Investing in silver has a lot of potentials. Though it rarely gets the same kind of attention as gold prices in the media, silver prices tend to move in tandem with gold but with more momentum. Silver is also more affordable and easier to buy in higher volumes for investors who want physical bullion, thanks to the much lower price per ounce.
Before you buy physical silver, here’s what you need to know about silver for beginners.
Where to Buy Physical Silver?
If you want the best price on silver or gold, you want to go somewhere that deals in high volumes. That may mean finding the biggest market available. In Canada, major cities like Toronto tend to offer the best prices and the most variety.
When you want to buy silver in Toronto, a bullion dealer is the best place to look. Bullion dealers sell gold and silver bars and coins sourced from mints and refiners such as:
- Royal Canadian Mint
- US Mint
- PAMP Suisse
- Royal Mint
- Perth Mint
- And more
A bullion dealer is the safest way to buy authentic silver coins and bars. You can also buy bullion online if y
ou don’t live in a major market like Toronto.
What Kind of Silver Should You Buy?
With so many silver products on the market, it’s not easy to know what you should buy. Many beginners think that the secret to successfully investing in silver is finding rare coins that will take on numismatic value later. However, the collectibles market is unpredictable and complicated, much more so than bullion.
Fine silver coins and bars are the best options for beginner investors. Look for products that are .9999 silver bullion or 99.99% pure silver.
The most common weight available tends to be 1 oz coins and bars. However, when you buy heavier bars, such as 10 oz or 1 kg silver bars, you may be able to save on premiums.
What Kind of Growth Potential Does Silver Have?
Unlike investing in stocks or bonds, where you buy part of a company or lend it money, silver doesn’t generate a product or service, and there’s no interest or dividends paid for owning the metal. It’s a commodity with value in itself, making it more of a speculative investment. You’re betting on the idea that prices will go up before you want to sell it.
Fortunately, there is only so much silver in the world, and production is falling due to depleting ore reserves in a world where precious metals are increasingly scarce.
- Production has fallen every year for the last four years.
- Solar power and 5G infrastructure are increasing industrial demand for the metal.
- Uncertainty about the delta variant of COVID-19 and the spread of the virus around the globe continues to hamper global economic growth.
For these reasons, silver’s long-term prospects are generally positive. It’s an investment that has the potential to pay off big gains down the road.
Is Investment in Silver a good idea?
Investors save their funds for the future in a variety of places in addition to the stock market. In reality, most wealthy investors diversify their capital among various asset classes, including precious metals, bonds, and equities. Especially during periods of strong inflation, you might consider purchasing gold as you vary your portfolio. You might, however, also hear of silver as a potential investment. This possible opportunity is difficult to miss because an ounce of silver costs far less than an equivalent amount of gold. Precious metals are a popular choice among investors as a hedge against economic downturns. These assets have a great deal of appeal due to their inherent worth and protection from inflation.
Silver is still a valuable metal with many practical uses across a wide range of sectors, despite its cheap price. Silver investment is a wise decision due to these aspects and the fact that it gives the same advantages as other precious metals. Silver is regarded as an inactive investment because it doesn’t produce revenue or cash flow. Additionally, it doesn’t produce goods or services, in contrast to other investments. However, it does have worth in and of itself as a valuable and industrial metal. In the past, silver was used as genuine money in everyday transactions. Its value has been quite steady because of this.
When considering investing in silver, you should regard it as a commodity that will do well or be very steady. The cost of silver was about $1 per ounce up until the 1960s. The government began removing silver from American coins when the price started to rise. Silver’s price surged after this was demonetized. It peaked at $1.8 in the 1970s before rising to $49.45 per ounce in 1980 and dropping back to $11 just five months later. Silver’s price has a tendency to increase considerably over time, which helps it maintain its status as a reliable investment. For instance, the value of silver per ounce stayed at about $5 from the 1990s through 2003. If you had bought in the 1990s, your money would have increased by 300% by the time it reached $16 per ounce in 2007. The price of gold began to soar in 2004.
When the financial crisis began in 2008, the price dropped to roughly $9, but within the following four years, it shot up to $50 per ounce in 2011. Silver’s price dropped to $12 when the COVID crisis struck in 2020. It has been recovering ever since and is currently stable at about $26 per ounce.
What are the Pros and cons of Investing in Silver?
Every investor wants to maximize gains and minimize losses. These are their two main objectives. It’s crucial to weigh the risks and rewards of the investment you wish to make, like with any investment.
In that vein, the following are some benefits and drawbacks of silver investment:
1. Silver provides security.
Investors frequently swarm to precious metals during tumultuous times. Legal currency is prioritized above assets such as gold or silver during political or economic unpredictability. Silver is a riskier commodity to engage in than gold between the two. Legal currency is prioritized above assets like gold or silver during times of political or economic unpredictability. Silver is a more unpredictable metal to trade in than gold, but it is still a great option. You might potentially reduce losses by diversifying your portfolio, which is another advantage. While the value of paper money will decline due to inflation, the price of silver and other rare metals will not.
