Are you looking to diversify your portfolio with an investment that can protect against inflation and hold its value over time? Silver can be the perfect vehicle for those looking to hedge their portfolio against inflation and market volatility. It’s cheaper than other precious metals, like gold, palladium, and platinum. And because it has many industrial applications, it’s expected to remain stable in value over the next 10 years.
But before you head down to your local pawn shop to peruse the silver coins on offer, or start buying bags of junk silver to melt down, you need to know what you’re getting into. You should buy from a reputable bullion dealer to avoid scams and get a fair price. You may want to have your silver stored at a depository for safe keeping, or even invest in stocks, ETFs, or mutual funds instead of physical silver. Here’s what you need to know before you invest in silver bullion
Go to a Reputable Bullion Dealer
There are lots of reputable bullion dealers to choose from, and many of them operate online stores. For example, you can buy silver bars and coins from Scottsdale Mint at https://www.scottsdalemint.com/product/10-oz-scottsdale-silver-chunky-poured-bar-999-silver/. You can expect to pay a small premium over spot price when you buy from a reputable dealer. Avoid dealers who want to sell you collectable coins — numismatics are typically sold for their value as collectors’ items, rather than the value of the gold or silver they contain. That means you could end up paying much more for collectors’ coins than for investment coins and bullion bars.
You May Not Want to Take Possession of Your Silver
Some precious metals investors like to buy physical silver or gold and keep it in a safe or vault at home, or in a safe deposit box at the bank. There’s something very rewarding about owning a stack of silver coins or bullion bars. But silver stacks up quickly, especially if you’re buying a little bit every month to take advantage of dollar cost averaging.
Instead of taking physical possession of your silver, you may want to have it stored in a depository. This can make it easier to sell the silver for a good price when you’re ready to cash in on your investment, because there’s no break in the chain of custody. In fact, some kinds of silver investment vehicles, like silver IRAs, require you to keep your physical silver stored in a depository vault. Look for a reputable online bullion dealer that offers a buy-and-store program. They’ll send your physical silver to a depository and you’ll just have to pay the depository storage fees.
Coins are Easier to Sell Than Bars
If you’re going to invest in physical silver, you should buy coins, because they’re easier to sell than bars. Bullion bars are more expensive, because they contain more silver, and usually only large institutional buyers invest in large precious metal purchases of bullion bars. Reputable silver coins to buy include the American Eagle, the Canadian Maple Leaf, the Austrian Philharmonic, the South African Krugerrand, and the silver Eagle.
Silver Can Be a More Volatile Investment Than Gold
History shows that the spot price of precious metals will always go up if given two or three decades. But silver is a more volatile investment than gold because it’s more closely tied to the economy. Silver has inherent value and, in general, it holds onto that value when the stock market goes down. But if an industry that relies on silver for manufacturing suffers, the price of silver will go down in conjunction with that. That’s what happened when people stopped using film cameras — the price of silver dropped because silver was used in the manufacture of photographic film.
Silver Stocks, ETFs, and Mutual Funds May Be More Convenient and Profitable
Storage fees for silver bullion and coins can add up quickly, especially if you’re buying a lot of it over the years. You also don’t get dividend payments or capital gains on physical silver stored in a depository.
But if you buy stocks in silver mines or refineries or silver streaming companies, you can still benefit from silver’s power to hedge against inflation and market volatility, while also getting the benefits of stock dividends and potentially higher profits when you sell. Silver exchange traded funds (ETFs) and mutual funds are also available, and may invest in physical silver, silver stocks, or silver futures.
Silver is a great investment, but before you buy bullion or coins, you should be prepared. You may want to invest in silver stocks, ETFs, or mutual funds instead. But no matter what you choose, you’ll be glad you decided to diversify your portfolio with a precious metals investment.