The Silver Standard for Investing in Precious Metals

The Silver Standard for Investing in Precious Metals 5.00/5 (100.00%) 5 votes

Most investors who diversify their portfolio with rare metals usually think of gold first. After all, gold has had a very nice run over the past few years. Indeed, it has increased faster than most stocks and has held its value nicely even in 2013. Much of the same is forecast for 2014, with moderate and steady increases expected in gold prices. So why do most people who are investing in precious metals forget about silver?

Silver has always been a treasured commodity. It has been a safe haven for investors worried about fluctuations in company stocks as well as world currencies. It even has many industrial uses, making it much more important than just a component of pretty jewelry.

The Real Reason

The real reason that silver is such a good investment is that it is still very much a good value. You really don’t have to worry much about silver prices falling too far. Yet, there is plenty of upside in the pricing.

Consider the gold standard of stocks. Berkshire Hathaway is one of the most successful and profitable companies in the world. You can snap up a single share of the company for a lofty $175,000. But what if you do not have that much cash available?

This is one of the reasons why silver is such a good value when investing in precious metals. The ordinary investor can still afford to obtain a pretty fair amount of it. While gold has been over $1,300 a troy ounce, prices of silver have been an affordable $21 per troy ounce. You could buy about 62 times as much silver as you can gold for the same money. When investing in precious metals, the real question is will silver prices increase relative to gold prices?

Where are Silver Prices Headed?

There is no way of knowing what will happen with silver prices. They could drop or remain steady, and no one really knows how the markets will respond.

There is some evidence that silver prices should increase into 2014 and beyond. Industrial uses for silver have increased by roughly 50% over the past decade. This increase in the functional use of silver is expected to drive up demand, and faster than the increase in demand of other precious metals.

Still, investing in precious metals like silver involves some risk. If the price drops by $2, you just lost 10% of your investment. The inverse could be said for those who ride a price increase. For the investor going long on silver, it could possibly be one of the safest yet lucrative holdings in your portfolio.

There are several methods that you could grab some exposure to the silver market. Buying the hard metal itself is one option, and indeed a favorite option for doomsayers! There are also easy to trade methods for buying and selling silver. ETFs can follow the same swings in silver markets, yet give you the liquidity that you desire if your intent is to engage in frequent trading. Investing in precious metals mining firms is also a possibility. Those firms that produce a lot of silver would give you a good chance to share in some of the gains in the market prices.

The options for buying silver are plenty. The most important consideration is whether you anticipate an increase in price while you hold the asset. Ignoring all other market chaos, prices of silver are expected to increase as industrial uses continue to rise. Given the volatility in global stock markets, it would be safe to assume that investing in precious metals, and most notably, investing in silver could be one of the safest options.