Invest in silver
Gold isn't the only game in town, even though you'd never know it by watching late night TV. Investing in silver means putting your money into the production, trading or outright ownership of silver metal. For most investors this means buying quantities of bullion in coin or bar form and holding onto it. While silver is technically a commodity like any other, precious metals are somewhat different as an asset class.
Silver as an investment
Silver may be used as an investment like other precious metals. It has been regarded as a form of money and store of value for more than 4, years, although it lost its role as legal tender in developed countries when the use of the silver standard came to a final end in Some countries mint bullion and collector coins, however, such as the American Silver Eagle with nominal face values. Collectors of silver and other precious metals who collect for the purpose of investment either as their sole motivation or as one of several are commonly nicknamed stackers , with their collections dubbed as stacks.
However, while these bullion coins are considered legal tender, they are rarely accepted by shops [7] and not typically found in circulation, as opposed to pre-debasement ' junk ' or 'constitutional' silver coins, which still occur in circulation on occasion. The price of silver is driven by speculation and supply and demand , like most commodities. The price of silver is notoriously volatile compared to that of gold because of the smaller market, lower market liquidity and demand fluctuations between industrial and store of value uses.
At times, this can cause wide-ranging valuations in the market, creating volatility. Silver often tracks the gold price due to store of value demands, although the ratio can vary. The crustal ratio of silver to gold is Physical bullion in coins or bars may have a premium of 20 percent or more when purchased from a dealer. Physical coins generally have a higher premium. In recent years ecommerce growth in the physical bullion industry has seen premiums reduced for retail investors to purchase products online with door to door shipping.
Gold and silver prices for the years to in the table above is based on information from www. The Hunt Brothers Nelson Bunker Hunt and William Herbert Hunt took a huge position in silver using leverage borrowed capital, such as margin debt , to become some of the largest private holders of silver in the world.
In the last nine months of , the brothers were estimated to be holding over million troy ounces of silver and several large silver futures contracts. The brothers were estimated to hold one third of the entire world supply of privately held silver not counting the silver held by governments. The situation for other prospective buyers of silver who had not stocked up on the metal in advance of its bull run was so dire that the jeweler Tiffany's took out a full page ad in The New York Times, blaming the Hunt Brothers for the increase in price and stating that "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".
On January 7, , in response to the Hunts' accumulation, the exchange rules regarding leverage were suddenly changed, and the COMEX adopted "Silver Rule 7", placing heavy restrictions on the purchase of the commodity on margin, causing massive liquidations and enormous downward pressure on the price.
The Hunts were never found guilty of any criminal wrongdoing, though later on, they lost a civil suit to a Peruvian mining company who had lost money during the events of the silver boom and bust. Throughout the s, the Hunts' considerable fortune dwindled in the aftermath of these events, and they eventually filed for bankruptcy. In , they agreed to a civil settlement with the Commodity Futures Trading Commission, paying out fines, and agreeing to a ban from trading commodities.
There was immense risk to the world economy that investors drove the prices up by buying defensive commodities e. When the short-term risks were believed to have subsided, many investors reallocated their assets back into yielding dividend or interest investments such as stocks or bonds.
The United States debt ceiling crisis was the major factor for the rise in price. The U. Tea Party movement battle. In , Republicans in Congress demanded deficit reduction as part of raising the debt ceiling.
The resulting contention was resolved on 2 August by the Budget Control Act of Following the downgrade itself, the DJIA had one of its worst days in history and fell points on August 8.
Then as it became likely that U. As it became clear that the "financial apocalypse" would be delayed by late summer, many investors dumped silver and commodities and moved back into U. Whether classifying silver's movement as a 'bubble' seen when comparing silver with gold has been debatable, with Peter Schiff denying that a bubble ever existed and asserting that the factors that led to the increase in the silver price have not yet been resolved.
The silver market is much smaller in value than the gold market. The London gold bullion market turns over 18 times more monetary value than silver. For example:. In April , iShares launched a silver exchange-traded fund , called the iShares Silver Trust, which as of November held million troy ounces of silver as reserves.
A big driver for silver sales in was Morgan Stanley and their short position holdings. This has influenced the silver market, along with an apparent shortage of above ground silver available for investment.
