Is Silver a Good Investment in 2024?

January 3, 2024

Does Silver Make A Good Investment?

Is Silver a Good Investment to add to your Portfolio?

Silver has occupied a similar level of importance as gold has historically, all be it to a lesser extent. Though certainly not as rare as our shiny yellow friend, there are still benefits to be derived from the metal which an investor could look into.

Known as the poor man's gold, silver (like other precious metals) can offer an investor the chance to diversify his portfolio, hedge against inflation, and have an emergency source of income in a time of distress. That being said, there are also some downsides to the metal which, for most, still makes it an inferior investment to gold.

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By the end of this post, you'll learn:

  • The Benefits of Investing in Silver
  • The RISK of Investing in Silver
  • The Differences Investing in Silver Vs Gold
  • And More..

That said, let's go over some of these advantages and disadvantages together so that you can decide for yourself if silver is a worthy investment:

Benefits of Investing in Silver:

Silver IRA Coins

Silver is classified as a commodity and is a tangible metal traded in markets all over the world. Where current assets like cash and liquid investments usually depreciate due to the unfortunate effects of inflation, the price of noble metals like silver and gold move in the opposite direction. They generally only get more expensive with the time.

This, of course, presents investors with several benefits that other, intangible investments do not provide.

The incorporation of investments in silver into your portfolio allows you to hedge against the effects of inflation.

Say you are worried that, because of inflation and the volatility of the money market, your investments might turn out not to be as valuable as they could be.

As an investor, it's only natural that you want to walk away with as much money as possible. By buying quantities of silver, or investing in silver-related investments, you let the ever-increasing price of the metal offset the loss you incurred from inflation. Thus, successfully hedging.

Another notable benefit is their ability to serve as ample sources of emergency funds in times of need. Silver can easily be liquidated to free as much cash up as needed in cases when it's needed or you simply wish to cash in on your investment.

Consider how fragile the market can be from time to time, how usual fiat money can fluctuate in value that it makes it hard to depend on. Also consider for a moment that, for much of human history, gold and silver as been the standard currency for millennia. They were what was used to facilitate exchange and their dependability extends to the modern age as viable sources of investment.

In the unlikely event of an economic collapse or natural disaster, one that renders normal currency next to useless, it helps to have some precious metals around to serve as an alternative.

Finally, investment in silver is just another way to safely invest money. It's profitable not just because it's a noble metal but also that it's an important component in gadgets and technology.

Having investments in silver can also mean you partially own the material that is heavily needed in the technology market -- which is an infamously lucrative market.

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Risks of Investing In Silver (Why Silver May Be A Bad Investment For You):

Silver, as an investment is a questionable prospect. For one thing, there's this whole issue of what to do with it when you're done. I mean sure we enjoy the pretty reflections and drinks that are made from them now but seriously, do people really want silverware for eternity!? 😁

Anyway, there are some risks to investing in this shiny substance and we're going to cover them here for you now.

Sensitivity to the Industrial and Technology Markets

Perhaps much of what dictates the price of silver is its integral part in many industrial and technological uses. Silver is a corrosion-resistant and highly conductive metal -- a quality that makes it useful for electrical engineering.

But any downturns in these markets can directly affect the price of silver negatively. Technology is ever-changing and it's not uncommon that entire industries are rendered obsolete in the blink of an eye.

There is also the very real possibility that a material might be introduced that has many of the same qualities as silver but is much cheaper. Much like what happened when silver was no longer used in photography, silver might lose an entire market use in the future due to advancements in production.

Limited amount of income

The thing that makes silver so easy to understand as an investment might also the thing that holds it back. In the case of owning physical silver (just as with buying gold bullion), you will only ever earn the amount it could be sold for. There are no interests or dividends that yield you liquid income every month. Just like when you sell your gold, you can only earn from silver when you eventually decide to sell it.

Volatile Prices

Unlike gold's prices which increase relatively predictably, silver's price changes much more and can be far more volatile. In some cases, new silver deposits drive the price of silver down. Silver is also known to be recyclable and reused from discarded electronics and gadgets.

