Silver has for years had a much worse reputation on the market of alternative investments than gold. Gold is perceived as a safe haven, it has been increasing its value for years. Silver is considered cheap, unstable and with a tendency to generate losses. But did it really deserve such an opinion? How to invest in silver?
What is silver?
Silver is a white-grey chemical element, a soft, high-gloss metal. It is also a very good electrical and chemical conductor, so it is widely used in the electronics industry. Due to its rarity and aesthetic properties it is used in jewelry trade for making jewellery, but also dishes and cutlery.
Unlike gold, which use in industry is insignificant, four times more silver is used for industrial purposes than for investment due to its chemical and physical properties. Silver is used in photography, the production of high-class musical instruments, in medicine (silver compounds have antiseptic and bactericidal properties), in the production of mirrors, solar panels and as a chemical catalyst.
In nature, this noble metal is on average seventeen times more frequent than gold, but paradoxically, there is less silver on the investment market than gold. This is due to the fact that silver is simply invested less frequently, while surplus silver is bought by various industries.
Characteristics of silver as an investment
Investing in silver is seen as an alternative investment, which is not always taken into account. As a result, many investors often do not even know, how and where to invest in silver. It is worth knowing, however, that as a noble metal, silver is particularly valued by people interested in numismatics and wanting to have capital invested in a physical object, small and easy to transport and secure.
With other alternative investments, silver is distinguished by its price, which is relatively small. A silver coin with a weight of one ounce at this moment may cost less than 100 PLN, while a one-ounce gold coin – 4 696 PLN. Therefore, even a person with a small income can collect a small pile of silver coins during the year, investing only 100-200 PLN per month. Such investments are particularly tempting for those who would like to have physical access to their capital, anticipate economic collapse and do not trust banks and other financial institutions. It is also not difficult to come to the conclusion, even without much knowledge about the investment, that due to the events in Greece, when banks announced a limit on cash withdrawals from ATMs and the whole country went bankrupt, more and more people started to turn to alternative investment methods and „physical money”. Physically located capital always flourishes in times of economic collapse, uncertainty and war.
But what are the prognoses for silver as an investment? For years it has been considered to be the worse equivalent of gold or diamonds, however, according to experts, it may survive a blossom in the coming decades. This is due to two factors: the increasing use of silver by industry and the development of alternative methods of obtaining energy.
Silver is, like any noble metal, non-renewable. Although in nature it is much more common than gold, it is never recovered. For each disposed of laptop, a few grams of silver used for soldering is irretrievably lost, a dozen or so grams are found in every scrapped car, one gram – in every smartphone. Due to the high cost, silver is rather not recovered and there is simply less silver every year. Therefore, it seems inevitable that the price of this ore will eventually be affected by the millions of tons lost each year.
Silver is also strongly linked to the alternative energy industry. As mentioned above, silver is used to produce solar panels. Interestingly enough, more and more countries are moving towards ecological methods of energy generation. One of them is China, which has plans to reach 30% of the energy obtained from solar panels in several years. This means growing demand for silver in the coming decades.
So how to invest in silver?
Investing in silver in terms of its very nature is one of the simplest methods of investment, because it is enough to buy an appropriate amount of this ore. It is usually sold in coins (so-called bullion) and bars, which can be stored at home, in any box. Silver is also easily accessible, as it is offered by many intermediaries, public and private.
It is also worth noting that some coins may have a collector’s value, which is higher than the value of the gold used on them. Therefore, not every single one ounce coin has the same price. As with other collector items, the numismatic value of such coins will increase with time. Some collectors are also tempted by interesting motifs minted on coins, because you can find almost anything from famous historical figures, through the animals typical of the region, to even characters from Star Wars and comic books about Batman.
Where to invest in silver
An investor wishing to buy silver coins or bars has a really big choice. Silver coins are traded by the Mint of Poland (Mennica Polska) and this is probably the most reliable place to buy investment silver. However, the Mint of Poland has a large margin and a relatively small selection of coins, so you can look around other Mints (e.g. in Wrocław), private sellers or collectors of silver coins or bars. Nevertheless, at this point the choice of coins in Poland is very large, they are imported from all over the world and sometimes you can find even very rare collections.
As far as the security of such transactions is concerned, silver is much less often counterfeited than gold, and most of the rarer coins have the appropriate certificates and the possibility to confirm authenticity. Silver coins are also usually legal tender in the country where they were minted – since a $100 coin may have a face value of $1, it is unlikely that anyone will use this type of coin as their currency of payment.
Silver is underestimated as an object of investment due to the small increase in value in recent years. However, this is a mistake, because it is a promising investment material for average person, who has capital calculated in thousands rather than hundreds of thousands. Silver coins have a growing collector’s value, are a good place for the future, and according to experts, they will be gradually increasing their value in the coming years. Collecting silver coins can therefore be an alternative to retirement deposits or physical capital that can be given to children. As a result it may be worth to invest in silver in the future.
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