Investors are investing in silver now at a higher rate than gold – and the price is rewarding them. That’s because silver is one of the best investments on the market right now. It’s safe, low risk and cheap compared to many alternatives like gold or stocks. Despite this, silver has the potential to give incredible margins in today’s volatile economy.
Why Invest in Silver?
Recent developments in the global economy including by increasing national debt and international currency manipulation have led many investors to hold some of their wealth in physical assets like gold and silver. In the event of a total currency collapse, these metals would remain precious and safe and hold their value relative to things like food. While this is an unlikely worst-case scenario, it’s very likely that various fiat currencies will experience sharp dips and declines in value in the coming years. Holding assets in commodities like silver not only shelters you from these dips, it allows you to profit from them by converting your silver to cash at the low points. When the economy recovers, you’ll stand to make a generous amount of cash when investing in silver.
Why Silver Investing is Safer Than Gold
In 1933, the United States government put Executive Order 6102 into effect, criminalizing the private holding of gold in an attempt to stabilize the economy and provide a safeguard to banks. While much has changed since then, the global economy is more fragile than ever. The US government has turned to controversial tactics like bailouts and quantitative easing in order to keep order without having to seize gold, but many experts believe that these tactics are only digging us deeper into trouble. A government order seizing the public’s gold is unlikely but not unthinkable — and Executive Order 6102 left silver safe. If the safety of your investments is a major concern, it would be prudent to hedge your bets against the worst case scenario of government seizure and choose silver rather than gold.
Why Silver Will Return Incredible Margins
Silver is cheap right now — about $20 an ounce as of this article’s writing vs gold’s $1350. While public uncertainty will drive both metals higher in the coming months, silver has historically been a more volatile asset than gold. This means that if gold goes up, silver will go up more. Many experts predict that silver may go up to as much as $40 by the end of 2014 — a 100% increase in value. In order to achieve the same margin, gold would have to go to a record $2700 / oz, a price unthinkable in today’s markets. Silver at $40 / oz is not only realistic, it’s simply a repeat of April 2011 highs.
Not only does the volatility of silver mean it’ll go higher, it also means it’ll go lower. Silver declines further and more sharply than gold does in response to market pressure. This doesn’t mean it’s an unsafe investment — it means the opposite, in fact, that you can make silver smarter and safer than gold by buying during a dip. By leveraging the higher difference between low and high prices, you can stand to make millions of dollars by investing in silver.
How to Invest in Silver
There are a number of ways that you can invest in silver, all of them with various pros and cons. The least liquid, ‘safest’ way to hedge your assets against a monetary event is to buy physical silver. While it’s possible to buy bullion or coins and store them yourself, these items can be subject to a premium of between 5 and 15% of the market value of silver. A more convenient way to hold your physical silver is in the form of ‘paper silver,’ where you purchase certificates through a trusted source that are redeemable for silver at any time. The Perth Mint Certificates corporation in Australia is an excellent, government backed bullion storage program that issues certificates for silver that can be either held in your own personal vault or redeemed at any time.
When people talk about investing in commodities like silver, though, they’re usually not talking about doing so physically. Even the certificates provided by PMC are difficult to trade quickly to take advantage of a market event. If you want to be able to move your assets around quickly to maximize your returns and make money off of dips and booms, you may want to invest in a commodities market or in a stock-traded trust. Trading on a commodities market can be expensive, complicated and difficult, but companies allow you to invest in silver on a regular stock market. Best of all, some companies builds in a 2x margin for you, so that you can leverage your gains as much as possible without worrying about margin calls.
Investing in silver is as wise as investment in other precious metals like platinum, gold and palladium when it comes to commodity investment. This is because silver has already been used as store of value and currency for 400 years. Investment can be done through various ways, and 6 are laid down as below:
1. Purchasing silver coins.
Buying the Canadian Silver Maple Leaf, for instance, is a good idea as these coins are made of pure ( Ag ). Choices are available from fine to junk silver where the former are older coin versions made of small amount of silver. The easiest instances are U.S. coins like the quarter, dime and fifty cent. All of them are made of ninety percent of silver with a face value of 8/10 troy ounce per $1.
2. Investing in silver bullion bars.
This is a traditional way of investment whereby silver is purchased and sold by a number of Swiss banks. These banks keep the bars in safety boxes and for dealers they keep them in either allocated or pooled storage.
3. Creating a silver account.
Many Swiss banks allow investors to create a silver account with them. Through this method, silver is traded like common foreign currencies. The ownership of the silver isn’t awarded to clients, though. In this case silver is claimed against the bank based on its amount. Storage is available for either allocated or pooled option.
4. Getting ownership of a silver certificate.
With it, buying and selling silver doesn’t involve any physical transfer of the metal. The Perth Mint silver certificate program, for instance, allows the trading of silver solely by way of certificates and this method is recognized by the national government.
5. Investing in silver through ETFs (exchange traded funds).
ETFs allow investors to gain access to the current price of silver. There are quite a number of popular ETFs such as jShare Silver Trust, Central Fund of Canada and ETFS Silver Trust. Buying and selling via ETFs eliminates all the hassles that may occur due to the presence of silver in the physical forms.
6. Investment in silver via CFD (contract for difference).
There are quite a number of financial institutions located in the United Kingdom that offer the convenience of CFD or contract for difference. Investing in silver via this method involves two parties, i.e. the buyer and seller. Both parties are required to sign a contract whereby the seller will be paying the buyer an amount that derives from the difference between the present value of silver and its past value when it was purchased at the time of contract. If the difference represents a minus number, in this case of investment the buyer will be the one who will pay the seller.
CFD creates the convenience of trading silver both in the short and long term. Market price speculation can be done much easier as well. However, in the U.S. silver does not own a forced tender status anymore. Investment in silver via this method has been discontinued since 1967.