Silver
What is silver and how is it used?
Silver is a white, gleaming metal that is particularly very conductive with electricity. It is used in many different ways including:
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Cars
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Electronics
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Water purification
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Jewelry
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Solar tech
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Investing
This lesson, we will be focusing on silver's value towards investing.​
Mined and found in copper ores, lead ores, and cobalt arsenide ores.
Why do people invest in silver?
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How do you invest in silver?
Silver is generally worth less than gold, which is more rare. Silver has many benefits, however, to its relatively high value and cost including:
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It is good to have a substitution for fiat currency, which is constantly devalued by the forces of inflation
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Is effective during hyperinflation
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Silver is super cheap (one ounce coins and bars are generally 20-25 dollars)
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High in liquidity, similar to gold
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1) Physical Silver: Similar to gold, you can buy physical silver through online dealerships or even local stores/businesses.
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2) Silver Futures: Similar to gold futures, and any future in general, silver futures are purchased when a buyer intends to purchase a specific quantity of silver from a seller at a predetermined date. Futures are generally bought in ounces (and an ounce of silver is typically 20-25 dollars). You can purchase silver futures through various exchanges online. One of the most common exchanges is COMEX, which trades commodities such as gold, silver, and platinum.
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3) Silver ETFs: Silver ETFs work very similar to gold ETFs in the sense that your ETF is held by a custodian safely as physical silver in a fault. Once again, if this silver is harmed in any way that revolves around external forces, a custodian is not liable to retrieve any of the silver, or pay anything back to you. What you lose, you lose. ETFs are generally held as either a commodity or a silver future.
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4) Silver Mining Stocks: You can purchase silver stocks through reputable brokers or other exchanges.
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These four different methods to invest in silver have pretty much the same pros and cons as gold investments.
Comex commodity exchange center
Gold and Silver Pros and Cons
Pros to Investing in Silver
Cons to Investing in Silver
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The gold to silver ratio (how many ounces of silver match the amount of ounces of gold) shows how silver is much cheaper and affordable than gold
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Because silver is much less dense than gold, when equating the value of physical silver and gold, silver will take up more storage/space
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Silver is more volatile, or has unpredictable value/price change, compared to gold
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Silver is less liquid than gold, and the process in converting silver to cash is more difficult
Pros to Investing in Gold
Cons to Investing in Gold
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Silver is much more volatile than gold, meaning the value/price is unpredictable, unlike that of gold
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Gold is much more liquid than silver, meaning it can easily be converted into cash
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Gold takes up much less storage than silver
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Gold is more valuable than gold, and is often easier to buy
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Gold is much less affordable than silver due to its high cost and value
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Although Gold is much more liquid than silver, it costs much more to convert gold into cash than silver
Visual of Silver Volatility
Takeaways:
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Investing in silver is extremely similar to investing in gold, and involves the same process
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Whether you should invest in silver, gold, or both- is up to you. Whichever investment fits your needs should be the one for you to invest
Ex: If you are worried about economic recession, and wish to have a commodity backing you up, and you generate a relatively high income, you may want to invest in gold, which has proven to perform better than silver during stock crashes.
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Look at the budgeting rules in lesson 1 to see how much money you should allocate towards investing, if you are still unsure.
From this graph, you can see the unpredictable (or volatile) changes in silver price over the years. This is why people often have trouble when investing in silver.