- Silver As An Investment Theme
- What Causes Silver Prices To Rise And Fall?
- Benefits Of Silver Investment
- Buying Silver, What To Look For
- Best Place To Sell Silver
Silver as an Investment Theme
Silver is known throughout the world as being an asset that protects its owner from the effects of inflation. Central banks increase the volume of banknotes in circulation year-on-year which causes a gentle rise in prices as the pound becomes worth less and less the more it is printed by the Bank of England.
Silver is the choice investment for many coin collectors because it is available for a fraction of the price that a gold coin would cost. Silver and gold prices typically move in tandem given that the fundamental drivers for both metals are very similar. Moreover, silver is a popular asset, making it very easy to sell silver coins irrespective of whether silver prices have recently risen or fallen.
Buying silver or gold protects you from this and is an excellent wealth preserver over long periods. This makes silver a very popular investment with the beautiful designs adding a collectable element to this type of investment. Many people profit from buying silver coins when the price of silver falls and selling when prices recover.
What Causes Silver Prices to Rise and Fall?
Silver, like gold, is a precious metal and functions as a ‘safe haven asset’. This means that when investors are less confident about the global economy or the prospects of ‘risk-on’ assets such as cryptocurrencies or shares, they seek sanctuary in safe haven assets. This leads to an increase in gold and silver demand when economic growth is slowing or a crisis is developing.
During periods of optimism and strong economic growth, investors tend to switch to riskier assets such as shares or cryptocurrencies. This leads to a fall in demand for safe haven assets and can lead to a decline in silver and gold prices.
As gold and silver typically perform well when other assets are falling, they are popular choices for investors looking to diversify and preserve their wealth. Given the size of the gold and silver coin market, investors have opportunities to make profits from trading coins. That is, they buy when the price of the silver or gold has fallen and then sell at a profit when prices recover.
Benefits of Silver Investment
- Unlike buying shares in companies, silver coin investment requires no specialist knowledge.
- Silver has many industrial uses such as solar panel construction which ensures that its value will never fall to zero unlike a cryptocurrency or speculative penny share.
- Silver coins are very inexpensive, allowing investors with small budgets to profit from trading them.
- Silver is an excellent way of protecting your wealth against the impact of inflation.
- The silver price has consistently shown higher volatility relative to the gold price, meaning the swings are more pronounced which provides ample opportunity to profit from changes in the silver spot price.
Buying Silver, what to look for
There are many types of silver coins that can be bought online. Purchasing directly from online bullion companies is the safest way to buy as the coins are guaranteed to be genuine. This has the added advantage that prices are linked to the live silver spot price, allowing you to monitor the market and buy after a significant short-term fall has occurred.
It is best to stagger your silver purchases so that you can benefit should the silver price fall after you have bought. You will not have this option if you buy your full allocation at once. The best coins to buy are silver Britannia’s, silver Maple leaf coins, silver US Eagles and/or Silver Krugerrands which are all made of fine silver and are widely available.
Best place to sell silver
After buying your silver you will need to monitor the live silver price so that you can sell your coin(s) at a profit. Again, bullion companies offer live prices to sell silver coins with companies such as Auronum displaying live offers to buy your coins on their website. This allows you to see when your coins can be sold instantly for profit.
- It is important to buy silver coins after the price has fallen rather than after a sharp increase because markets often reverse course after a significant movement.
- Try not to buy your full allocation of silver all at once. In a falling market you can ‘average down’ by purchasing at lower and lower prices if the market continues lower.
- Buy a small amount of silver each month, this allows you to track the market average. This is a good strategy for beginners and silver can be accumulated over time and then sold when the silver price rallies.
- Silver has typically risen at a rapid pace which makes selling at a profit time sensitive. Selling to bullion companies is the best way of ensuring a fast sale as fellow investors may wish to wait for the market to fall again before buying from you. Moreover, bullion companies can buy in bulk which is perfect for investors looking to offload a large collection of silver coins.
- Large silver bars are a faster way of making money because a small percentage gain is all that is needed to make a good profit. However, heavier bars are more expensive to post. Ensure you research how much postage will cost for large bars with the Royal Mail before you invest.
- Some bullion companies offer free storage, this allows you to buy and sell without incurring postage fees. Most investors, however, enjoy building a collection of bars and coins and prefer to take delivery of their silver.
- Remember, silver prices can fall as well as rise so there is an element of risk in this strategy. It is always best practice to seek professional advice before investing in any asset.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.