Silver is having an underwhelming year again, this time alongside gold, and many investors are now wondering whether is the right choice. Here’s a look at the pros and cons…
Pros of investing in silver bullion
1. Silver can offer protection: …When political and economic uncertainty are rife, legal tender generally takes a backseat to assets like gold and silver. While both gold and silver bullion can be appealing to investors, the white metal tends to get overlooked in favor of individuals investing in gold, even though it plays the same role.
2. It’s tangible money: While cash, stocks, bonds and other financial products are accepted forms of wealth, they are essentially still digital promissory notes. For that reason, they are all vulnerable to depreciation due to actions like printing money. Silver bullion, on the other hand, is a tangible asset that is finite. That means that, although it is vulnerable to market fluctuations like other commodities, physical silver isn’t likely to completely crash because of its inherent and real value…
3. It’s cheaper than gold: Between gold and silver bullion, the white metal is not only the less expensive of the two bullion products, and therefore more accessible to buy, but it’s also more versatile to spend. That means, if you are wanting to use your silver coins as currency, they’re easier to break than gold because they are lower in value. Just as a $100 bill can be a challenge to break at the shops, divvying up an ounce of gold can be a challenge. As a result, silver bullion is more practical and versatile than physical gold.
4. Silver offers higher returns than gold: Because silver bullion is worth around 1/86th the price of gold bullion, it is affordable and stands to see a much bigger percentage gain when silver prices go up. In fact, in the past, silver has outperformed gold in bull markets…[For example,] it gained 448% from 2008 to 2011 while gold gained just 166% in that same time period. It’s possible for an investor to hedge their bets with silver bullion in their portfolio.
5. History is on silver’s side: Silver and gold have…been recognized for their value throughout a great deal of mankind’s history, and so there’s an expectation that they will endure while fiat currencies may fall to the wayside. When individuals invest in physical silver, whether that be through silver bars, fine silver, coins or other means, there is a reassurance that its value has, and will continue, to persist.
6. Silver offers anonymity: Whether you value your privacy or not, silver has the same benefit as cash in that it gives users a degree of anonymity with regards to spending. Not everyone wants all of their transactions to be a part of the public record…
Cons of owning silver bullion
1. Lack of liquidity: There is a chance that if you hold physical silver, it may not be immediately liquid. In order to make common purchases such as groceries, you are not able to use bars of silver, so you will need to convert that to currency first, and the ability to sell in a hurry can be an issue. In a jam, pawn shops and jewellers are an option, but not necessarily the best-paying one.
2. Danger of theft: Unlike most other investments, such as stocks, holding silver bullion can leave investors vulnerable to theft. Securing your assets from looting may incur other costs, including a safety deposit box in a bank, or a safe box in your home. Additionally, the more physical assets that reside within your home, the more at risk you are for burglary.
3. Weak return on investment: Although silver bullion may be a good safe haven asset, it may not perform as well as other investments…[such as streaming companies, for example due to] organic growth and dividend payouts that bullion doesn’t provide.
With all of these factors in mind, investors may want to reflect on the pros and cons from their own personal lens before deciding whether to build up their stockpile of silver bullion. Timing is also an important factor for those who want to reap the benefits of the white metal.