Precious metals are generally seen as a safe investment that is largely recession proof. However, that does not mean they are immune to periodic fluctuations in the short term. The silver market, in particular, provides a case in point.
Since the turn of the millennium, silver enjoyed a bull market that continued right up till around 2015. Over the past couple of years, it has pulled back somewhat, but according to many analysts, that simply means that now is the perfect time to buy.
Certainly, all the ingredients are in place: industrial demand is growing, while at the same time, recent drops in price have been felt by the mining companies, meaning constrained supply. In a world where we are all looking to whatever alternative investments we can find, you might be tempted to try your hand at investing in silver. Let’s find out how.
There is no great mystery to buying silver. In fact, the simplest way is simply to go out and buy some silver bars or coins. There are numerous types and sizes available – while some opt for the standard 100oz silver bars, others prefer something that has value beyond its simple weight and invest in in Morgan silver dollars, or other collectible coins minted at key times in history. These certainly add a unique and personal aspect to your investment, but if you take this course, it is important to buy from a reputable source – avoid those online auction sites where you could end up buying almost anything!
Of course, when you buy silver in this way, you need to be in it for the long term. With a property investment, you need to factor in agent costs when you buy or sell, and with silver, there will be a premium that the dealer will charge. For a long term investment, that becomes immaterial, but it does mean that physical silver is not the most liquid of investments.
If liquidity is important to you, there are still ways of investing in silver. With a silver ETF, you can buy shares that equate to a given quantity of silver, and these will track closely to the price of the commodity itself. As is the case with any mutual fund, ETFs are subject to fees and commissions, but again, these are not prohibitively high.
Some critics say that ETFs defeat the object of investing in precious metals, as the whole point is to have a safe investment that you can physically feel and touch. To a certain extent, the logic is understandable – the argument goes that investing in precious metal means you are safe from a financial implosion in which mutual funds, government bonds and stock market shares become valueless overnight.
However, there is a counter argument that such an eventuality is astronomically improbable – and also that if we were to find ourselves in some post-apocalyptic world, there is every chance that sources of food, warmth and shelter would be of greater value that stockpiled metal.