When people are diversifying their portfolios, precious metals like silver are one of the options many look at. Silver is a safe haven when times are uncertain. It can serve against inflation, as its value tends to increase over time. Silver is also a metal with industrial uses, which can contribute to its price performance. There are several ways to add some silver to your investing portfolio. Most people look at one or more.
Buy physical coins, rounds, and bars
This is the option that most people think of first when they think of investing in silver. And, it makes sense. Physical silver is an asset that you can see. If you opt to store it in your home, you always have easy access to it. You maintain control.
Silver can be purchased in sizes that range from tiny one-gram bars to one-ounce rounds to the 100 oz silver bar size and larger. You can opt to store it in your home or a safe deposit box, or pay for a space for it in an off-site safe.
While silver bars have many upsides, they can also have drawbacks. Large quantities can be harder to store if you keep them on-site.
Physical silver can be purchased in a number of places. One of the most reliable choices is through companies that specialize in trading precious metals. Highly trusted mints like Scottsdale Mint that pour and mark their own bars are one of the most popular choices. Investors who choose these products can be sure that they are getting the asset that they have paid for.
Many people also purchase from online trading sites such as eBay. When investors look at peer-to-peer options like auction sites or private buys on sites like Reddit, they must do their due diligence. Because of the unregulated nature of these transactions, there is an increased risk of fraud.
Invest in silver ETFs
Exchange traded funds (ETFs) track a sector or commodity, such as silver. By investing in a silver ETC, you can benefit from silver’s prices without owning physical silver. ETFs can be purchased through your broker. Some ETFs are also available directly from the company that manages them.
Some silver investment ETFs hold physical silver. Others invest in silver more indirectly by investing in silver mining.
The largest ETF based on assets under management is the iShares Silver Trust, which manages around $15 billion in assets. Because an ETF invests in a number of companies, they theoretically provide protection through diversification. However, this can sometimes mean not seeing the same gains that someone focused on a single asset might.
Buy mining stocks
Investors also have the option of buying stock in individual mining companies. At the current time, there are very few companies that only mine silver. Most mining companies now focus on base metals instead. In fact, about 70% of silver production is now a byproduct of mining for base metals.
Even though silver is often now a byproduct of other mining, people who buy into mining concerns can still benefit from increases in the price of silver.
Buy silver futures.
Silver futures allow investors to make money by betting on the price of silver rising or falling. Many advanced investors like futures because of the high amount of leverage that is available. They have to put up very little of their own capital to gain a relatively part position.
However, before investing in futures, make sure you understand this vehicle thoroughly. The leverage in a contract can harm an investor as much as it helps. Investors may have to put down more money if the market moves in a way that they did not expect. If a position is closed out, the investor can get stuck with a loss. This is an avenue that is advisable only for those with a high risk tolerance.
There’s a lot to find attractive with silver. It’s a store of value, an inflation hedge, and even an alternative currency, when necessary. The multiple ways to put this sort of investment into your portfolio also make it appealing to some investors.
Which is the best way to add silver to your holdings will depend largely on your own preferences and circumstances. Take some time to research your options. Run some numbers to predict which will be the best choice for you. By taking the time to study, you can find just the right way to add the right investments for your future and your peace of mind.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.