Are you interested in putting money into precious metals, but can’t afford the expense of gold, platinum, or palladium? Silver might be the right investment vehicle for you. It has a wide range of industry applications and a long, long history of use as a currency and as a way to store and protect wealth. It’s also very much cheaper than other precious metals, so you can buy silver even if you don’t have much to invest. An ounce of pure silver bullion costs about $25 to $30.
But is silver still a good investment? It has its pros and cons. The value of precious metals like silver tends to swing in the opposite direction of the stock market, so silver prices will go down when the economy is booming and up when the market is crashing. That can provide some protection against market volatility, but silver itself can be volatile due to its wide use in industry. However, over the long term, the value of silver should only go up, making this investment a great safe haven for your money. Let’s take a look at the pros and cons of investing in silver.
Silver Is More Volatile than Gold
Gold is the most popular precious metal among investors because it’s the one with the widest name recognition. Gold has been highly valued in most societies going back thousands of years, so people feel comfortable putting their money into gold. And the price of gold is mostly driven by gold investment and by the jewelry industry, so it’s not as volatile as other precious metals that have more industrial applications.
Silver, on the other hand, is widely used in industry. It’s used to make electronics and solar panels. It’s used to make jewelry and photovoltaic technology. It’s even used in medical applications.
Because it’s so widely used in industry, silver’s price can rise or fall depending on how those industries are doing. If one or more industries that rely on silver aren’t doing well, perhaps due to an economic slowdown, the price of silver will fall as demand falls. Of course, if industrial demand for silver increases, the price of silver will rise, too.
Silver Can Protect Your Purchasing Power in the Long Term
Precious metals like silver have their own inherent worth that isn’t connected to the value of the local fiat currency. That’s what makes silver a good safe haven for your money. The value of silver doesn’t shrink with inflation. When inflation devalues the currency, silver will simply get more valuable to compensate.
Silver Is More Affordable than Other Precious Metals
The high price of investing in precious metals is an obstacle to many investors, but silver is much more plentiful than other precious metals, and therefore cheaper. You can buy hundreds of ounces of silver for the same price as an ounce of gold.
Silver Is Bulky, Heavy, and Hard to Store
If you’re going to buy bullion, you’re going to have to store it, no matter what kind of metal it’s made of. But silver can be harder to store than other kinds of precious metals because you get so much more of it for the same price. You can store your silver at home in a safe or vault, but you’ll need to add a rider to your homeowners insurance policy to protect it from loss or theft. You can store your silver in a safe deposit box, but you might quickly exceed the amount of metal that can be stored in a small bank box. Many investors choose to store their silver bullion in a depository, but that comes with fees and shipping costs when you sell.
Silver Can Provide the Opportunity for Short-Term Profits
Because silver can be so volatile, it can provide savvy investors with the opportunity to realize short-term gains. You just have to keep an eye on the spot price of silver and be willing to sell quickly if it goes up. However, if you plan to attempt this, you should know that it’s not always easy to sell bullion quickly. It’ll be easier if you choose to buy from a dealer that has a buyback policy.
Silver Bullion Doesn’t Pay Dividends or Interest
Unlike stocks and bonds, silver bullion doesn’t pay interest or dividends. You’ll only realize your profits when you sell the silver. However, if you want to expose your portfolio to precious metals and still want to retain the benefits of stock ownership, you can instead choose to buy stock in a silver mining company, shares of a silver mutual fund, or shares of a silver exchange-traded fund. These silver investment products pay dividends and are as easy to sell on the open market whenever you need to liquidate them.
If you’re looking for a precious metals investment, you should consider silver. Silver is cheaper than other precious metals, but can give you the same benefits as investing in gold, platinum, or palladium. Diversify your portfolio today – add some silver holdings.
