Is silver a good investment? Why should anyone buy it? It is natural and even prudent for an investor to wonder whether a particular asset is a good investment or not. That is especially true for silver, as it is such a small market and does not have the same gravity as gold.
There is a possibility that if you have physical silver, it is not immediately liquid. For making common purchases like groceries, you can't use silver bullion bars or a silver bullion coin, so you'll have to convert it to currency first, and the ability to sell in a hurry can be a problem.
But at this point in history, there are compelling reasons to add physical silver to your investment portfolio (and only one is because the price will go up). Here are the top 10 reasons why every investor should buy silver bullion ...
Silver is real money
Silver may not be part of our currency, but it is still money. In fact, silver, along with gold, is the ultimate form of money, because it cannot be created out of thin air (and therefore depreciated) like paper or digital forms. And by real money, we mean physical silver, not ETFs or certificates or futures contracts. Those are paper investments, which do not carry the same benefits that you will find in this report.
Physical silver is a store of value, just like gold. Here is why.
- There is no counterparty risk. If you have physical money, you don't need another party to fulfill a contract or promise. This is not the case with stocks or bonds or virtually any other investment.
- It has never been breached. If you own physical silver, you have no default risk. Not so for almost any other investment you make.
- Long-term use as money. An exploration of monetary history shows that silver has been used in the minting of coins more often than gold!
As Mike Maloney puts it in his best-seller, Guide to Investing in Gold and Silver, "Gold and silver have appreciated over the centuries and called for a fiduciary role to be held accountable."
Owning some physical silver provides you with a real asset that has served as money for literally thousands of years.
2 Physical silver is a hard asset
Of all the investments you own, how many can you have on hand?
In a world of paper earnings, digital commerce and currency creation, physical silver stands in stark contrast to one of the few assets that you can carry anywhere in your pocket, even to another country. And it can be as private and confidential as you want. Physical silver is also tangible protection against all forms of hacking and cybercrime. You can't 'erase' a silver Eagle coin, for example, but that can happen with a digital asset:
Silver is cheap
What if I told you that you can buy a hard asset at 1/70 the price of gold and that it would protect you just as well against the crisis?
That's what you get with silver! It is much more affordable for the average investor, and yet as a precious metal it will help maintain your standard of living as good as gold. If you can't afford to buy a whole ounce of gold, silver can be your ticket to some precious metals. This is also true for gifts. Don't want to spend more than $ 1.000 on a gift but would like to give a hard asset? Silver just makes it more affordable.
Silver is more practical for small everyday purchases. Silver is not only cheaper to buy, it can be more practical when you need to sell. Maybe one day you don't want to sell a whole ounce of gold to meet a small financial need. Enter the silver. As it usually comes in smaller denominations than gold, you can sell only what you want or need at the time.
Every investor should have some silver for this very reason.
Keep in mind that silver bullion coins and bars can be sold practically anywhere in the world.
Silver outperforms gold in bull markets
Silver is a very small market, so small, in fact, that a little money entering or leaving the industry can impact the price to a much greater extent than other assets (including gold). This increased volatility means that in bear markets, silver falls more than gold. But in bull markets, silver will soar much farther and faster than gold.
Here are a couple of good examples ... check out how much more silver made than gold in the two biggest bull markets for precious metals of the modern era:
Silver is used in a large number of industries and products, and many of those uses are growing. Here are some examples ...
- A cell phone contains about a third of a gram of silver, and the use of cell phones continues to grow relentlessly around the world. Gartner, a leading information technology research and advisory company, estimates that a total of 5.750 billion cell phones will be purchased between 2017 and 2019. This means that 1.916 million grams of silver will be needed, or 57,49 million ounces, for this use only.
- Your new Volkswagen's self-heating windshield will have an ultra-thin invisible layer of silver in place of those tiny wires. They will even have filaments at the bottom of the windshield to heat up the wipers so they don't freeze on the glass.
- The Instituto de la Plata estimates that the use of silver in photovoltaic cells (the main constituents of solar panels) will be a whopping 75% higher in 2018 than just 3 years ago.
- Another common industrial use for silver is as a catalyst for the production of ethylene oxide (an important precursor in the production of plastics and chemicals). The Instituto de la Plata projects that due to the growth of this industry, 2018% more silver will be needed by 32 than was used in 2015.
There are many more examples like this, but the bottom line is that due to its unique characteristics, the industrial uses of silver continue to expand, which means that we can reasonably expect this source of demand to remain robust. But that's not the whole story… unlike gold, most industrial silver is consumed or destroyed during the manufacturing process. It is not economical to recover every tiny silver flake from millions of discarded products. As a result, that silver is gone forever, limiting the amount of supply that can be returned to market through recycling.
Industrial uses
So not only will the continued growth of industrial uses keep demand for silver strong, but millions of ounces cannot be reused. That could be a problem, because ...
As you may know, the price of silver fell after peaking in 2011. Over the next five years it fell 72,1%. As a result, the miners had to struggle to cut costs to make a profit. One of the areas that was dramatically reduced was the exploration and development of new silver mines.
It doesn't take a rocket scientist to understand that if less time and money is spent searching for silver, less silver will be found. That drought in exploration and development is starting to take its toll.
Like everything in the market, investing in silver bullion has both pros and cons, and what is attractive to one investor may not be a good option for another.
Silver has just emerged from a more prosperous year than it has seen in a while, and as the price of silver rises, many investors interested in the silver market wonder if now is the right time to buy physical silver. and make it part of your investment portfolio.
