Investing in precious metals like silver and gold is one way you can build long-term wealth.
Gold gets a lot of attention, but did you know that silver has more uses than gold? Demand for silver is growing all the time, both as a safe-haven asset and as an industrial metal.
Here are five benefits to buying silver as an investment.
1. Silver Goes up When Stocks Are Down
Investing in precious metals is a good way to hedge your portfolio against other assets. You should buy silver bullion as its price rises during times of economic uncertainty when investments like stocks and bonds fall in value. You can use silver as a way to offset losses in your portfolio during recessions.
2. Silver Price Outperforms Gold
Although silver trades at a lower price than gold, investing in silver can actually generate higher returns. The silver price is more volatile, so it makes larger gains and losses than gold, giving you the opportunity to make larger profits from the lows. In 2020, the gold price gained 25% while silver climbed by 48%.
3. Silver Demand Is Rising
Silver has more industrial uses than gold, and demand is growing faster than it is being mined. It is used in everything from mobile phones and computers to cars, cameras, and solar panels. With the spread of 5G networks and renewable energy, silver demand is forecast to rise by 11% in 2021 to a six-year high. And it is expected to continue increasing in the coming years. That, in turn, should give support to higher prices over the long term.
4. Physical Silver Can Be Used as Money
Unlike other types of investment like stocks or options contracts, physical silver coins can be used as money. Silver is a store of value that you can exchange for other things or sell directly. But with stocks, you need a broker to exchange them for money. While it is not currently considered to be a currency, historically silver has been used for coinage going back thousands of years.
5. Silver Is a Collectible
Buying precious metals can become a hobby as well as a profitable investment. You can buy silver bullion like the American Silver Eagle coin as rare collectibles. These are eligible for investment tax shelters including IRA accounts with a custodian storing the coins on your behalf. Consult a buyers guide to help you decide which type of physical silver is the best investment for you.
You can pass your physical silver on to family members as an inheritance. And don’t forget that silver jewelry also holds investment value.
Research Your Options for Buying Silver
If you’ve decided you want to take advantage of the benefits of buying silver, the next step is to research the different forms of investment. You can buy silver bullion, invest in exchange-traded funds (ETFs) and mutual funds, buy silver mining stocks, or trade stock options.
The type of investment you choose will depend on your goals and how you want to diversify your portfolio. And like any other investment, you should make sure you understand the risks before you get started.