The current financial market allows investing in silver from different investment perspectives. From the most comfortable and traditional in the form of investment funds, to other more sophisticated models through the futures markets where contracts are negotiated to buy or sell this metal. at a fixed price until a certain date. The purchase of coins or bullion of the precious metal in the market is also present, which allows to benefit from the possible revaluation of this financial asset in the markets where they are listed.
It is not necessary to have a large capital to invest in one of the precious metals that have appreciated the most in recent years, such as silver. This desire can be formalized from small amounts to make an investment that can channel this demand by small and medium investors. In any case, the offer is not as wide as in other financial assets, such as gold. With the problem that not all entities have this model for private investment.
On the other hand, they can physically open positions, that is to say through bullion or coins or through investment funds exposed in this precious metal. This last alternative is the most normal among savers who see the most appropriate way to enter this market without assuming certain risks and with the great advantage that the upward movements of this precious metal of special relevance can be captured. To the point that it is one of the means chosen by those interested in making this kind of investment.
Investing in silver: returns
Investment funds based on this precious metal are configured in the best of strategies to carry out this special investment. The main attraction of these financial products lies in the fact that they have a potential for appreciation above that presented by other financial assets. With an annual yield that is at the disposal of exceed levels above 20% if they are aimed at the medium and long term. Although on the contrary, they have a greater risk than in other investments due to the volatility in which they configure their prices.
Investors can currently find themselves with a limited range of markets and products exposed to silver, from publicly traded mining companies (generally in the North American and English stock indices) to more sophisticated ones such as futures and options. However, its biggest obstacle is that these financial products require prior knowledge of them. This being the main reason why, in the end, they must be formalized under the supervision of an expert in these markets. Who will be in charge of deciding if it is time to open positions in these financial assets or if, on the contrary, it is a very risky bet for their personal interests
Silver bullion as an alternative
Another alternative that the market provides is through the physical purchase of silver that can be made through bullion and coins. The great advantage of this investment proposal is that it can be done under very affordable amounts for all households. Others that involve a higher financial outlay to make the savings profitable. In any case, investing in precious metals such as silver can be an excellent option for small and medium investors. Where, in the spot market, investors purchase metals from large banks with the primary objective of avoiding costs and risks.
Another alternative is represented by the futures markets. Through this unique model in alternative investment, they can enter the market through futures exchanges, where people negotiate contracts to buy or sell a raw material at a fixed price until a certain date. Entities serving a diverse clientele of precious metal bullion producers and consumers can be found in a variety of industries, including mining companies, foundries, processors, jewelry manufacturers, and traders and brokers.
Cash operations
On the other hand, brokerage and banking services related to bullion include cash transactions, long and short term future, options and derivatives linked to silver. You can even find coins in this precious metal at competitive prices, ranging from small amounts to others of greater importance that start from 10.000 or even more euros. In this sense, it should be noted that investment in precious metals should be considered as high risk. Not surprisingly, it is adjusted to the law of demand and supply in international markets and that will determine its valuation in their respective financial markets.
Although silver has been one of the financial assets that have appreciated the most in recent years, there are no fewer precautions that investors should take in the hypothetical taking of positions in this metal due to its own characteristics and the limitation of products on the market. It is for this reason that the pros and cons of this investment and, once analyzed, opt for the best option for the interests of savers, depending on their investment needs.
Factors riesgo
El jewelery sectorAlthough it maintains a representative weight, it appears to be structurally in decline. Manufacturing fell sharply from 1997 to 2002 although in recent years it has rebounded. What is the reason for this latest rebound? How likely is it to be consistent? To answer the question, it is essential to understand that during the years 1997 to 2003 the gold demanders for recreational use were the first world countries. The certain saturation coupled with the bursting of the technology bubble and the fragility of their economies inhibited demand.
In 2003 the trend changed because China, and to a lesser extent India, they start to export massively. These currencies generate a wealth effect that triggers consumption in these areas with so much tradition. Speaking of traditions, a curious example is found in the religious sphere. The Golden Buddhas are made through gold leaves that the faithful deposit to cover the Buddha and that they have to replace annually.
Central banks
Although it is true that Central Banks are prone to reducing their sales and purchases could be reconsidered due to the situation of rates, it is also important to say that the reserves of the US, Germany and France are still very large and this limits the potential bullish gold as a result of purchases by Central Banks. There are two interest rate situations that are delicate. Some high and stable interest rates (because they boost forwards sales to make up the balance sheets) and a downward trend (not to be confused with low rates) due to the opportunity cost that is lost by not being invested in fixed income.
There is the possibility of seeing mining production increase. Not for new farms but for larger ones production of existing. This risk is limited by the high dividends gold mining companies have been paying out. The reinvestment policy has been minimal. Another risk factor is the strong weight that ETFs and other derivative instruments have on the price of gold and on the inflows and outflows of this asset.
Trading in other currencies
The appreciation of the American currency in view of the negative correlation that it has historically presented with silver. It is important to remember that volatility of silver funds around 15%. The high levels expected for silver in the coming years have as a counterpart that they are necessary but not sufficient factors. If it is not accompanied by cost cuts or at least containment of them in the mining companies, the upward path could be limited.
In recent years, an important rally bullish that has benefited all savers, who in one way or another, have been positioned in the silver market and, which has been configured as one of the more likely to deposit savings due to the enormous profits it has generated in recent years, above other top-class financial assets, and of course exceeding international equities in profitability.
Compared to the bag
You just have to remember that the Ibex 35, in what has been a bad year in 2018, it has depreciated around 15%. While on the contrary, this precious metal has closed this year with a wide revaluation. This trend in recent months has been accompanied by those experienced by other precious metals: gold, platinum, palladium, etc. and whose capital gains have also been placed in the double digits. As one of the alternatives to the traditional buying and selling of shares in the equity markets.
It plays in your favor that it is one of the financial assets with the highest appreciation in recent years. As well as becoming one of the safe haven values par excellence to face investments in times of uncertainty and economic instability. This is one of the reasons why financial institutions have chosen to offer financial products of these characteristics. That is, linked to this precious metal.