In the world of precious metals, gold is considered king. It is the first option that comes to mind for most investors looking into alternative investments to bonds and stocks. However, silver is a worthy option as well. From time to time, it’s worth shooting up so much that it outperforms gold. The answer to whether silver is a good or bad investment depends on various factors. Keep reading to learn about them.
Like other natural resources, silver is considered a commodity. It is a tangible, publicly-traded asset. The prices of silver, therefore, go in the opposite direction of bonds and stocks. When the stock market is not doing well or the economy seems to be in recession, investors can start learning how to buy silver because It is a great investment option because it is impacted by various influences. Many investors get into the silver business during political turmoil and economic recession.
Silver can be an inflation hedge. Unlike traditional currencies, silver has an intrinsic value. It retains its value for a long time and does well even when interest rates are low. It is one of the safest investments.
Silver is used in various manufacturing applications. From medical equipment and batteries to jewelry, metal is a staple in various industries. Because of its high conductivity, silver is used in the electric automotive and solar energy industries. The versatility of silver means its demand will continue growing over the years.
Silver may not be a traditional form of currency but it is money. Physical silver cannot be depreciated or created from nothing like digital forms or paper. Silver may help you store value for a long time. Its benefits include:
Silver is valuable but it isn’t as expensive as gold. Its cost is about 1/70th of gold and it offers just as much protection. Silver is perfect for an average investor or for giving gifts. When you want to give a hard asset without spending too much, silver may be a great option.
The supply of silver is likely to drop over the years. After rising in 2011, the price of silver dropped. It crashed by 72.1 percent over the next five years. Miners were forced to lower their costs to earn profits. Some of the areas that were affected significantly were the exploration and development of new mines. Spending lots of money and time looking for silver means there will be less silver to find. The drought in development and exploration may be an advantage to investors.
Silver is not only cheaper to buy, but also more practical for small purchases. It is great for investors who want to sell. You can sell a small ounce of silver when you need some money. Its denominations are smaller than gold and therefore, easier to sell.
Like with any other investment, silver presents a few challenges and risks. The most obvious one is that it may be sensitive to a recession. Since it is driven by industrial growth, silver prices may drop in case of an economic shutdown.
Silver prices can be unpredictable. Since it is worthy in various categories, the price estimations can vary wildly. The industrial value of silver is typically different from the investment value. If, for example, investors are bidding silver prices up, their value will rise. However, the incentive to recycle may arise in the industrial world causing an oversupply and a drop in prices.
Even though silver is used in various applications, there is always the potential of being replaced with a different metal. It is vulnerable to changes in technology.
Since silver is a tangible commodity, it has limited potential for appreciation. Unlike bonds and stock, it does not offer any interests. The best way to get a profit is by selling during price rises.
It is prudent for all investors to find out if an asset is worth their money and effort before investing. Silver is not different. Even though it has a small market and does carry as much grandeur as gold, the benefits of investing in silver outweigh the disadvantages.