It’s true that the world economy is not going through its best moment, and this has caused many investors to rethink their investment strategies.
It’s also true that the price of gold has risen significantly and has received a lot of attention in the market, but many experts believe that silver could outperform it in the long run.
The reality is, there are several factors that make silver a more attractive asset and investment than gold right now, so if you’ve been thinking about it, here are some facts about investing in silver that you should consider for your peace of mind.
Silver Investing Facts
1.- Industrial, commercial and consumer demand affects the price of silver
Unlike gold, silver has a wide variety of uses in different industries, including medicine, agriculture and in the manufacture of household appliances and electronic devices.
Nowadays, silver is also widely used in the growing solar industry, both for semiconductors and solar panels.
This fact causes the price of silver to be affected by the demand of the industry. This is related to the following fact.
2.- The supply of silver is decreasing
Silver mining production has been falling by about 2% per year and about 80% of the available silver on Earth, has already been extracted from the mines, according to data from experts – World Silver Survey.
Mines now have fewer silver reserves and companies with fewer incentives to invest in new projects due to low prices, geological challenges and rising costs.
Also, the supply of junk silver is at its lowest levels in years.
This scenario, coupled with fact one, causes the supply of silver in the market to decrease and therefore, its demand and value increases.
3.- Silver is not a product for everyday trading
Silver is an extremely volatile commodity and the large price fluctuations associated with silver can scare anyone.
This extreme volatility of international markets has contributed to a greater fear in the world of investments than in previous years, which causes silver prices to fall.
4.- Silver can mitigate risk
Considering the previous fact, silver can provide protection during economic downturns. Large central banks often react to economic crisis by lowering interest rates and increasing liquidity on the streets.
This can weaken fiat currencies and lower confidence in the equity and bond markets, but that doesn’t happen with silver.
Being a physical asset and considering there is a limited supply of silver on Earth, this financial asset is much more likely to keep its value during economic downturns.
5.- There are several ways to invest in silver, for each type of investor
If your risk profile is conservative and you don’t have a lot of capital, you can start investing in physical silver:
This is what a typical bar of silver looks like.
They come in different sizes and designs and most are made from 99.9% pure silver per gram. This is usually the most profitable way to physically accumulate value in silver.
Buying investment coins or “Bullion”
These coins are like bar but smaller and round. There is a greater variety to buy coins than to buy bars, although they’re usually a bit more expensive.
The most traditional format is that of a Troy ounce (31.1g) of pure silver.
Buying old coins or “junk silver”
“Junk silver” refers to ancient coins that contain silver and have little numismatic value. The most interesting thing is that in many countries, these currencies don’t pay taxes, so the investment can be very profitable.
On the other hand, if you have a bit more money and like to take more risk, you can try trading.
You can do this by using financial derivatives whose product to operate is silver.
There are all kinds of derivatives, but the most affordable for mainstream investors are futures, financial options and ETF.
ETF, for example, are exchange-traded funds and their operation is similar to that of shares on the stock market. The important thing is, try to make sure that the ETF has the silver holdings backed by physical bullion stored in vaults, just in case.
The advantage of this type of investment is that you can save the cost and worry of investing in physical silver, as well as that it’s much easier to mobilize assets, since today almost everything is done digitally.
Investing in silver can be a very good option as long as you understand how the market works – just like with other types of investment.
But if you plan to do it any way, make sure you like to be continually monitoring the market, as well as knowing how to manage your emotions if there are abrupt changes in prices.
Final tip: never put all of your capital into one investment emotionally. It’s best to start with 20% to 30%, and according to the behavior of the markets, determine what your next step will be.