Precious Metals: How To Invest Silver Markets
How To Invest Silver Markets
For the last 5 years, there has been a surge in investments in silver markets. Silver coins as a form of money had been in use for thousands of years. Having lost its value as a legal tender, the global reserves of silver were at a level of 530,000 tons in 2011. Canadian Silver Maple Leaf coins at $5 per ounce and American Silver Eagle are very popular and are bought as investments. Interestingly, in one US state, the state of Utah, silver is still legal tender.
Positioning your assets in silver or simply doing it for broadening your investment portfolio can be a good option. Silver being one of the most popular hard assets after Gold portends long-term growth opportunities. silver, unlike other precious metals, has a strong industrial demand which accounts for 60% of its purchases. A forecast by CRU shows that the global demand for Silver would rise by 27% to 2018.
This growth will be due to a rise in the renewable sources of energy and silver’s use in PV solar panels and the automotive industry. Silver is sold on ‘spot price’ as it is being traded on all major market exchanges. As the different regions have different timings, the prices change all the time. NY Mercantile Exchange COMEX section and London exchange have paper contracts for silver sale and purchase and COMEX is the one determining the spot prices.
Silver Bullion, Silver Coins, and Silver Bars
It is extremely important to authenticate your silver purchase as there are many counterfeits bullion coins and bars circulating. Therefore, it becomes necessary to trade with dealers who are reputable. Mining stocks or Silver ETFs are good alternatives to having hard assets. However, hard silver is more liquid. The popular bullion are Austrian Silver Philharmonic, Canadian Silver Maple, American Silver Eagle, Chinese Silver Panda and the Mexican Silver Libertads. These are 99.9% pure. Bullion can be purchased from the SD Union in the United States.
ETFs, and mutual funds, and are other ways to invest without holding hard assets. In the case of future contracts, physical ownerships occur at some time in future. In the case of ‘accumulation plan’, investors can purchase silver based on averaging but do not need to own it in physical terms. In the case of silver being traded without owning, care must be taken to ensure that there is no Rehypothecation being done by banks or other dealers. Otherwise, some of them can use the silver purchased by you for their own purposes but at the same time show it as a ‘collateral’ for various other business deals. Theoretically, this could your investment unsafe.
Silver Retirement Accounts
Even retirement accounts might include at least some of the silver bullion. Even though its price is volatile and has lost 2/3rd of its value in the last 5 years, investment in silver still yields returns higher than annualized stock average returns on the S&P 500. As demand is rising and supply would not immediately meet up with it, the prospects of silver standing out as a good investment are quite high.