As silver continues to boom for industrial uses, less of the metal is available for physical bullion for investment. That, coupled with paper investment uncertainty, has driven the market prices wildly. Some silver analysts have pointed to a potential conflict of interest, as close scrutiny of Comex documents reveals that ETF shares may be used to "cover" Comex physical metal deliveries. This led analysts to speculate that some stores of silver have multiple claims upon them.
If you see only the hedges and our activity in the futures market, but you aren't aware of the underlying client position that we're hedging then it would suggest inaccurately that we are running a large directional position. The traditional use of silver in photographic development has been dropping since due to the decline of film photography.
Other new applications for silver include RFID tags, wood preservatives, water purification and food hygiene. New products are being introduced almost daily. Established companies are incorporating silver based products in current lines - clothing, refrigerators, mobile phones, computers, washing machines, vacuum cleaners, keyboards, countertops, furniture handles and more.
The newest trend is the use of nano-silver particles to deliver silver ions. Data from reveals that a majority of silver is being used for industry The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial and jewelry usage.
Silver, like all precious metals, may be used as a hedge against inflation , deflation or devaluation. The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies — the printing of money basically — then the less valuable the currencies become.
A traditional way of investing in silver is by buying actual bullion bars. In some countries, like Switzerland and Liechtenstein , bullion bars can be bought or sold over the counter at major banks. The flat, rectangular shape of silver bars makes them ideal for storage in a home safe , a safe deposit box at a bank, or placed in allocated also known as non-fungible or unallocated fungible or pooled storage with a bank or dealer. Silver is traded in the spot market with the code "XAG".
Silver bars, like silver rounds, can either be cast or poured, or minted; both categories often involve the production of bars with intricate decorative designs that attractive to collectors, [45] [46] often referred to as 'art bars'; [47] these types of bars are often given as gifts.
Various sizes of silver bars [48]. Silver coins include the one ounce All U. The combined mintage of these coins by weight exceeds by far the mintages of all other silver investment coins.
Junk-silver coins are also available as sterling silver coins, which were officially minted until in the United Kingdom and Canada and in Australia. These coins are The tiny threepence weighs 1. Other hard money enthusiasts use. A cross between bars and coins, silver rounds are produced by a huge array of mints , generally contain a troy ounce of silver in the shape of a coin, but have no status as legal tender which makes them lose favorable VAT status in those countries where lower or zero-rate VAT exists for silver coins.
Produced in a wide variety of different designs, ranging from reproductions of existing coin designs to wholly original shapes and patterns, rounds can be ordered with a custom design stamped on the faces or in assorted batches.
Silver exchange-traded products represent a quick and easy way for an investor to gain exposure to the silver price, without the inconvenience of storing physical bars.
Silver ETPs include:. A silver certificate of ownership can be held by investors instead of storing the actual silver bullion. Silver certificates allow investors to buy and sell the security without the difficulties associated with the transfer of actual physical silver. However, due to the fact that there was a limit to their issue, and the fact that no more are issued for circulation, there is a collector's premium over face value for these notes.
Series dates and issues, as well as condition, are factors which determine such value. Most Swiss banks offer silver accounts where silver can be instantly bought or sold just like any foreign currency. Digital gold currency providers and internet bullion exchanges, such as OneGold, BullionVault or GoldMoney, offer silver as an alternative to gold.
Some of these companies allow investors to redeem their investment through the delivery of physical silver. Derivatives , such as silver futures and options , currently trade on various exchanges around the world. In the U. These do not represent silver at all, but rather are shares in silver mining companies. Companies rarely mine silver alone, as normally silver is found within, or alongside, ore containing other metals, such as tin , lead , zinc or copper.
Therefore, shares are also a base metal investment, rather than solely a silver investment. As with all mining shares, there are many other factors to take into account when evaluating the share price, other than simply the commodity price.
Instead of personally selecting individual companies, some investors prefer spreading their risk by investing in precious metal mining mutual funds.
In many tax regimes, silver does not hold the special position that is often afforded to gold. For example, in the European Union the trading of recognized gold coins and bullion products is VAT exempt, but no such allowance is given to silver. Norwegian companies can legally deliver free of VAT to the rest of Europe within certain annual limits or can arrange for local pickup. Other taxes such as capital gains tax may apply for individuals depending on country of residence tax status and whether the asset is sold at increased nominal value.