Its harder to liquidate

Unlike gold, the silver market is smaller. This means that you'll have to do some extra searching online or in the city streets to find a place willing to buy silver. Some, if not most, dealers don't deal in silver at all. This when you buy silver, you must also have a selling strategy in place for when you need it converted to cash.

Differences Between Silver Vs. Gold, Which Is A Better Investment?

Silver VS Gold As An Investment

Both metals share most of the same benefits stated above. They are optimal options for hedging against inflation, their prices mostly only increase, and they are great sources of emergency funds or as safe-haven investments to weather times of turmoil.

Silver is cheaper than gold

That being said, it's obvious why we should compare the two and see which one holds out when takes for their differences. The first and most obvious difference is that silver is cheaper than investing in gold. The poor man's gold is viable if you're looking for a cheaper alternative to gold investments that still offer many of the same advantages. Silver is a good investment for the investor on a budget.

Silver is more readily available than gold

If it's a question of which is the rarer element then gold wins by no contest. All the gold mined in the world so far is stipulated only to fit in about two Olympic-size swimming pools. On top of that, fruitful gold mines are quickly drying up. Silver, on the other hand, is not so rare. This can either be a good thing or a bad thing depending on the nature of your investment.

It could be a positive if you're banking on silver's role in the future of technological development. Alternatively, if you are banking on silver's increasing price to make your investment worthwhile, then you won't have as much assurance as gold in that department.

Silver's prices are more unstable than gold's

The fluctuations in the price of silver are more frequent than those in gold. Where one can bank on the rarity of gold, viable silver mines are still being found every few years or so. Along with that, the availability of silver in industrial markets means that its price is heavily influenced by the demands found therein. One could wake and find that the Tech industry doesn't need silver anymore. Where does that leave silver's price?

With gold, all you bank on is its rarity and predictable price increase. Entire investment schemes are built on this almost unchangeable principle and it's not likely to change any time soon.

Silver can be very liquid

The silver market is smaller, much smaller than the one for gold. This especially applies to the market of silver investments. The risks explained here are some of the reasons why silver hasn't really caught on as much as a form of commodity investment the way gold has. This could present some problems for you when the time comes that you'd like to liquidate your silver investments.

Unloading it will be difficult since gold is much more highly praised and better understood. Perhaps the market will grow when gold finally runs out and silver is seen as an alternative investment in noble metals. But at this point, the price you pay for the cheaper metal is finding a place to sell it later on.

Bottom Line, Is Silver A Good Investment?

Despite all the risks with silver, there is still a way to make money with it without risk. You can invest in silver IRA's or mutual funds, which are safer. This saves you from having to store silver by yourself.

Just as there are Gold ETFs and Gold IRA's, there are also silver ETFs, IRA's and ETCs (exchange-traded commodities) which lets you buy silver the same way one would buy stocks from a company.

Again you get the benefits of the metal's increases in price while not having to worry about storing and selling it yourself.

Stocks in silver mining companies are also just as good as investments in silver itself, just like gold stocks.

No matter what the case is, it's important to weigh your options first and decide on the investment you feel works for you best.

Silver might not be gold, but it's still shiny and will likely be valuable in one way or another for decades to come.

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About the author 

Jenna Lofton, an expert in stock trading, investing, and financial planning, combines over a decade of experience with rigorous academic training. Holding dual MBAs in Finance and Business Administration from the University of Maryland, Jenna's expertise is grounded in a deep understanding of the financial markets. Her career, which started on Wall Street, has evolved into empowering others through her insights and analyses in the dynamic world of finance.

Based in New York City, Jenna's approach is informed by her hands-on experience as a former financial advisor and her keen observation of market trends. She is known for translating complex financial concepts into actionable strategies, making her a valuable resource for both seasoned investors and newcomers to the stock market. Her commitment to financial literacy and her ability to demystify investment principles have made her a respected and authoritative voice in the investment community.

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