Silver is the little brother to gold when it comes to investments but it should not be overlooked. Silver prices increased an impressive 22.4 percent from early February through late June. The price of silver is double what it was in November 2008 and the industry buzz has started. Investors who usually buy gold coins are now purchasing silver coins as well. The number of Silver Eagle coins sold by the U.S. Mint during the first quarter of 2010 exceeded the amount sold during any previous quarter in history. The year 2009 saw record sales of Canadian Silver Maple Leaf coins.
Silver should be added to the investment portfolio because it may outperform the precious metal gold. Market capitalization of silver stocks and silver is smaller than gold. This makes silver prices more susceptible to spikes in demand than is gold. Silver is less expensive than gold, it has wide industrial uses, and has monetary value.
On the flip side, the price of silver is volatile, but this attribute can actually be used to an investor’s advantage when purchasing at a discount. Another negative aspect is storage issues that arise as an individual amasses a supply of silver. To address this, investors can spread their holdings, purchase silver bars, and use private storage or pool accounts and unallocated storage.
The metal holdings in silver bullion ETFs have increased five-fold since the year 2006. Silver is currently undervalued and represents a better bargain than the precious metal gold. Purchasing silver at current prices is the recommended alternative to not owning any at all. Those who want to supplement their silver holdings should wait for prices to drop.
Users should purchase silver in its physical form but they should hold more gold than silver. A mix of 20 percent silver and 80 percent gold is recommended. Investors should start by purchasing one-ounce silver coins and then expand the silver collection as their holdings increase.
Source: Casey Research. Clark, Jeff. The 2010 Silver Buying Guide.
Tags: Investing in Silver, silver stocks