it for its beauty, versatility, and industrial uses. Therefore, in this article, we’ll explore why investing in silver now could be the key to unlocking significant returns.
Silver is a tangible asset classified as a publicly traded commodity. Commodities like silver tend to move in the opposite direction of stocks and bonds, making them a popular choice for investors during economic recessions or political turmoil.
Silver’s diverse influences make it a great way to diversify and balance your portfolio, especially compared to equities or other paper securities.
Additionally, silver serves as a hedge against inflation due to its intrinsic value as a physical asset. Unlike currencies like the dollar, silver holds its value over the long term and performs well in low-interest-rate environments where fixed-income investments may not be as lucrative.
What Are the Benefits of Investing in Silver?
Not only does owning silver sound nice to our ears, but there are many other benefits to investing in this metal, including:
Diversification: Adding silver to your investment portfolio is practical because it often performs differently than stocks and bonds, meaning it can reduce risk and improve the overall performance of your portfolio in the long run.
Affordability: Silver generally costs less than gold, making it a more accessible option for many investors.
Industrial demand: This metal has many practical uses, such as in electronics, jewelry, and medical equipment, which helps increase demand for it and can potentially lead to growth in price over time.
Inflation hedge: Silver can hold its value over the long run, making it a good choice for saving wealth during economic problems and inflation.
Potential for price appreciation: As demand for silver increases, the metal price can grow, allowing investors to earn significant returns on their investment.
Safe haven: A currency’s value is often influenced by economic factors such as interest rates and money supply, but the value of silver is determined by supply and demand. Because of this, silver is often considered a “safe haven” asset during economic and geopolitical volatility.
Silver prices rose significantly in the three months from March to August 2020 as investors sought a stable investment during the COVID-19 pandemic, for example. Similarly, there was a 10% increase in silver prices following Russia’s invasion of Ukraine.
Overall, investing in silver is a wise financial decision for those looking to diversify their portfolio, hedge against inflation, and earn stable returns.
How to Start Investing in Silver Now?
There are two main ways to invest in silver: purchasing the actual metal or buying silver-related securities. Buying the physical metal allows you to own and hold the silver yourself while investing in silver-related securities enables you to gain exposure to the metal without physically owning it.
Furthermore, there are quite a few options for investing in silver indirectly, including silver stocks, mutual funds or exchange-traded funds (ETFs), and exchange-traded commodities (ETCs). These alternatives allow you to invest in silver without physically owning it, but they also come with risks and potential drawbacks.
- Silver stocks, some companies specialize in extracting and processing silver, known as “miners,” and those that focus on reselling it are called “streaming companies.” However, it is rare to find pure silver since firms often extract it by mining it with other natural metals, such as copper.
- exchange-traded funds (ETFs) or mutual funds are traded on a stock exchange and can be bought and sold like individual stocks. They often offer lower fees and greater liquidity compared to mutual funds. On the other hand, mutual funds are typically purchased and sold at the end of the trading day based on the fund’s net asset value.
- Exchange-traded commodities are securities traded on a stock exchange and track the price of a particular commodity, such as silver. They can be a convenient and cost-effective way to invest in silver because they offer the benefits of a physical asset, such as the ability to hold the metal in a secure location, while also providing the liquidity and ease of trading typical of stocks.
- Use your retirement accounts. Read how you can use your retirement accounts to execute a silver IRA rollover and invest whatever allocation you prefer.
Silver vs. Gold as an Investment
Gold and silver are precious metals used to store wealth and currency for thousands of years. Both are valuable assets and can be an excellent addition to your investment portfolio. However, there are some key differences between gold and silver that you should consider when choosing which one to invest in:
- Price: Gold typically costs more than silver, making it less available for some investors.
- Industrial demand: Silver has different industrial uses, which can cause demand in the market and potentially lead to price growth. On the other hand, gold is mainly used for jewelry and as a store of wealth.
- Liquidity: Gold is naturally a more liquid investment than silver, making it easier to trade.
Finally, gold and silver are good investment options for anyone looking to store wealth and own precious metals. Regardless, it’s essential to consider your financial plans, risk tolerance, and vision before choosing which is suitable for you.
The Bottom Line
Although silver is affordable and has many industrial uses, it has gained less attention than gold. According to Camerana, investor demand for silver currently represents just 15% of the market compared to industrial demand. This need suggests that silver is both under-owned and undervalued.
Silver is generally cheaper than gold, providing investors with more buying opportunities. It is more volatile and less liquid than gold, making it harder to predict how the market will perform in the short or long term. Hence, it may be wise for newer investors to stick with gold as a safer haven against stock market fluctuations.
However, suppose you are an experienced investor with a higher risk tolerance. In that case, silver may be an excellent option to consider, mainly when the market is bullish and there is an increased need from both the industrial industry and financial investors.