Silver has been thought of as a security against inflation. Many investors kept some kind of silver, or silver stocks in their portfolios when the dollar depreciated and the stock market was in a downward roll. Silver has always traded lower in price per once than gold and has been more volatile. Silver is largely used in solar energy, electronics and medicine.
Owning Actual Silver
You can buy silver coins, jewelry or bullion. Buying silver bars is cheaper than buying bullion or jewelry. When you buy silver jewelry you are also paying for the art work to develop the piece of jewelry. The best way to buy silver is through a dealer. Make sure the dealer you choose has a good reputation and has been around for a while. This will help to lower your risk in getting phony silver. Most reputable dealers will have websites that you can go to and see what they are offering.
The most common silver coins and bars that are bought by individuals’ weigh between 1 ounce and 100 ounces. Silver bars can be bought up to 1000 ounces, but if you want to sell the bar you have to sell the whole 1000 ounces. Owning silver bars also creates a storage problem. If you do not have a safe at home for storage, then you would need to have a deposit box at your bank or vault service. Even silver coins would need to be safely put away and not stored in the home.
Buying futures is done through a broker. One futures contract is 5,000 troy ounces. When you choose to buy it, what you are really buying is an obligation to purchase 5,000 troy ounces of silver in the future at a certain date. Brokers do not give you physical silver pieces. They use a cash settlement. First of all, you will need to deposit an initial margin into an account with a broker. Once you have made that deposit your account is marked to market. That means every time silver goes down it is taken out of your account. When it goes up it is credited to your account. If silver falls to low, you might have to deposit more money.
Brokers also get a commission for trading silver future contracts. Not all brokers charge the same amount. If the 5000 troy ounces is to high for your budget, you can buy lower with an E-mini silver future. These contracts are 2,500 troy ounces.
Exchange-traded funds or ETFs are another way of buying silver on the market. ETFs shows the price of silver at different dates when sold. You buy silver at a price in the future at a certain date. It will not always show the price of silver today or for the front-month price per contract. There is also fees and commissions for ETFs trades. Some ETFs have leverage. The buyer needs to check the ETF characteristics before buying.
Buyers can get exposure to silver through silver miners. Buyers can pick stocks through their brokers of individual companies or you can choose to buy an ETF that is investing in the mining sector. There are stock guides that you can use to learn all about silver stocks.
Rare Silver Coins
Many investors investing in silver by buying rare coins. Rare silver coins often have a market value that is much greater than their silver content. Investing in rare coins may provide some protection to hedge against the value of silver dropping. If you are considering purchasing rare coins, make sure to do your research first, or consult a numismatist.
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