Times are tough for investors trying to earn a positive return. They’re getting squeezed on one side by high inflation eating into the value of their investments, while on the other, they’re fighting high stock market volatility.
In challenging economic circumstances, investors may have to widen their field and seek out assets outside of the mainstream to make a return.
One asset that investors turn to during these times is bullion, including silver. Silver is a commodity with properties that make it a compelling investment. It straddles the line between industrial commodity and store of value.
The Benefits of Silver Bullion
Silver possesses several qualities that give it a lot of potential during tough economic times. These are among the leading reasons people invest in silver:
- Silver is considered a safe haven asset. Much like its more established cousin, gold, silver prices do not correlate to the stock market, making the metal a good place to ride out market volatility.
- Diversifying your portfolio into a basket of assets that respond to market changes in different ways helps you spread out your risk of loss. Silver often gains value at the same time that other assets decline.
- Precious metals are often used as an inflation hedge, as they have a history of maintaining their value as the currency loses purchasing power.
- Industrial demand for silver is also an important pressure on silver prices, as it’s widely used in electronics, medicine, and more.
How to Maximize Your Returns
Silver offers many benefits to your portfolio, but if you’re seeking the best possible return, it helps to have a strategy.
There are two ways to maximize your returns with silver: buy at the lowest possible price and sell when you can get the best possible price. Investors can’t control where silver prices are going to go in the future, but one factor you can control is the premiums you pay when you buy silver coins or bars. Every bullion dealer charges premiums above the spot price of silver, but when you buy larger quantities, you can usually reduce the price per ounce.
Compared to gold, silver is a great asset for buying in larger quantities because the price is much more accessible than gold.
Alternative Ways to Buy Silver
There are several advantages to buying physical silver bullion and storing it yourself or with a third-party bullion storage provider. You have immediate control over your investment, no counter-party risk, and you’re not at risk of losing your investment because of corporate fraud. Once it’s locked away and insured, it’s a safe investment in that regard.
However, it’s not the only way you can buy silver. If you don’t want to deal with the hassle of storage, you can also invest in a silver ETF or a mining company. An ETF (exchange-traded fund) is similar to a mutual fund in that you own stock in the fund, and the fund itself owns a basket of assets. A silver ETF removes the hassle of storing the metal yourself.
Mining stocks can be considerably riskier because you’re also investing in a company’s earnings. It’s not just silver prices that determine a mining company’s success but also a mining company’s ability to control costs.
Silver can help you keep up your returns during a recession. These tips can help you navigate the world of silver trading.
