Why Invest In Silver
by Jonathan Buhalis
Bullion is the basic commodity traded in the precious metals market. By adding precious metals in general, and silver in particular, to a portfolio of stocks, bonds and mutual funds, an investor is introducing a tangible or real asset to the asset mix. This increases the degree of diversification and protects the portfolio against fluctuations in value of any one-asset type.
Economic Forces The economic forces that affect the price of precious metals are different from, and often are opposed, to the forces that determine the price of most common financial assets. This independent movement of precious metals to other financial assets can reduce overall portfolio volatility and contribute balance.
The Declining Dollar The purchasing power of the U.S. dollar has steadily declined over time and is expected to continue to do so. Precious metals can often provide a hedge against inflation. For example, between 1971 and 1981, the U.S. dollar lost more than half its value, while silver prices rose nearly five times. Economies cycle between inflation, recession and expansion, precious metals investment helps diversify and lower overall risk.
Asset Allocation Whether you are conservative or aggressive in your investment approach, precious metals can represent an important part of your asset allocation. Some experts suggest that 10-15% of portfolio assets be in precious metals. No matter what level of risk an investor wishes to take, every portfolio needs a secure foundation.
Ease of Ownership For investors who wish to take possession or direct control of their assets, buying physical bullion has appeal. Owning bullion is easy and convenient, and commissions on buying and selling it are minimal.
Inexpensive Silver Silver bullion bars are the least expensive way to own silver. They can be converted easily to cash, prices are widely quoted and they are internationally negotiable. Silver bullion coins are relatively inexpensive. Because of their smaller unit size they are affordable and easily converted into cash.
A simpler alternative is an exchange-traded fund (ETF), of which several are now available.
Industrial Demand Silver, more than other precious metals, has significant demand rooted in sectors as diverse as imaging, electronics, jewelry, coinage, superconductivity, and water purification. For this reason, silver is no longer know as just a precious metal, a store of value, a work of art or an industrial metal. It is all of these. Today silver is indispensable, working all around us to improve the quality of our lives.
Individual Retirement Account (IRA) Today, millions of people throughout the world recognize silver's intrinsic value and have made it popular as an affordable investment. In the United States, Individual Retirement Account (IRA) participants can invest a portion of their investment portfolio in silver bullion coins and silver bullion bars provided that they are of a fineness equal to or exceeding 99.9 percent silver. Contact your IRA plan administrator for further information.
Silver is a Precious Metal Precious metals are valued for their beauty and relative scarcity in the Earth's crust, and their superior properties. They are very malleable, highly resistant to corrosion, superior reflectors of light and are unsurpassed as conductors of heat and electricity.
Besides signifying status and wealth, silver has been one of the most romantic and sought after of all the precious metals. Mystified by its beauty from the beginning of time, people have been drawn to remote areas of the world in search of this white, reflective metal.
Silver has often been surrounded by mystery. The Incas of Peru called it "the tears of the moon" because they were awed by silver's strange gleam, and the Chinese believed that a silver locket hung around a child's neck would ward off evil spirits.
As a Part of Your Financial Plan For the average investor, silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation.
Although the value of silver may vary, it has an intrinsic value that is immutable and permanent. Accordingly, many experts suggest that investors should include it among their investment assets.
History of Silver
Investing in Silver