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Guide to Buying Silver

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In the early 1600’s Milton coined the phrase: “Every dark cloud has a silver lining.”  We can juxtapose the meaning and extrapolate it to the economy. Should you experience economic instability, and you have silver in your investment portfolio, it will turn out better for you.

Buying silver as part of your investment strategy will assist you to hedge you against market uncertainty and shocks. Just like gold, this precious metal is a safe-haven in turbulent economic waters.

Silver is a cheaper alternative to gold and other precious metals. Since silver has some intrinsic qualities of its own, it offers investment advantages in its own right. Silver has unique considerations and risks that investors need to consider.

The value of silver is based on the current value of the precious metal as well as the metals use in industrial fields. The industrial use affects its price performance and outlook. Silver is used in the manufacture of a variety of things in the automotive sector, in photography, across various electronics products, medical equipment, microcircuits and in solar panels. Various new technologies use silver in silver oxide batteries, various silver-based nanotechnologies in medical applications and in silver conductive inks. Silver is becoming the standard in these industries. 

What should investors consider when they buy silver bullion?

Although silver costs less than gold, fewer trades take place, making silver more volatile and illiquid. silver prices react to various measures of manufacturing data making it more volatile than gold. 

The use of silver in manufacturing processes can be replaced by other metals or technology. Certain technologies using silver can be replaced. The technology using silver can also become outdated and industry can replace that technology with another.

Economic factors may also impact positively on the price of silver. Silver’s use in many technological applications in solar energy and the electric automotive industry, benefits technological advances and the clean energy movement. This increases the bullish outlook for silver.

On the other hand, silver is sensitive to recession. Consequently, an economic slowdown will hamper the use of silver causing the price to drop significantly. 

The economic potential of silver bullion is limited since the price is linked to the spot price at the time that you liquidate your investment. It is not like an investment in tocks that provides a second income stream through dividends.

In a bull market when the silver price rises, there will be a motivation to recycle silver from industrial scrap, jewelry, and silverware. 

There is a premium to consider when investors buy silver bullion from a bullion dealer. Depending on the size you can pay anywhere from 5% to 30% premium on top of the spot price. 5kg bars are the cheapest source of silver while silver coins being the most expensive. Storing physical bullion bars or coins means can be a little difficult and expensive as often investors will be buying kilos.

Conclusion

Due to the volatility of the price of silver and its commercial applications an investor must be try be careful and research not only which bullion dealer they wish to buy from but also the timing of their silver purchases thoroughly. Buying silver at the correct time from the right bullion dealer can result in your silver bullion to outperforming other precious metals such as gold.

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