From Wikipedia, the free encyclopedia. Main article: Silver mining. See also: Taxation of precious metals. The United States Mint. Archived from the original on December 2, Retrieved November 24, The Silver Institute.
Archived from the original on December 4, Retrieved September 29, Archived from the original on November 29,
There are numerous ways to buy silver. Investors can buy silver coins and bars, invest in an exchange-traded fund backed by physical metal. What are the pros and cons of investing in silver bullion? Read on to learn why now may be the time for investors to enter the market.
Gold and silver have been recognized as valuable metals, and have been coveted for a long time. Even today, precious metals have their place in a savvy investor's portfolio. But which precious metal is best for investment purposes?
Should you decide to add silver to your investment portfolio, there are a number of options for you to consider. Here is a summary of silver investment choices:.
People who invest in precious metals tend to appreciate the sense of permanence, stability, and tangibility that comes with owning an item like silver, whether it is sitting in your home safe or a huge vault somewhere. There are many options when it comes to investing in silver, and, like all investments, varying levels of risk and reward.
A Beginner's Guide to Precious Metals
Silver may be used as an investment like other precious metals. It has been regarded as a form of money and store of value for more than 4, years, although it lost its role as legal tender in developed countries when the use of the silver standard came to a final end in Some countries mint bullion and collector coins, however, such as the American Silver Eagle with nominal face values. Collectors of silver and other precious metals who collect for the purpose of investment either as their sole motivation or as one of several are commonly nicknamed stackers , with their collections dubbed as stacks. However, while these bullion coins are considered legal tender, they are rarely accepted by shops [7] and not typically found in circulation, as opposed to pre-debasement ' junk ' or 'constitutional' silver coins, which still occur in circulation on occasion. The price of silver is driven by speculation and supply and demand , like most commodities.
Why Invest in Silver?
So why invest in silver? The reasons are manifold. Silver is a precious metal, and like gold, it has an intrinsic value. Silver is widely perceived to be both a commodity and a form of money, and it has been used as a medium of exchange for thousands of years due to its inherent value. Money in the U. Constitution is defined in terms of silver. Article I, Section 10 of the U. The Coinage Act of specifically defined the U.
Physical silver is a tangible asset with no counter-party risk or default risk. Silver has an intrinsic value due to its metallic characteristics making it suitable for industrial, medical and ornamental use and due to its finite supply.
The best way to invest in silver is to gain exposure to the price of this precious metal through mutual funds, exchange-traded funds ETFs or exchange-traded notes ETNs. But before investing in silver funds, investors should learn the benefits and strategies of buying precious metals. Silver as an investment has similar purposes as gold. There are industrial uses for silver, such as jewelry, but the price is driven primarily by supply and demand and investor speculation.
Why Invest in Silver
In uncertain financial times, people have historically turned to gold and silver as a hedge against inflation and investment losses. But silver attracts heavy investor demand for a number of other reasons. Silver has the same attributes as other precious metals but possesses unique strengths and weaknesses. This can motivate a different type of investor behavior. New money is cash or securities from a non-Chase or non-J. Morgan account. Find out how. TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools.
Investing in Silver: Four Ways to Invest and Why
The silver market has been volatile over the past 20 years, with a huge bull market that ran throughout most of the s and early s giving way to a big pullback in recent years. Now, however, some see silver as an investment that could take advantage of industrial demand, especially if new supply gets constrained by lower prices. Yet many don't know how to buy silver or why investing in silver can be lucrative. By understanding how you can invest in silver, you'll be in the best position possible to decide whether it's the right move for you. The clearest way to invest in silver is to go out and actually buy the physical metal. Bullion silver is available in coin and bar form, and most coin dealers and precious metals dealers will offer silver bullion in various sizes and formats. Typically, you can find coins and bars as small as a single ounce, or large bullion bars as big as 1, ounces. Owning silver bullion has the advantage of having its value track the market price of silver directly. However, there are a number of disadvantages. First, you'll typically pay a slight premium to buy silver from dealers, and you'll often have to accept a slight discount when you decide to sell it back to your dealer.
