If you’re looking for a way to diversify your portfolio with an investment that will always hold value, then you should consider investing in silver. Silver is cheaper than other precious metals like gold, palladium, and platinum, so it’s more accessible for the average investor. Silver has intrinsic value as currency, as well as in jewelry and industrial applications, so it’s a great hedge against inflation and market volatility.
Lots of people like to buy silver bullion so that they can have that hedge and also have access to physical silver coins or bars that they can take possession of if they feel the need. But that’s not the only way to invest in silver. Here’s why you should add some silver to your portfolio.
Protect Your Portfolio’s Value
Silver holds its value long-term, which is what makes it such an effective hedge against inflation. When interest rates drop, and other investments aren’t earning as much, silver will hold its value.
If you pay attention to the market, you’ll notice that when the stock market drops, the spot price of precious metals, like gold and silver, goes up. Silver and gold in particular have an air of security and stability because they’ve been used as currency for centuries, and it was only recently that the value of currency was decoupled from the value of gold. When the market is volatile, silver prices remain stable, and over time, the value of silver tracks with inflation. Because its value isn’t tied to the value of the dollar, when currency weakens, it’s reflected in the spot price of silver and other precious metals, which go up to compensate for the weakened currency.
Diversify Your Holdings
A diversified portfolio is more insulated from market volatility, because it’s so unlikely that stocks, bonds, and commodities (of which silver is one) would all crash at once. To make sure your portfolio is adequately diversified, you need to put money into different kinds of investments, each with a different role to play in your investment plan. You might invest in stocks and bonds for higher returns in the medium to long term, while mutual funds or index funds are a safer bet for retirement money — and silver is cast as a stabilizing influence.
Commodities like silver are an entirely different animal from stocks, bunds, exchange traded funds (ETFs), and mutual funds — and precious metals like silver are unique in that they are relatively shelf stable and portable, unlike pork bellies and natural gas. You can invest in silver bullion bars or silver coins to store at home or in a depository, or you can invest in silver mining and streaming companies, mutual funds and ETFs that trade in silver company stocks and physical silver, and exchange traded commodities (ETCs)
The difference is that investing in stocks, funds, ETCs, or ETFs doesn’t actually buy you any physical silver. But if you buy silver bars or coins, you can take possession of it whenever you want. If you purchase a 100 oz silver bar, you own an asset with inherent value not tied to the stock market or to the value of any currency. If you’re worried about surviving in a genuine disaster, that might be important to you. If you know you’re not going to want to liquidate your silver holdings anytime soon, then physical silver bullion or coins might be the way to go. But stocks, funds, and certificates are easy to store, eminently portable, and, perhaps most importantly, easier to liquidate than physical silver.
There’s Still a Potential for Growth
Silver is the cheapest of the precious metals, but it still offers investors the potential for growth. Even though the value of silver isn’t tied to the stock market or to the value of currencies like the U.S. dollar, other factors can cause its value to fluctuate. These factors often have to do with the global industrial demand for silver — for example, spot prices for silver took a hit when the use of film cameras declined, because the industrial demand for silver to use in film manufacturing also declined. But then silver prices climbed again as demand for it exploded within the electronics industry. Silver prices can also jump if a lot of investors pile into the commodity, or fall again if a global shortage is alleviated by a rise in silver recovery adding more of the metal to the market.
So, if you decide to invest in silver, keep an eye on the spot prices — there is the potential to earn a quick profit for your silver holdings, usually followed by an opportunity to reinvest when the spot price falls again. Of course, it may be hard to liquidate silver coins and bars in a hurry, so it may be worth choosing ETFs, ETCs, mutual funds, or stocks instead.
Adding a little silver to your portfolio can protect it from inflation and market volatility, while offering you the chance to sell at a profit. Buy some silver today — it will always have value.