2. Silver is a tangible asset
Digital notes are what stocks, bonds, options, and even cryptocurrency are, in essence. They are hence susceptible to depreciation. A physical asset is a silver. All investments will change with market conditions, but because silver is a real commodity, its value can never be zero. Market value will revert to its true intrinsic value in the event of a crash.
3. Silver provides prudence.
The advantages of buying silver are the same as those of paying cash. If you don’t want your trades to be a part of a public record, this is an additional benefit to think about.
4. Silver won’t dent your bank account.
Silver currently costs $0.85 per gram. Due to this, it is less expensive than gold while offering all the advantages of investing in precious metals. Gold is currently being sold for $57.63 per gram. Therefore, if purchasing a gold bar is beyond your price bracket, you might choose to first check for silver bullion. Technically, there are very few dangers associated with investing in silver because silver’s value can never go to zero.
5. Silver is not a metallic liquid.
This means that selling silver quickly is not possible. Pawn shops and other similar options exist, but they’re not the greatest. Keep this in mind if you wish to have investments with high liquidity.
6. Great premiums result from high demand.
Basic common-sense dictates that. For instance, one will be required to pay a hefty premium if one wants to purchase silver coins because they are in high demand.
7. Insufficient return on investment
A safe investment is a silver. It doesn’t provide returns like equities or bonds, and historically, it hasn’t done well like real estate. What it actually does is act as a safety net.
It is obvious that, in this instance, the advantages exceed the drawbacks. Gold and silver, like other commodities, have an intrinsic worth that is not arbitrary but is reliant on their scarcity, the amount of labor expended in obtaining them, and the valuation of the capital employed in the mines that generate them, according to British economist David Ricardo.
How to invest in silver?
By acquiring silver bullion bars or coins, you can engage in silver directly and take ownership of the precious metal. Alternatively, you can indirectly invest in silver by purchasing related assets, such as stocks, funds, and even broadcasting businesses.
Direct investing: taking possession of bullion coins
You can take immediate possession of your possessions by buying in silver bullion or coins. This is the more conventional method of investing. You have direct access to the value of silver in times of turbulence. Investors choose actual bullion mostly for insurance purposes. Silver bullion bars are possible if you wish to invest a significant amount of silver. One ounce to one hundred ounces is the weight range for them. However, bear in mind that trading bullion is more challenging than trading silver coins.
Indirect Investing: Silver Stocks, Funds, ETFs, and ENTs
As a result, silver is utilized in more industrial applications than gold, such as the automobile and pharmaceutical industries, as well as the reality is that the market for silver is less than that of gold, and silver’s value is more erratic. Given this, investing in silver ETFs that track foreign prices or futures may be preferable to buying bullion or coins. The ease of liquidation and absence of the 5%–6% commission are two advantages of ETFs over real silver ownership. Silver is not an asset that the mutual fund itself holds if you invest in one. By owning shares of silver mutual funds, investors can have a secondary position in the metal. These businesses include the iShares Silver Trust, Invesco DB Precious Metals Fund, and Aberdeen Standard Physical Silver Shares ETF.
Do your research before selecting a silver ETF because some of them will expose you to more gold equities than silver mining firms. ETF fees can have a depleting impact on the underlying asset, despite the fact that they do not have the disadvantages of premiums, storage, or insurance fees. Although investing in silver equities has several advantages, including the ability to exceed the price of silver, it also has certain disadvantages. Silver equity markets and silver streaming company stocks are the two main silver businesses available for investment.
The first kind makes investments across the entire silver production process. The second kind makes investments in mining projects in exchange for a share of future revenues rather than mining the silver themselves. The most complicated silver-focused investing choices are ETNs. Like bonds, they are debt products that don’t make investments in assets. They aren’t securities or investments. ENTs are a combination of bonds and stocks. Silver ENTs track the silver index like ETFs and derive their value from market prices. Thus, tracking errors are decreased. If the price of silver has increased by the time the notes mature, you could receive a lump sum as a return.
How to buy silver coins or bullion and where?
Online or at the mint, silver coins are available for purchase. Likewise with silver bullion coins. Normally, there is a commission of about 6% on your purchase. Watch out for premiums if you decide to buy from third-party suppliers.
The American Eagle is the most well-known silver coin produced by the United States Mint. This coin costs $39.59 and weighs one ounce. Due to its popularity, the price is higher than the average one-ounce silver price. The Canadian Maple Leaf and the Chinese Silver Panda are two further well-known coins that, like the American Eagle, are struck from.999 silver. This coin costs $33.59 in total. Chinese Silver, which costs $38.97 and has a silver content of 0.900, is the third preferred choice. Some of the best silver coins to purchase include these three.
Silver bullion is the best option if you want to purchase a larger amount of the metal. Of course, there are two things to consider while purchasing bullion. First, where are you going to keep it? Think about the annual fees involved if you decide to put it in a bank safety deposit box. Theft is the second issue. You must ensure it is secure if you intend to keep it at home.