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Precious metals such as silver have long been an alternative to traditional investments such as stock and bonds. When times get tough or it looks like the Federal Reserve is actively engaged in printing money, some investors turn to silver to hedge their bets or to invest more defensively. Investors like silver for many reasons, but many see it as a store of value in uncertain times, while others see silver and other precious metals such as gold as protection against inflation.
There are a number of ways to invest in silver, from owning it outright to owning shares in companies who produce it. Here are five of the best ways to invest in silver. Owning physical silver, either as coins or bullion, is a psychologically and emotionally satisfying way to invest in silver.
You have possession of it and can use it, if necessary. For example, U. More specialized dealers allow you to purchase whole bars rather than just coins. Similarly, if you need cash in a hurry, you may not be able to get the full value for your physical silver, especially if you need to go through a dealer. Silver futures are an easy way to wager on the rising or falling price of silver without any of the hassles of owning physical silver.
Silver futures are an attractive way to play the silver market because of the high amount of leverage available in futures contracts. In other words, you have to put up relatively little capital to own a relatively large position in the metal. Risks: The leverage in future contracts works both ways, meaning it magnifies your gains and your losses. Finally, only some online brokers offer futures trading.
ETFs offer another advantage, too. Risks: Like gold and other commodities, silver can be volatile, especially over short periods. You can also take advantage of a rising silver market by owning the stocks of companies that mine the metal. By owning a miner you can benefit in two ways. Second, the miner can raise production over time, also increasing its profits. Many miners are risky outfits, and some have yet to dig a hole in the ground, let alone mine silver from it.
Plus, because their profits depend on the volatile price of silver, mining stocks can be volatile, too. Risks: A sector ETF reduces the costs of any single miner doing poorly, but anything that hits the whole industry, such as a falling price of silver, will likely ding the fund significantly. Some may offer more exposure to higher-quality companies, while others focus more on riskier junior miners.
Investors like silver for many of the same reasons that they like gold and precious metals more generally. Here are some of the most important reasons:. In contrast, owners of a business — through either individual stocks or ETFs — can profit through the rising price of the commodity or the increased earnings of the business. So those who have a stake in these types of businesses have multiple ways to win with silver. While adding silver to your portfolio can be a useful strategy for more advanced investors, beginners may be better-served by building a well-rounded portfolio made up of the best investments.
Investing in silver is not a good fit for everyone, and some investors prefer to focus on cash-flowing businesses rather than invest in the metal itself. Still, owning bullion means you have no counterparty risk with an exchange or a company, for instance , though the investment relies only on you for safekeeping.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. How We Make Money.
Editorial disclosure. James Royal. Written by. Bankrate senior reporter James F. Royal, Ph. Silver takes up more physical volume than gold. Since the same size investment literally buys more silver than it does gold, that means silver holdings will take up a lot more space will cost more to store and transport.
Oh, and it tarnishes too. The silver market is much smaller than the gold market. Those looking to offload silver will likely have a more difficult time finding a buyer than those selling gold. The gold market is simply more widely known and understood. It offers a wider array of safer, reputable places to invest. Since silver is an industrial metal, it's more vulnerable to recession and pressures affecting manufacturing companies. Such factors can affect gold, which also has its industrial uses, but overall, gold is more driven by investor sentiment.
So gold acts as a better, purer hedge against the economy and stock market. There are two main ways to expose yourself to silver: directly buying the actual metal itself and indirectly buying silver-related securities.
Investors can buy physical silver in the form of bullion coins, bars, or junk silver bags. This is the purest form of silver investment, but it does incur storage-related problems and expenses. Less pretty, but more pragmatic, is to invest in financial instruments that represent silver. For individual investors, these best indirect options include:. Despite its affordability and industrial uses, silver has maintained a fairly low profile, especially in comparison to gold.
It also remains relatively cheap — especially in comparison with gold — presenting investors with more buying opportunities. But silver is more volatile and less liquid than gold. These factors, along with its dependence on different industries, can make it difficult to predict what the silver market will look like in 10 minutes, let alone 10 years. For those reasons, it's probably wise for newbie investors to steer clear and stick with good old gold if they want a safe haven against the stock market's moves.
But if you're slightly more experienced and have a stomach for risk, Camerana suggests that silver could be a good choice. Now might just be the perfect moment to take the plunge, as the combination of a bullish market intersects with increased demand from both the industrial sector and financial investors. Get the latest Silver price here. Get the latest Gold price here.
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Silver is Recovering from its All-Time Low Levels From here, the uptrend looks more feasible and there is a very limited downside to this metal considering the recent market trends. Due to this reason. Silver, like gold, can be viewed as a safe-harbor investment during the end of a long bull run because it's a hard asset and a store of value. It can also be. Silver is an excellent all-around investment to consider now. First Quantum Minerals offers exposure to copper, gold, and nickel. Motley Fool.