In a volatile market, investors tend to look to precious metals for their investments. With rising oil and a weak dollar and ever rising inflation the metals market is starting to look good for all kinds of investors.
Silver bullion or coin is likely to be of interest to the big investor looking to buy large quantities of physical metal and also the small investor with a smaller budget. mathey It is important to price silver per ounce.
It is difficult to predict where the silver prices will be six months from now but it does seem that it is hovering around $20 per ounce at the moment, (as of Autumn 2013), and it has had a year on year improvement.
Who knows what will happen next?
Interestingly, silver mining is secondary to other mining because:
A) The bulk of silver mines are in obscure and volatile parts of the world so the US is not mining enough.
B) Most countries (like the US and UK) keep a other precious metals reserves but do not keep silver bullion.
Surprisingly though, there is an increase in the industrial use of silver.
So, what should the average investor do?
In my opinion, investing in some silver is a great idea.
If you do decide to invest in silver, it’s worth remembering that silver bullion coins, such as the U.S. Eagle or the Canadian Maple Leaf, will always get you a few dollars above the spot prices. Silver rounds and silver bars usually sell for around the spot prices.
Why I believe that the price of silver is still low?
Because of Manipulation.
The silver price is roll-up-profis determined by the volume of purchases. At the moment London is trading at about 130 million oz per day. The physical silver market is about 850 million oz per year in (figures from 2008). Thus in 6 trading days the amount of silver traded is equivalent to 1 year of the supply from World mining. Most of the silver trading done is not for physical silver buyers but for paper trading and even gambling. So at the moment the existing stocks are still able to fulfill the physical silver demand. But I believe, once these stocks dry up, the silver price will go up.
Knowing this, I believe it is sensible to add some silver to your portfolio for investment purposes or as a future insurance policy. Please do your own homework first before you buy. So assuming silver is a good investment, what next?
What type of physical silver should you buy?
1.) In my opinion, those who are new to silver investment should start with common bullion coin first. This is the most liquid form of silver available. It is much easier to sell a Silver Maple leaf compared to a 100 oz silver bar or silver ingot.
In additional to that, if you just want a term of reference, having a few coins is good enough. The Canadian Maple Leaf and the American Silver Eagle looks the exactly same except for the printed year of the coin.
A good collection would be all the years? Not an easy task as some years are harder to find than others, but fun though!
2.) It would be good to get some premium bullion coin with limited yearly mintage such as China Silver Panda, Australia Perth Mint Silver Koala, Silver Kookaburra, Silver Lunar and Silver Kangaroo. These coins have a lower yearly mintage and one side of the coin changes every year.
This is a bit of a naughty ploy by the mint because they can get more sales from the customer and they can up the price. Since the price is so high, it is not wise to buy so many coins for investment but rather more to add to a collection. I will expect people not to want to pay extra for numismatic value, I believe, as money is short, they will be more interested in the silver content of the coin.
3.) Common silver rounds such as A-mark, Pan AM Round and Buffalo Round. I don’t buy common rounds unless from a reputable dealer as they are very easy to fake.
4.) Silver BAR, Perth Mint, Johnson Mathey Bar, PAN-AM, NWT bar. These silver bars come in sizes from 1 oz up to as much as 20oz even a kilobar or 100oz and 1000 oz. Make sure the silver bar has a vendor hall-mark with it such as Perth Mint, Johnson Mathey etc. If the silver bar does not have a popular hall-mark then people may doubt the silver content of the silver bar. The only way to be absolutely sure of the silver content is to melt it down.
5.) Kilobar and 100 oz bar. This large silver bar I would hold for about 10 years and then sell it on. Be careful as the buyer will pay the exact price for the exact weight and some of the bars especially the big ones do not have the exact weight on them.
At the moment, it is still too early to know which silver investment will give the best yield. My opinion is that you should diversify and buy a little bit of each to reduce your risk.
The price of silver and how long should you hold silver?
In early 2013 the demand for both gold and silver coins was record-breaking. This lead to the US Mint running out of silver eagles and they had to suspend sales. I believe that that would have been a good time to sell, when there is a shortage. But generally, unless there is a massive World event then I see silver going up little by little year on year.
Author – Pat Sutton
A silver investor and professional blogger.
Did you know that for the first time in OVER 30 YEARS countries and central banks are BUYING Precious Metals such as Gold and Silver and the demand only continues to rise. Read why here