Recent years have shown significant market swings that may make investing in the stock market scary. In these uncertain times, you might wonder, is silver a good investment?
The answer is yes. Silver is a good investment, depending on your investment goals.
As a precious metal with industrial uses, silver investments can diversify your portfolio and protect against inflation.
However, it’s crucial to understand the best silver investment practices before you make a purchase.
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Reasons to Invest in Silver
Gold may be the go-to commodity investment, but you shouldn’t overlook silver’s potential. Like gold, silver is a tangible asset, and its price is rising overall.
Unlike gold, though, silver has many clean energy-related uses, making it an investment with great promise for the future.
Silver is a tangible asset
Precious metals, like gold or silver, are physical assets that retain value. In investing, that means they act as a counterbalance to traditional stocks and bonds.
Tangible assets like silver are a traditional hedge against inflation and turbulent socio-political climates. Silver has intrinsic value, unlike the dollar or other currencies.
So, it tends to hold its value even when fixed-income investments aren’t doing as well. Because of this, investors often refer to silver as a safe haven asset.
When the stock market becomes turbulent and hard to predict, you’ll likely see the demand for silver rise. Consider, for instance, the Great Recession, when silver prices rose from $11.95/oz to $13.94/oz while traditional stocks fell.
The price of silver is rising overall
Silver markets are more turbulent than other precious metals, but its price is rising overall. Over the last century, silver prices have risen 67% on an inflation-adjusted basis.
Given that, though silver may have booms and busts in the short term, it tends to be a reliable long-term investment.
Silver has many uses
Silver is a highly conductive metal, which means it has several industrial applications. For example, silver is used in batteries, medical equipment, microcircuits, solar energy, and electric vehicles.
Auto manufacturing alone accounts for more than 60 million ounces of silver each year! Industrial demand for silver will probably increase as the need for green energy grows, given its use in electric vehicles and solar panels.
Silver vs. Gold: Which Is a Better Investment?
Silver and gold are both tangible assets, making them ideal counterbalances to investments in stocks and bonds. And learning how to invest in gold and silver is relatively straightforward, meaning it’s an approachable option for beginner investors.
However, gold tends to get all the attention when investors talk about diversifying their investment portfolio. That’s probably because investing in gold has a few advantages.
In particular, gold is easy to store, and its market is relatively stable, leading to it being a favorite precious metal for investors seeking to hedge against inflation and times of uncertainty.
Silver, meanwhile, is difficult to store and can tarnish. And, because it’s worth less, you may need to hold a larger volume of it.
In addition, silver is a little more subject to the ebbs and flows of the market. Though the price of silver has risen over the last century overall, it has had and will likely continue to have significant swings.
Still, investing in silver is ideal in many ways.
For one, the market price of silver is significantly less than gold, making investments in silver more affordable. While gold prices are consistently in the four-figure range, silver seldom exceeds $50/oz.
Silver also allows investors to stake their interest in clean energy advances. It’s essential for electric vehicles and other green technologies investors may want to support.
How to Invest in Silver
Now you have the answer to the question “is silver a good investment?” you’re likely wondering how to invest in silver.
One of the most common methods is to purchase silver bars or coins directly. Alternatively, you could invest in businesses that revolve around silver, like silver mines.
Perhaps best of all, you can consider a precious metals IRA that includes silver. Each option has its pros and cons, which we’ll discuss in more detail below.
Silver bullion bars
Silver bullion bars or silver bullion coins allow you to invest directly in silver. These are 99.9% pure silver and available from 1 to 100 ounces.
The U.S. mint also produces a set number of 1 oz silver bullion coins each year, which you can purchase through an authorized dealer.
Unfortunately, bullion bars and coins are tricky to store and subject to theft. You can put them in a safety deposit box, but even then, you’ll need to take extra steps to prevent tarnishing.
Amateur investors may want to consider purchasing smaller bars or coins if possible. In smaller portions, silver bullion is more liquid.
Larger portions can be difficult to find a market to sell your silver.
Coins minted in the U.S. before 1965 had significant silver content. These silver coins, or junk silver as some collectors call them, are available through certified online dealers like APMEX and JM Bullion.
You can also find them at pawn shops. It’s easy to accidentally overpay for silver coins, so do plenty of research before purchasing.
And remember that finding a silver coin market can be difficult. They’re not a good investment if you plan to turn them quickly.
Silver IRA account
You can place IRA eligible silver into a precious metals IRA. Rather than having paper assets, taking this approach allows you to purchase physical metals and store them with an IRA custodian.
In uncertain times, having some of your retirement savings in precious metals, like silver, can reduce your risk and act as a tax-efficient shelter.
Currently, this might be one of the best ways to invest in silver.
Silver stocks and ETFs
Stocks and exchange-traded funds (ETFs) let you invest indirectly in silver by investing in companies that relate to silver in some way.
For example, you could invest in silver mining companies or silver streaming endeavors. ETFs give you greater diversity and are especially advantageous if you’re looking for a relatively safe investment.
Silver futures contracts
Silver futures allow you to invest a small amount of capital in silver with the potential for a major payout. However, as with all futures investments, purchasing silver futures comes with significant risk.
Novice investors may want to avoid silver futures, but if you’re confident in your investing skills, futures can be an effective option.
Should I Invest in Silver?
So, is silver a good investment? The answer is probably yes, but it depends on how you invest. Purchasing silver bullion or coins means you’ll have to deal with storage and illiquidity issues.
Stocks and ETFs are great but come with some risk. A better option may be to consider a self-directed silver IRA.
A silver IRA gives you a hedge against inflation. It’s a safe haven investment that isn’t subject to the current turmoil of regular stocks.
Here are answers to a few commonly asked questions about silver.