The Silver Lining in Silver Investments

Jun 24, 2014 by

The Silver Lining in Silver Investments

Silver is like gold’s little brother. No one pays much attention to him. Gold is attractive, desirable, and much more expensive. The price of gold can be volatile, and it makes for an exciting investment.

Aside from use in jewelry and a few electrical components, though, gold has minimal industrial use. In fact, gold’s only true value is that people like it. There’s already far more gold sitting in vaults than could ever be used.

Silver has much more practical use. Over 40% of the demand for silver is for industrial applications. Silver is used in electrical applications because it’s the industrial metal with the lowest electrical resistance. Silver also has anti-bacterial properties and is used in the medical field.

Silver can be a good investment, too. Silver has been used as a form of money and wealth storage for over 4,000 years.

The price of silver is a function of supply and demand, as well as speculation. This is true for most commodities. Silver also serves as an excellent hedge against inflation.

Consider these options for investing in silver:

  1. Silver bars. Silver bars can be purchased in several sizes. They are sold in troy ounces and the common weights are 1 ounce, 5 ounces, 10 ounces, 100 ounces, and 1000 ounces. The larger the bar, the lower the cost per ounce. Bars can be purchased online and at retail outlets.
  • Silver doesn’t have as many storage limitations as gold. This form of investment also doesn’t yield any interest.
  • In some European countries, silver bars can even be bought and sold at most large banks.
  1. Exchange traded funds (ETFs). This permits the investor to own shares in a trust that actually buys and holds silver. You can avoid worrying about storage or insurance. The largest silver ETF is iShares Silver Trust.
  1. Silver stocks. Stocks can be purchased in related activities. Mining stocks are one such example. While most investments related to silver rely entirely on the current price, silver stocks are more independent of prices. This is a relatively conservative investment.
  • Keep in mind that silver mining companies also mine other metals found along with silver. These commonly include zinc, copper, and lead.
  1. Options and futures. If you have an interest in derivatives, you can use them with silver to obtain greater leverage. It isn’t necessary to worry about storage. The risk is high, but the potential payoff is high, too.
  2. Silver mutual funds. There are mutual funds that invest in silver, silver stocks, and other investments. Some specialize in multiple precious metals. These mutual funds can vary dramatically with regards to risk and volatility, depending on the types of investments.
  3. Silver medallions and coins. Coins are inexpensive in most cases and can be converted into cash quite easily. The cost per unit of weight is greater than that of silver bars. Medallions can range greatly in price and aren’t as easily converted to cash.

If you’d like to invest in precious metals, silver is one of your most lucrative options. The price of gold is almost entirely dependent on the desire of investors to own it, whereas silver has actual industrial applications. When companies need more silver, the price tends to rise.

Silver is much less expensive than gold, permitting small investors to make purchases of the actual metal more feasible. Like gold, there are also numerous other options for investing in silver. 

The average investor is familiar with stocks and mutual funds. Exchange traded funds are simply a way to own silver without the burden of acquisition, storage, insurance, and disposal.

Investing in silver can be fun and profitable! With so many applications, you should be able to see some nice long-term growth.

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