Silver has both risks and rewards, but is it right for your portfolio?
Silver has served as a valuable asset to investors for many reasons. It’s often used to diversify one’s portfolio, hedge against inflation, and is seen as a “haven” to store your wealth. However, silver comes with risks, including volatility, risks related to supply and demand, and the risk of theft if you own physical silver pieces.
Is silver a good investment for your portfolio? That depends on your current investment objectives, your risk tolerance, and how diversified your assets are. Here, we’ll discuss the ins and outs of investing in silver, how to buy it, the pros and cons of investing in it, and how it compares to investing in gold.
Silver has been around forever, giving people a sense of stability as a rare, limited-in-supply commodity in which to invest. Among the many reasons why people invest in silver include:
Hedge against inflation: During uncertain economic times and rising prices, people often turn to silver as a way to hedge their portfolios against loss. This is because silver has historically been a less volatile investment, as well as a commodity that has many uses even today——making it a conservative investment option.
Haven: Investors looking for a safe place to put their money have historically turned to silver as a haven.
Diversification: Diversification doesn’t just mean having different stocks in your portfolio. It also means diversifying the types of assets you hold. Investors looking to diversify the asset classes held in their portfolios often turn to silver as a stable option because it’s less correlated to other markets.
It’s a tangible asset: One way to invest in silver is to purchase silver bars. For many people, having a tangible asset such as silver provides a sense of security over holding intangible assets such as ownership in a company.
Multiple uses: Silver serves as both a precious metal and an industrial metal. In other words, silver is used as both a form of currency and also has many uses for manufacturing various products.
There are things you should know before you invest in silver to avoid damaging your portfolio performance. Before you add silver to your portfolio, understanding the risks you may be exposing yourself to is essential. Some things to consider before investing in silver include:
Silver can be a great way to diversify your portfolio and hedge against loss. However, it is also subject to the law of supply and demand, which can result in unpredicted, sharp changes in price.
When buying silver, you pay the current price plus a premium. It’s wise to compare the premiums of different broker-dealers to ensure you get the best price possible.
As with all types of investments, there is the risk of fraud. Steer clear of any broker promising guaranteed returns, who sends you spam mail and phone calls, or who claims to make a lot of money with little risk.
Silver and precious metals are often purchased on margin, increasing your maximum potential losses. This can be very risky because you are using borrowed money to buy more of the asset, and you’re paying an interest rate for the borrowed money.
Certain industries such as technology may replace silver in their products with other materials. This would ultimately lower the demand for silver and thus, its price.
Silver can be used as an inflation hedge: If rising prices bother you, you can protect your portfolio by investing in silver. It has a track record of rising in times of rising prices.
Silver is not directly correlated to asset markets: The stock market and real estate market are examples of asset markets. Silver doesn’t have a direct relation to the economic conditions of asset markets, making it a great option for diversifying your portfolio.
Own tangible coins or bars: Owning actual silver coins or bars is satisfying to some investors in that they can see and feel what they have invested in. Furthermore, silver is a weatherproof material that can withstand various conditions such as water, fire, and damage.
Silver can be expensive: Because silver has a limited quantity in the world, it is considered a rare commodity. As a result, bullion dealers often charge hefty premiums to maintain their business of buying and selling precious metals.
Difficult to store: Owning physical pieces of silver takes up space and can become a heavy asset to own. Finding a place to store and move heavy silver can be difficult.
Misplacement and theft: Like owning expensive jewelry, owning silver has the risk of being lost or stolen.
And so, if you are planning to get your money back in an instant in Kolkata, then your safest bet is Adyama Gold Jewellers. After all with our latest XRF technology and the state of the art facilities, we will make sure you get the best returns on your precious silver. And we guarantee the best rates in the city, and if you can find someone who will pay you more than us for your precious metal, we will be more than happy to match the difference. So, next time you are planning of selling your precious metals for a bit of money, think of us. After all, we are the best, and we pride ourselves on us being the best as well.