Is Silver the Right Investment for You?

Silver plays dual economic roles as both an investment vehicle and an industrial metal. It’s widely used in the manufacturing of electronics, solar panels, solder and brazing, automotive parts, and more. 

This makes it a unique investment vehicle. As a precious metal, silver can provide a hedge against inflation and some protection from market volatility, so it can be a good choice to diversify your portfolio. However, because it is used in so many industrial applications, it can be more volatile than gold — up to 1.5 times more volatile. Let’s take a look at the pros and cons of investing in silver.

Silver Is a Real Asset You Can Hold in Your Hands

Silver is a commodity, which means it’s a real, tangible asset with inherent value, like crude oil, natural gas, cocoa, corn, or other precious metals like gold, platinum and palladium. That means that when you invest in silver coins or bullion, you can take delivery of the metal and possess it directly. When you need to realize a return on your investment, you can sell the silver coins or bars to a dealer, coin shop, or even a pawn shop. Many investors love the feeling of owning a tangible, valuable asset that they can look at and touch — and if you want to protect your wealth in uncertain times, owning the physical metal is the way to go.

Physical Silver Can Be Hard to Store and Sell

However, if you buy silver bars or coins, you have to store them somewhere, and since silver is vulnerable to theft, you probably don’t want to leave them lying on your coffee table. If you want to store your physical silver at home, you’ll need a safe or a vault. You may even want to buy insurance to protect your silver against theft or loss. 

But silver is relatively cheap compared to other precious metals, which means that if you invest in it regularly, it can really stack up. If you intend to buy a lot of silver, you may want to arrange to have the dealer ship it directly to a depository for secure storage. Your silver will be safer in a depository and you won’t have to worry as much about space constraints.

It can be hard to sell physical silver, though, especially silver bars. Silver coins are the better choice if you want physical silver you can easily sell. But it can be hard to get a fair price for your silver from pawn shops or local coin dealers. Your best chance of selling your silver quickly is to have it shipped directly to a depository from the dealer, so that the chain of custody remains intact.

It’s Easy to Overpay for Physical Silver

It’s normal to pay a small premium over spot price for physical silver. The dealer has to make a profit on the sale of the silver, and they have to cover costs associated with creating silver coins and bullion bars. Unscrupulous precious metals dealers may charge a larger premium for silver coins and bars. They may try to sell you collectors’ coins that come with a higher price tag because they’re collectible numismatics. They may even try to sell you fake silver.

Before you buy any silver, do your research to find a reputable dealer. Look at online reviews to assess the reputation of a dealer before you choose to buy. You can buy silver from Scottsdale Mint at a fair premium over spot price. Make sure you’re not buying investment coins, not collectors’ coins.

Silver Can Be More Volatile Than Gold

Precious metals are generally a long-term investment. Over the course of 20 or 30 years, an investment in silver is likely to bring good returns. Silver and gold specifically have a long history of use in currency, which makes them seem more stable to investors. But silver can be much more volatile than gold, due to its use in industrial applications. Generally, if the stock market goes down, precious metals will go up — but if one or more of the industries that rely on silver take a hit, the spot price of silver will reflect that.

Physical Silver Doesn’t Pay Dividends

The only way you can get a return on an investment in physical silver is to sell it. You won’t get quarterly dividends or other returns associated with stocks and bonds. However, you can choose to invest in silver stocks (usually stocks in silver mines or streaming companies), silver mutual funds (which may invest in physical silver, silver stocks, or silver futures), or silver exchange traded funds (ETFs), exchange traded commodities (ETCs), or exchange traded notes (ETNs). These investments will pay returns throughout the lifetime of your investment in silver — and if the companies you’re holding do well, you might see returns above the price of silver.

If you’re thinking of investing in precious metals, you can’t go wrong with silver. Silver is used in industrial applications, and it’s expected to hold stable or even go up in value over the next ten years. It’s a great way to diversify your portfolio and protect your wealth.

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Danielle England

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