Investing in silver is often hindered by doubt. Why should anyone buy silver? It’s not as renowned as gold. It has less industrial usage than platinum or palladium. It is burdened by VAT and taxes in many countries… But, silver has many virtues as well. Here are just five of them.
Silver is cheap. Yes, gold is more renowned than silver. But, this “fame” comes with a high price. About 70 to 80 times higher in relation to silver. That is why silver makes for a great “entry level” investment in precious metal sector. It gives the buyer all the advantages of “safe haven” investment, but at a much lower price than gold.
Investing in silver is easy and cheap
Silver is more practical than gold. Sometimes you don’t want to divest all of your precious metals assets. Sometimes you’d like to liquidate just a small amount and turn it into cash. But, you can’t do that with a 1.000 g gold bar. However, silver allows you higher control over the amount of your portfolio you wish to keep or sell. So, even when buying gold, it is a good idea to keep at least some of your assets in silver.
Gold signals the rise of silver prices. The “usual” gold and silver ratio is about 1:70. This means that one ounce of gold is valued same as 70 ounces of silver. As the leader of the precious metals sector, gold rises first in the bullish circumstances. This is a good signal for silver. When the ratio grows in favor of gold, the price of silver often rises faster in the next period. Keep that in mind when deciding about investing in silver or gold!
Great in bullish markets
Silver outperforms gold in bull markets. Silver market is smaller than gold market. Which means it is more volatile. In the bullish circumstances this is good news, as silver usually has larger gains than other precious metals. During the aftermath of housing crisis, in the period between 2008 and 2011, the price of gold soared 166 per cent. But silver did even better. Its price soared 448 per cent!
More than 50 percent of silver use is industrial. Primary use of gold is as an investment. Another common use is jewelry. Industrial use is scarce due to the high price of gold. It’s different for silver. Less than 15 percent of silver sold is in bars and coins. More than 50 percent of its use is industrial. Silver is used in electronics, batteries, solar panels… Steady industrial demand means less chance of heavy price dips!