Investments in gold, silver, bullion, platinum, palladium, coins and other precious metals, suggest the desire of the investor to diversify his portfolio by putting his wealth in different baskets.
Overview of silver investing as a lucrative savings option
When we talk of silver investing, we are looking towards investments in a metal which is both valuable and scarce and also an alternative to savings in fiat currencies. However, one of the basic issues connected with investments in silver, is its enhanced vulnerability to implicit and explicit confiscation. It is important to note that physical possession of a precious metal like silver requires a high level of investor resolve and strength. It also involves a confrontation with the risks connected with storage and market fluctuation.
However, recent trends reveal that certain bullish market fundamentals will take silver trade to its intrinsic value. This is definitely good news for those holding silver – the “white gold”.
The appeal of silver as an investment tool
Silver has always been strategically important as an investment tool. Its highly inelastic demand, has established its repute as an appealing investment and savings option. The exhaustive range of industrial and metallurgical properties possessed by this metal also increases its inherent worth. Silver is an active raw material in the mint and is widely used for the manufacture of coins and currency. This makes it a viable option as a monetary asset or as an alternative to other investment vehicles.
The role of savings and investments in precious metals
The importance of capital and savings has become all the more enhanced in these contemporary challenging times. With low returns on investments being the order of the day; adequate savings in precious metals like silver lead to higher capital formation, ownership control and anticipation of profits in the long run. Savings also generate a higher level of self-respect and financial security and overall improvements in the wider economic community.
The advantages of silver investing
-The advantages of investing in silver are indeed plenty. As an investor, you must understand that silver is greatly shielded against the negative effects of currency devaluation. Its value is not connected or tied to any currency and therefore any degradation in the purchasing powers of a specific currency fails to affect its inherent worth.
-The wide industrial use of silver as a component for drugs, computers, electronics, metallurgy, coins and laptops, will always influence its value in a positive direction. For example, silver nitrate is a compound used for the manufacture of medicines required for the treatment of neonatal syphilis—a condition that affects the eyes and vision of a newborn. These critical properties of silver and its wide usage coupled with universal demand make it an attractive option for savings and investment.
-On a per ounce basis, silver is typically cheaper than gold, but it boasts of a similar value perception as that of the latter. In contrast to gold, investors with budgeted saving plans find silver as an appealing option. Its affordability makes it more accessible than palladium, platinum, gold or other more precious metals.
Silver can also be used an alternate medium of exchange in the period of an economic downturn.
The disadvantages of investing in silver
-Silver investing is a lucrative savings option for those looking towards long term investments. Like other traded commodities, silver is also vulnerable to price fluctuations and can prove to be an unsuccessful investment alternative, if the investor indulges in frequent buying and selling. The key to good returns in silver investments is to hold on to this asset until the price rises, offering a good return on investment.
Before investing, it is also important to go through the listing and historical price fluctuations of silver on trading platforms. The average rate of returns on silver investments is not as high as other commodities. Investors looking for very high figures of ROI or quick returns should stay away from silver as an investment option.
-It is difficult to exchange silver for services or other physical goods. Investors will have to convert their silver assets into cash before they can purchase any items with the same.
-Being a highly precious metal, silver is prone to theft and explicit confiscation.
Informed decisions on the pros and cons of silver investing go a long way in helping investors protect their scarce resources and assets. Investments in silver should be guided by proper market research, study of trends and an analysis of its feasibility.
Current trends in the precious metal commodity market
According to the latest reports published in the third week of March 2013, silver has reached a six-month bottom along with a significant price drop in gold. This has created favorable grounds for interested investors to invest in these precious metals. With the US economy showing positive signs of revival, the mood is definitely more optimistic and upbeat globally. This in turn will lead to higher investments in silver, which may witness a price rise in the days to come.
As per experts, a flourishing economic environ does not always lead to high returns on precious metals. However, it is too early to provide one’s verdict on the changes in the global economic scenario. The current decline in the prices of gold/silver and a few other precious metals can be accepted as a temporary phenomenon. Regardless of whether the US economy will be able to sustain its economic improvements or sink back into a recessionary phase- it is the best time to invest in precious metals like silver and gold.
An insight into the reduction in the price of silver and other precious metals
The recent decline in the price of silver and gold can be attributed to a number of factors.
As per the U.S. housing and real estate data, there are strong signals of an economic revival. These signals are providing very positive indications for a recovery in these sectors. Investors would remember that housing was one of the worst hit segments in the recent recession. With the graph of real estate prices moving in an upward direction, citizens in the US and the rest of the world are looking towards more lucrative alternatives for savings and investments.
-Better times are also being signaled by the improvements in the stock markets. Investors are now researching on equities, which promise them higher returns. For example the price of S&P 500 has seen an escalation of 6.9% in the past twelve months; in contrast to gold, which has seen a dip of approximately 6%.
Global Economy still on shaky grounds: what does it mean for silver investors?
The going surely looks good for the US economy, which is moving on its path to recovery. However the mood is not so heartening in the other places across Europe. For example, the German economy has witnessed a shrinking of over 0.6 percent in the last quarter, while that of France has contracted by 0.3 percent. The Japanese economy is still under recession and is waiting for the worst to pass.
Under the circumstances investments in silver and gold may not be as high as anticipated. However, the slightest hint of any adverse problems in the US economy will send investors scurrying back to invest in these reliable precious metals. The same situation rings true for other European countries as well.
It is important to understand that silver investing will not lose its sparkle in the minds and investment plans of those looking for valuable savings. With most large economies still reeling under the pressures of recession and very few signs of recovery appearing on the horizon, the luster of silver and other precious metals will continue to attract investors.
The way forward…
As an investor, if you are looking towards silver investing just because it is the favorite topic for the investing world in recent days—then you certainly need to pause and ponder. Informed decisions are more important than simply following the herd. Investing in silver and other precious metals is definitely a good proposition if you aim to hedge yourself against the effects of inflation. Although it goes a long way in providing a diversification in your portfolio and helping you save for a longer term; investments in silver does not guarantee quick and spectacular returns.
Investment tips that guarantee more lucrative returns
It will suffice to say that the key to successful portfolio management and investments lies in a proper understanding of the underlying market currents. Trends which speak volumes about the viability of diverse investment modes such as bullion, precious metals, stocks, mutual funds, coins and currency can be best explained by professionals in the field of investments.
Trusted tips and industry references from reputed and investor friendly websites like Monex.com help successful investments and make sure that you get more lucrative returns on your savings vehicles.