Is Silver a Good Investment?

When people think about an alternative investment to traditional stocks and bonds, they think of gold. Often silver is overlooked when the reality is it holds a lot of value, and from time to time, the spotlight falls on silver, and its price rapidly increases, outperforming gold.

Silver is usually a cheaper alternative to gold and comes with distinctive differences that investors should consider. Here is what you need to know about silver and how to determine if it’s a suitable investment for you.

Why invest in silver?

Like gold, it is a metal that holds industrial and investment value. Its industrial purposes are used for things like making jewelry, batteries, and medical equipment. It is often at the forefront of innovative industries such as solar technology because of its high conductivity and the electric automotive industry. Electric cars and Solar panels are two of the largest growth areas due to green initiatives from both US and China. The fact that silver is used in such advancing ways makes it an excellent investment, and many analysts predict the demand for silver will rise substantially in the coming years.

Silver is cheaper than gold

Silver is more affordable than gold because the same dollar investment buys you a fair amount more silver than gold, and the spot price for silver in the past has never exceeded $50/oz, whereas gold trades in the thousands. However, silver is a much smaller market than gold, making it more volatile and keener to waves of dramatic price swings. The gold silver ratio is also 90-1 where historically that ratio is closer to 16-1 so there is much more upside in silver versus gold.

Silver is less liquid than gold

Gold is a larger market and therefore has many potential buyers and sellers. However, the market is smaller with silver, and offloading tends to be more difficult for an investor. Gold is also well-known; investors feel safe buying and selling from reputable sources. If you want a safe place to buy silver, make sure it is from a registered bullion dealer like CanAm Currency. Another negative trait of silver is the wait time is around 2-3 months, whereas gold is 1-2 weeks.

Silver is a hedge against inflation

Unlike paper currency and stocks, precious physical metals like gold and silver are resistant to inflation because they derive their value differently than paper currency. The dollar’s value is dependent upon the actions of the federal reserve, central banks, global factors, and the economy’s general health. Historically, silver has served as an effective hedge against inflation, but in times of recession, silver is vulnerable compared to its sister metal, gold.

How can you invest in silver?

Investors can buy silver in the form of silver bars, coins, and rounds which is the purest way you can invest in bullion. Other methods include silver stocks which are companies involved in the mining process or its reselling. Another way to invest is in mutual funds or ETFs with companies that hold silver portfolios or invest in silver companies. Finally, you can invest with exchange traded commodities (ETC’s) which are publicly traded securities that invest in silver bullion funds.