INVESTMENT IN SILVER

Is silver a good investment?

To determine whether silver is a good investment, we first have to ask: what is it that makes precious metals so ‘precious’?

Precious metals are called so for a reason. The yearly production of these elements is quite limited. Their scarcity is precisely what enables their value and uniqueness.

There are three major, highly valuable metals that garner the attention of traders around the world: platinum, gold and silver.

Precious metals have been serving mankind in various shapes and forms – money (coins), investment tools, industrial commodities – around the world for centuries. You might ask: why would anyone invest in precious metals while the paper money system and securities options exist?

Well, if we look back through history, we can see that fiat currency has failed in different countries and different cultures many times, while precious metals like silver and gold have managed to stay internationally valuable as methods of payment throughout the centuries.

Whenever there are times of political or economic inconstancy, you might see a sudden increase in metal demand. The wobbling of bonds, stocks and funds have also been seen to trigger people to take a step toward investing in precious metals. If there’s a possibility that securities seem threatened, precious metals show their role as a valuable, tangible asset that people can actually have in their possession and rely on to keep its value.

Precious metals have low-to-negative correlations to other asset types such as bonds and stocks. This means that if even the smallest percentage of metals are included in an investor’s portfolio, it will lead to a reduction of both, risk and volatility.

These metals can truly be called a global currency that offer investors a unique tool to hedge against uncertainty with exceptional liquidity, which is so important in today’s market.

Role of silver in the global market

Silver has been around for centuries. Nowadays, it is included in the list of the most traded precious metals, as it has the advantage of countering inflation and protecting from other economic and financial crises.

Silver has attracted investment demand for a very long time. It is well known for its versatility in all spheres of life. Aside from its important role in medicine and jewellery design, it is also in demand in the industrial production of solar panels, phones, computers, microwaves and other electronic consumer goods. Silver is also sometimes used in nuclear energy. New ways to utilise this versatile metal are created almost every day.

The majority of silver is purchased in Germany, the US, and Canada. There is also a high demand for silver in emerging markets for the creation of jewellery and religious and cultural ornaments. It remains, however, that such items can easily be melted down, reshaped and resold in times of economic trouble.

As global silver production drops while its demand continues to grow, analysts predict strong silver deficits in the upcoming years. This will supply the silver market with more targeted investors, increasing industrial demand for the metal.

Rank Country Annual silver production in millions of ounces
#1 Mexico 186.2
#2 Peru 147.7
#3 China 112.4
#4 Chile 48.1
#5 Russia 46.6
#6 Australia 43.6
#7 Bolivia 43.5
#8 Poland 38.5
#9 USA 35.4
#10 Argentina 30.0

How to invest in silver

There are several ways you can invest in silver. You can purchase physical silver bars or coins, invest in Silver Exchange-Traded Funds (ETFs) or trade stocks that have a vested interest in the silver industry (e.g. a silver mining company).

One of the easiest ways to trade silver, however, is through Contracts For Difference, or CFDs. A Contract For Difference allows you to go long or short on the asset without ever taking ownership of it. You simply speculate on its price direction: if you think the price will rise, you ‘Buy’; if you think the price will fall, you ‘Sell’.

So, is silver a good investment?

There are several ways you can invest in silver. You can purchase physical silver bars or coins, invest in Silver Exchange-Traded Funds (ETFs) or trade stocks that have a vested interest in the silver industry (e.g. a silver mining company).

Just like any other asset, silver as an investment can give no guarantee of financial success. Nevertheless, it is, in fact, an undoubtedly stable choice for long-term investment and is an excellent hedge in times of economic uncertainty.