Investing in Silver

As an investor, your main goal is to make profits. You can opt various sources of investment to make good returns from your invested money. Investment in precious metals is one such medium which is ranked high among the various sources of investment and gives excellent returns. Other than Gold, Investing in Silver is one such metal which you can look up to for investing in precious metals segment.

Is Silver a Good Investment?

Going by the figures, silver prices touched a high of $50 per ounce in 2011 from $16 an ounce in a space of just 8 months. This actually comes to an enormous gain of 206 percent in a short span of 8 months. Such performances have made silver “the most bullish chart on the face of the planet”. Another important fact about silver is that it has easily outperformed its closest competitor Gold as far as returns are concerned. Silver registered 21 percent higher returns than gold in the first quarter of this year. It has become the best performing commodities in the year 2012.

Investing in Silver

So you should not ignore silver as one of the best investment opportunities if your priority is to make profits from your invested sum. It would not be an exaggeration to state that Silver has become the greatest investment medium of this decade. Its recent history shows this too. In the year 2000 silver was priced at $4.95 per ounce which in the year 2011 rose to $35 per ounce. Whereas in the same period gold rose from $279 per ounce to $1572 per ounce. So this makes silver the clear winner beating its closest competitor Gold handsomely. Thus, silver presents a better opportunity for investors.

There are some other advantages linked with investing in Silver which makes it perform consistently well on the precious metals market. Silver sees a high demand in industrial applications. It is extensively used in the manufacture of batteries, automobiles, electronics, solar panels, water purification systems, eye glasses, mirrors, photographs, defoggers and even NASA spacecraft. Silver is also in high demand in the technological segment too. An increasing percentage of technology runs on silver.

Having said that, investing in silver is not without risks. It is regarded as an extremely volatile commodity. So if you are willing to take some risks then only turn to silver as an investment medium. Prices of silver may see higher highs and also can see lower lows too. Though there are many positives to investing in silver no one can rule out the speculative form of pricing of silver. You cannot be sure of how its value will move in the coming years. So investment in silver demands risk-taking investors.

How to Invest in Silver

Now after having understood the advantages and the associated risks of an investment in silver, it’s time to look at the various investment vehicles through which you can invest in silver. The most traditional form of investment in silver has been the purchase of its physical bars and coins. You actually have to own the silver metal in the form of bars and coins. Silver bars have a flat shape and are suitable for storage in a safe deposit box or even in a home safe too. Compared to bars, silver coins are far more common and popular among the investors.

Then you can also invest in silver through exchange-traded funds (ETFs). You can buy ETFs for silver. They track the movement of prices of silver. They can be traded like stocks and depict movements like spot futures. You need to have a brokerage account to trade an ETF for silver such as the ETFS Silver Trust (NYSE: SIVR). ETFs allow you to participate in the price movements of silver without actually getting a piece of silver metal. So ETFs can be a convenient source of investment option in silver for investors like you.

You can also invest in silver by buying shares in companies that mine for silver. Also, when you purchase shares of mining companies, you gain exposure to many other base metals too as companies rarely mine silver alone. Silver is usually found as an ore alongside metals like Copper, Zinc, Lead, Tin, etc. With shares in mining companies, you get to have exposure to metals (particularly silver) without actually tracking the price of the metal. The price of stocks of these companies fluctuates in accordance with the price movement of the underlying metal market.

Thus, we see that silver is a very lucrative source of investment that has the potential for the high rate of returns but not without risks. So you ought to take some precautions while investing in silver. As far as investing in silver is concerned, you should always avoid day trading as Silver is an extremely volatile commodity. You should adopt a long-term investment approach with silver. As we have already seen, over a long term, silver has an extremely high rate of return.

Then you should preferably follow the systematic approach of investment in Silver which involves regular investments rather than investing a lump sum amount in one go. If you follow such an approach for investing in Silver you would certainly make huge profits out of your invested sum.

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