Precious metals, from an investment point of view, have been highly sought-after commodities for years.
They’re in high demand not only for their beauty but also because they’re a lucrative investment option. You can invest in a variety of precious metals, some of which you’ve never heard of, and you can learn more about them here.
However, silver and gold are still the most popular choices. The yellow metal is rarer, more valuable, and always more desirable, while its gray cousin has always been an alternative for all those who can’t afford gold. That’s the case with jewelry and, more and more often, investing in these assets.
Simply, silver has always been in the shadow of gold, meaning its price is affected by every movement in the gold and currency markets. That’s how the gray metal got the epithet of gold for the poor for no valid reason.
Silver is also valuable, perhaps not much in a material sense, but as a means of preserving your portfolio. Also, there’s a noticeable trend of increased demand for this metal, and it seems it won’t stop soon. And the list of benefits of investing in the gray metal doesn’t end here.
Increase in Value
If you’re considering silver as your investment option, you should know it has the potential to yield handsome returns. A significant increase in demand for this precious metal has been noticed, in recent years, particularly because its industrial use is becoming more and more widespread.
Unlike gold, silver is not a rare metal. It means that its offer on the market is much larger, so it’s easier to get to it. However, it seems that the current reserves aren’t enough to meet the demand, which certainly has a massive impact on the growth of the value of this precious metal.
In fact, silver recorded the most significant price increase in the previous decade, which makes it very promising. Although not rare, this metal is in high demand. First, it is used to make jewelry. Secondly, it’s a vital raw material, and more and more industries need it because of its outstanding properties. That’s how it became irreplaceable in producing solar panels, batteries, computer parts, catalysts, etc.
Everyone Can Afford It
Silver is currently the cheapest precious metal, which means it’s accessible to investors who don’t have enough funds to invest in more expensive assets such as gold and platinum. The reason behind its low price is that the gray metal isn’t rare, and its mining isn’t as complex as gold, for example.
The cost of this precious metal is currently about one-hundredth of the price of gold. But that doesn’t diminish its investment value and potential. In fact, it can be as good an inflation hedge as gold and just for a fraction of the gold cost.
Silver also has a negative correlation with other commodities, so when stocks and shares drop, investors holding this asset are safe. That comes in handy in economic turmoil, global geo-political crises, natural disasters, etc.
Great ROI
When you put your money into something, you look for it to come back to you in the best possible way. Precious metals generally don’t have a high ROI, primarily because they’re not used for short-term profit but as a long-term investment.
But that’s not the case with silver, which brings a fast return on invested funds thanks to its vast potential. One of the reasons for the great potential of gray metal is the fact it outperforms gold for a long time. That’s because this asset is both an investment vehicle and an industrial raw material.
Given that the global economy is slowly but surely recovering, and production is growing, too, the demand for silver is on the rise. On the other hand, gold is primarily sought-after as an investment vehicle.
The potential for silver price growth doesn’t come only as a result of demand from conventional industries. Moreover, this element is necessary for making things such as solar panels or electric vehicles. And as the need for clean energy grows, so will silver.
Inflation Hedge
As said, silver can provide you with the necessary protection for your portfolio, and it’ll cost you less than gold. In the case of inflation, the value of money drops, i.e., it loses its purchasing power. That triggers the need for producing more money, which devalues it even more.
So over time, your cash can become worthless. Luckily, that’s not the case with precious metals, which usually preserve (or even increase) their purchasing value over time. Since it’s not related to fiat currencies in any way, silver will perform well when the value of other assets goes down. That’s why investors look for a safe haven in precious metals.
High Liquidity
The liquidity of assets in your portfolio is a very important item. You never know when you will need cash, and then it is important to have something that you can quickly convert into money. Silver is liquid, although less so than gold, but when the need arises, you will easily find a buyer for this precious metal.
If you own physical silver, and bullion or coins, you can cash them when you need money. This is especially useful if you need small amounts because then you can sell part of your silver assets and meet your immediate cash needs. That is why it is always recommended to keep silver in the portfolio in smaller denominations.
How to Invest in Silver
Investing in a gray metal is an excellent way to prevent ambiguity in the market, diversify your portfolio, and keep it safe from negative market trends. This decision can bring many good things to your investment venture, of course, if you make good decisions at the right time.
First, it’s good to know your options. You can invest in silver in many ways. Most people still prefer bullion, bars, and coins, but there are also ETFs, futures, and shares related to this precious metal you can have in your portfolio. The choice will depend on your preferences and risk aversion.
Physical silver is less risky than paper or digital ones. It brings security, but you can’t expect high profits from it. On the other hand, trading ownership shares and futures can be thriving, but that usually requires some prior knowledge. If you succeed in getting into the meat of the matter, you can earn solid profits.
Regardless of which form of silver you decide for your portfolio, it is essential to get it from reputable sellers. Be sure to research the seller’s background before you decide to buy precious metals from them. Trustworthy companies like Durham Precious Metals have been on the market for a long time, have a base of satisfied clients, and it’s easy to check their track records.
Although many still favor gold, silver is slowly but surely finding its place in the portfolios of many investors. It costs less and offers almost all the advantages of the yellow metal. So putting a portion of your savings into this precious metal is a good decision that’ll bring many benefits in the future.
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