Investing in silver is popular way chosen by many people to hedge against inflation and build up a strong portfolio. However, there are several things to know about investing in silver. Though it is a precious metal like gold, the market characteristics are very different. It is best to do your homework thoroughly before entering the market.
Different forms of silver investments
Silver bullion is the most traditional way of investing. If you want to physically own the silver, you can opt to buy silver bars or coins. The bars are flat rectangular pieces of the metal which come in different sizes ranging from 1 troy oz bars to 1000 troy oz bars. You can store these bars in the safe of your home or at the banks. These are far easier to buy than gold bars.
Another type of silver investment is coins. You can purchase the Canadian Maple Leaf or the American Eagle coins as a part of your investments. But it is better not to aim at old and rare collector’s coins because you will find it difficult to both buy and sell. The value of a coin is determined by the value of the intrinsic amount of silver in it.
It is much more convenient to buy silver exchange traded fund or ETF. The largest silver ETF is the iShare silver trust.
Silver Certificates show how much silver you own on a paper. They are easy to store, buy and sell.
Swiss banks allow you to have silver accounts. You can buy and sell silver on these accounts rather like foreign exchange.
ETF and Silver bullion are the best options for silver investments, but you should know that in the USA, if you own a silver item for over a year, it is considered to be collectible. So, any gains that you make from selling it will be taxed at a far higher rate. So, bullion may not be suitable for the long-term investment if you are looking to invest in silver over a long period of time then silver ETF would be the better option.
Facts about investing in silver
Silver prices are much lower. So, they are far more accessible to the ordinary investors than gold.
The amount of silver bullion actually traded in the market is far less than gold. This increases the risks of investing in silver.
The price of silver is far more volatile than gold and it changes quite drastically in response to demand and supply. So, the silver market is less stable than gold.
In many countries, gold enjoys a special tax status but silver does not. For example, in the European Union, trading in gold bullion is exempt from VAT but not silver.
Though the price of silver generally follows that of gold, it is regarded as a less effective protection against inflation than gold.
Silver investments may be quite suitable for people with limited funds who are looking for an assured profit, provided you follow the standard safeguards in buying and selling.