While silver can be volatile, the precious metal is also seen as a safety net, similar to its sister metal gold - as safe-haven assets, they can protect investors in times of uncertainty. With tensions mounting, they could be a good fit for those looking to preserve their wealth in these tough times.
With these factors in mind, let's look at the pros and cons of buying physical gold bars in the form of silver.
The pros of investing in silver bullion
- As mentioned, investors often flock to precious metals in times of crisis. When political and economic uncertainty is very great, legal tender generally takes a back seat to assets such as gold and silver. While both gold and silver bullion can be attractive to investors, the white metal tends to be overlooked in favor of individuals who invest in gold, even though it plays the same role.
- It's tangible money - Although cash, mining stocks, bonds, and other financial products are accepted forms of wealth, they are essentially still digital promissory notes. For that reason, they are all vulnerable to depreciation due to actions like money printing. Silver bullion, on the other hand, is a finite tangible asset. This means that although it is vulnerable to market fluctuations like other commodities, physical silver is not likely to completely collapse due to its inherent and real value. Market participants can buy gold bullion in different forms, such as a silver coin or silver jewelry, or they can buy silver bullion bars.
Chris Duane, an investor and YouTube figure, has said that he puts his metal where his mouth is by liquidating his assets and putting the money in silver bullion when prices drop. He believes that our monetary system, and indeed our entire lifestyle, is built on unsustainable debt, and the purpose of investing in silver bullion and the silver market is to lift himself out of the mathematically inevitable collapse of that. system.
- It is cheaper than gold - Among gold bars and silver bars, white metal is not only less expensive and therefore more accessible to buy, but it is also more versatile to spend. This means that if you are looking to buy silver in coin form to use as currency, it will be easier to break than a gold coin, because it is of less value. Just as a $ 100 bill can be a challenge to break into the store, handing out an ounce of gold bars can be a challenge. As a result, silver bullion is more practical and versatile than physical gold, making this type of silver investment more attractive.
- Because the white metal is worth about 1/79 of the price of gold, buying silver bullion is affordable and a much higher percentage of profit can be seen if the price of silver goes up. In fact, in the past, silver has outperformed the price of gold in bull markets, according to GoldSilver. GoldSilver claims that, from 2008 to 2011, silver gained 448 percent, while the price of gold gained only 166 percent in that same period. It is possible for an investor to hedge his bets with silver bullion in his investment portfolio.
- History is on the side of silver - Silver and gold have been used as legal tender for hundreds and thousands of years, and that lineage gives the metal a sense of stability. Many find comfort in knowing that this precious metal has been recognized for its value throughout much of human history, and therefore there is an expectation that it will endure as long as a fiat currency may fall along the way. When individuals invest in physical silver, whether by purchasing a silver bar, pure silver, a coin, or other means, there is an assurance that its value has persisted and will continue to persist.
- Silver offers anonymity - Whether you value your privacy or not, silver has the same benefit as cash, as it offers users a degree of anonymity with respect to expenses. Not everyone wants all of their transactions to be part of the public record, and privacy is a necessary component of democracy, according to Glenn Greenwald's TED Talk. That is another benefit for investors who want to buy silver bullion.
The downsides of investing in silver bullion
- Lack of liquidity - There is a possibility that if you have physical money, it may not be immediately liquid. For making common purchases like groceries, you can't use silver bullion bars or a silver bullion coin, so you'll have to convert it to currency first, and the ability to sell in a hurry can be a problem. In a traffic jam, pawn shops and jewelers are an option, but not necessarily the best paying.
- Theft Hazard - Unlike most other investments, such as stocks, holding silver bullion can leave investors vulnerable to theft. Securing your assets against looting using a safe at a bank or a safe at your home will incur additional costs. Also, the more physical assets, including silver jewelry, reside in your home, the greater the risk of theft.
- Weak return on investment - Although silver bullion can be a good safe-haven asset, it may not perform as well as other investments - for example, real estate, or even other metals.
Mining stocks may also be a better option than silver bullion for some investors. As Randy Smallwood, president and CEO of streaming company Wheaton Precious Metals (TSX: WPM, NYSE: WPM), has said, "Streaming companies will always outperform bullion on their own." He attributes this to organic growth and dividend payments that gold bars don't provide. Other options for investors interested in silver also include investing in an exchange-traded fund or silver futures.
- When investors try to purchase any bullion product, such as the American silver coin known as "Silver Eagle," they will quickly discover that the physical price of silver is generally higher than the cash price of silver due to the premiums set. by sellers. What's more, if demand is high, premiums can rise quickly, making the purchase of physical silver bullion more expensive and a less attractive investment.
Buying real silver
The clearest way to invest in silver is to go out and buy the physical metal. Silver bars are available in both coin and bar form, and most coin and precious metal dealers offer silver bars in various sizes and formats. Typically, you can find coins and bars as small as a single ounce, or large bullion bars as large as 1.000 ounces.
Owning silver bars has the advantage that their value follows the market price of silver directly. However, there are a number of downsides. First, you will usually pay a small premium to buy silver from the merchants, and you will often have to accept a small discount when you decide to sell it back to your merchant. If you expect to keep your silver for a long time, then those costs are not monumental, but for those who want to trade frequently, they are typically too expensive to bear multiple times in close succession. In addition, storing gold bars involves some logistical challenges and additional costs.