Investing in silver coins and bullion is a favorable way to protect against inflation and other changes in the financial market. For example, investors prefer to look for silver and other alternatives if the stock market has not performed well. The short answer is that it can be both a cheaper alternative to gold and also for some intrinsic qualities of its own. But silver also comes with unique considerations and risks that investors should consider.
Another advantage of silver is that it serves as a hedge against inflation. Because it is a physical asset, it has an intrinsic value that dollars and other currencies lack. Silver also offers long-term value and works well when interest rates are low. Silver is not a real investment, since it does not generate a product or service.
Silver has value in and of itself, both as a precious metal and as an industrial one. It produces nothing, generates cash flow, or provides a stable income. And growth in electric vehicles is projected to be so high that the Instituto de la Plata estimates that automotive demand will become the second largest source of industrial demand for silver by 2024.Argentines and Paraguayans who had to plan to get out of trouble from banking systems and convert their assets into gold or silver coins were protected. By buying silver bars, you actually take possession of the metal, even holding it “old school” in the form of a coin.
Other options for investors interested in silver include investing in an exchange-traded fund or silver futures. A silver exchange-traded fund (ETF) is a way to hold silver bars in and of itself, except that you do so through a fund. Coins made before 1964 contain about 90 percent silver, and you can buy them for the value of their silver content. When the Federal Reserve controlled inflation in the 1980s, much of the silver bars and gold coins purchased in the 1970s were sold and profits were reinvested in paper.
Bullion bars have the least amount of dealer premium because they are simply silver poured into a mold, so they have no value beyond current silver prices. An ETF that holds physical silver will generate the return of silver prices minus the ETF's expense ratio. Buffett's purchase of silver, which became legendary among silver investors, was likely for investment purposes. If you don't want to own physical silver directly, but you also want a lower risk method than futures, you can buy an exchange-traded fund (ETF) that holds physical silver.
These companies own large quantities of land with silver mines and are involved in the production of precious metals such as silver. Owning physical silver, whether as coins or bullion, is a psychologically and emotionally satisfying way to invest in silver. Holding shares in silver streaming companies, such as Royal Gold or Franco Nevada, can be another way to add silver to your portfolio and benefit directly from their growth. Since investing the same size literally buys more silver than gold, that means silver holdings will take up much more space and cost more to store and transport.
