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Did You Know You Could Profit from Silver Investments?
Source: Silver Institute

Did You Know You Could Profit from Silver Investments? 

Often referred to as the lustrous cousin to Gold, Silver offers investment opportunities that can adequately put money to work. The metal is a good store of value and safe haven. It can also be used as an inflation hedge. Important to note is that the metal’s demand is 50% driven by industrial use with the remainder shelved for investors. This means Silver has lower investor traction compared to Gold. This makes it less liquid and more volatile compared to Gold.

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Silver’s industrial use includes the manufacturing of medical equipment, batteries, jewelry, electronics, and coins. This is the reason Silver’s demand is higher than that of Gold. However, it fetches comparably low prices. The low prices are because it occupies more volume than gold and tarnishes faster. It is, therefore, more expensive to store and transport than its market benchmark, Gold. A common observation of the commodity over the years has effectively shown that Silver’s movement trails that of Gold. If Gold is in a bull run, Silver will most likely follow suit. The reverse is true.

The commodity can either be bought directly or indirectly. It can directly be bought in the form of bars, bullion coins, and silver bags. Indirectly, It can be bought through positions in brokerages or equities in Silver companies.

Significant cons in Silver investments are illiquidity and vulnerability to recessions. The metal is illiquid because it is less traded on the financial markets compared to its cousin. Its vulnerability to recessions is informed by the high probability of industries suffering losses in times of economic turmoil hence lowering the commodity’s demand and price.

On a positive futuristic note, Silver is used in the manufacturing of solar panels due to its high electrical conductivity.  A shift towards cleaner energy will increase the commodity’s demand consequently increasing its price and value.

Key Take Away

Novice investors are advised to keep off Silver as it is highly volatile and can cause significant losses especially when one cannot stomach risk before turning a profit. Experienced traders can either invest in buy or sell opportunities on the commodity depending on their market analysis at the time.

Will you be buying physical Silver or its futures on brokerages?

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