silver

Adding Silver To Your Investment Portfolio: Benefits And Tips

Investing 5 Mins Read April 10, 2024 Posted by Arnab

Silver is a valuable investment option for diversification and growth. Moreover, as demand for it has increased significantly over the past year, silver investments have gained more popularity.  

Previously, choosing gold or silver was a singular choice. However, now we live in the “golden age” with options available on a silver platter.  

With gold as the more established precious metal investment, silver offers numerous benefits. It acts as a potential outperformance during economic growth and an essential hedge during downturns.  

Silver’s numerous industrial uses make it an attractive option for those seeking growth opportunities. 

This article will help you understand why you should invest in silver and diversify your portfolio with silver investments. 

Why Invest In Silver?

Invest In Silver

Given below are some of the eye-opening reasons why you should consider investing in silver? 

1. Gives You A Hard Asset 

When it comes to investments, have you ever considered how many you can actually hold in your hand? However, with digital trading, paper profits, and the creation of new forms of currency, there are few options.  

However, physical silver is an exception. You can take it with you wherever you go, even across borders. Plus, it offers privacy and confidentiality.  

Therefore, in today’s world of hacking and cybercrime, physical silver is also a tangible hedge. Unlike digital assets, silver coins can’t be erased. 

2. It Is Cheap Now 

Did you know that silver is an excellent hard asset alternative to gold?  

At 1/70th the price of gold, it provides the same level of crisis protection and can help maintain your standard of living.  

Therefore, even if you cannot afford a full ounce of gold, you can always go for silver investments. 

Silver makes for a more affordable gift than gold, making it a great choice for gift-giving. 

3. Inflation Cannot Touch Silver 

The best part about silver is that it is an inflation-proofed investment. Therefore, silver investments ensure their value remains constant regardless of currency fluctuations.  

Moreover, they perform well even during economic downturns and depression, unlike most physical assets depreciating over time.  

Silver also performs better than other investments during world crises, including the coronavirus pandemic, with more investors turning to them for financial protection.  

Therefore, silver makes for a popular choice for investors seeking financial security. 

4. Offers A High Liquidity Rate 

Another advantage of investing in silver is its high liquidity compared to many other investments. Their value is widely recognized, making it easy to convert them to cash.  

Plus, converting them is just as straightforward no matter where you are, and you’ll still receive their full value in cash.  

In contrast, many other investments are currently uncertain, and unfavorable economic conditions could cause your investment to depreciate or be lost. 

5. Portfolio Diversification 

Most investment portfolios have a high concentration of stocks, which can lead to significant drawdowns during bear markets.  

Conversely, silver rises during bear markets, making it a great way to diversify and smooth out returns.  

Moreover, it is a valuable asset you can leave behind for future generations as its value appreciates over time. This diversification can ensure a stable and rewarding investment experience for future generations. 

6. Demand For Silver Is Growing Worldwide 

The demand for silver is increasing globally. Moreover, major government mints have started experiencing record sales and are operating at peak production.  

China and India, with their cultural affinity toward precious metals and growing populations, are leading the surge in demand. Therefore, all these factors indicate a greater demand for silver in the future. 

Silver For Industrial Use 

Silver is ubiquitous in various industries. Some of the popular industries that use silver include the following: 

  • Electronics. 
  • Medical applications. 
  • Batteries. 
  • Solar panels.  

Its use is increasing, with cell phones containing about one-third of a gram of silver. Moreover, according to Gartner?s estimations, 5.75 billion cell phones will be purchased between 2017 and 2019.  

Also, the self-heating windshield in new Volkswagens will feature an ultra-thin silver layer instead of tiny wires. Therefore, the Silver Institute predicts that silver use in photovoltaic cells will be 75% greater in 2018 than three years ago. 

Silver is a crucial industrial resource used as a catalyst for producing ethylene oxide, a precursor in plastics and chemicals production.  

The Silver Institute predicts a 32% increase in silver demand by 2018 compared to 2015.  

However, unlike gold, most industrial silver is consumed or destroyed during fabrication, making it difficult to recover every small flake from millions of discarded products, limiting the amount of silver that can be recycled. 

What Are The Best Ways To Invest In Silver? 

Best Ways To Invest In Silver

Here are some of the best practices to invest in silver? 

1. Silver Futures 

Silver futures offer a convenient way to speculate on the price of silver without the need for physical silver.  

They are attractive due to the high leverage in futures contracts, requiring minimal capital to own a large position in the metal.  

However, the leverage magnifies gains and losses, as the market may move against the investor, requiring more capital to hold the position. If the investor cannot, the broker may close the position, leaving the investor with a loss.  

Futures are risky and suitable for sophisticated traders, requiring a large account balance. Thus, futures trading is less common, barring some online brokers. 

2. Silver Coins & Bullions 

Owning physical silver as coins or bullion is a psychologically and emotionally satisfying investment option. It provides access to the metal and can be used if needed.  

U.S. coins made before 1964 contain about 90% silver and can be purchased at the value of their silver content.  

Silver prices can increase, allowing profit on coins and bullion. Purchases can be made through local pawn shops, online, or specialized dealers.  

However, risks include overpaying for physical silver, not receiving full value for cash quickly, and overpaying for collectible coins. Silver is also susceptible to theft, so safeguarding and insuring it is crucial. 

3. Silver Mining Stocks 

Owning stocks of companies that mine silver can provide benefits in the rising silver market. The miner can gradually increase production, boosting profits, and the company’s earnings will rise with the price of silver.  

However, conducting an extensive company analysis is crucial to ensure it’s a high-quality, profitable venture. Many miners are high-risk businesses whose earnings rely on silver’s erratic price.  

Given that their earnings are based on the price of silver, mining stocks can also be erratic. As a result, purchasing a miner may provide more earning prospects. 

Investment For The Future 

Silver is a popular investment due to its potential for returns, liquidity, and diversification.  

Moreover, it outperforms highly regarded asset classes like stocks, making it a valuable store of value.  

Silver is a liquid market and less correlated to other markets, making it a valuable store of value.  

However, it does not produce cash flow, making it difficult to determine when to buy. Therefore, make mindful decisions and invest wisely!

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Arnab Dey is a passionate blogger who loves to write on different niches like technologies, dating, finance, fashion, travel, and much more.

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Mashum Mollah

27th March, 2024

Nice