What are the benefits and drawbacks of investing in silver bullion? Continue reading to find out why investors may want to invest in silver bullion now.
Like any investment in the market, silver bullion comes with its pros and cons. Investors’ interest in silver markets increases with rising silver prices. Many are now wondering if this is the right time for them to invest in silver.
Silver can be volatile, but the precious metal can also be seen as a safety net similar to its sister gold. They can provide protection for investors during times of uncertainty. They could be an excellent choice for people looking to protect their wealth during times of high tension. Let’s now examine the pros and cons of buying physical silver bullion.
There are pros and cons to investing in silver bullion.
1. Protective silver can be a good investment — Investors often turn to precious metals in times of turmoil. Legal tender is often overlooked when political and economic uncertainty is high. This can lead to legal tender being replaced by assets such as gold and silver. Investors can find silver bullion and gold attractive, but the white metal is often overlooked by those who invest in gold.
2. It is a tangible asset — Cash, mining stocks, and bonds are all accepted forms of wealth. However, these digital promissory notes are still digital. They are therefore all susceptible to losing value due to actions such as printing money. Silver bullion is, however, a finite tangible asset. Physical silver, while it is susceptible to market fluctuations, is not likely to crash completely due to its intrinsic and real value. Market participants have two options: they can either buy silver bullion bars or a silver coin.
3. It is cheaper than gold — Silver bullion is more expensive than silver bullion. However, it is also easier to spend. It is, therefore, easier to break a silver coin than a gold one if you’re looking to purchase it as currency. As a PS50 note can prove difficult to use in a shop, it can be challenging to divide up an ounce of gold bullion. Silver bullion, which is more versatile and practical than physical gold, makes this type of investment attractive.
4. Silver has higher returns than gold. Silver moves in tandem with gold. When the price rises for gold, silver prices will also rise. Silver bullion can be purchased at a price that is less than 1/79th of the price of gold. This makes it affordable and will give you a greater percentage return if silver prices rise. Silver has outperformed gold in bull markets. Investors can hedge their bets by investing in silver bullion.
5. The history is on the side of silver — Both gold and silver have been legal tender for hundreds of thousands of years. This gives the metal an air of security. It is comforting to know that this precious metal has been valued throughout the history of humanity. This means that there is an expectation that it will continue to be valuable, even if fiat currencies fall. There is comfort in knowing that physical silver will be valued no matter how it is purchased, such as a bar of silver or pure silver, and that it will not decline.
The cons of investing in silver bullion
1. Insufficient liquidity — If you have physical silver, there is a possibility that it might not be immediately liquid. You cannot use silver bullion coins or bars to purchase common items like groceries. It is necessary to convert the currency to currency first. Selling in a hurry can also be a problem. You can access a bullion exchange if you are stuck and cannot find one. However, jewellers and pawn shops are an option.
2. The risk of theft — Silver bullion is more volatile than other investments like stocks and can make investors vulnerable to theft. Additional costs will be incurred to secure your assets from theft by using a safe deposit box at a bank or in your own home. You are also more vulnerable to burglary if you have more physical assets (including silver jewellery) in your home.
3. Poor return on investment — Silver bullion is a safe-haven asset that can be sold, but it might not perform as well in other investments such as real estate and other metals.
Some investors may prefer mining stocks to silver bullion, particularly if they pay dividends. Investors interested in silver can also invest in an exchange-traded silver fund or silver futures.
4. Premiums are higher in high silver demand — Investors who try to purchase any bullion product, such as an American Silver ounce coin, also known as a “silver eagle”, will soon discover the physical price of silver is usually higher than the spot price. This is due to premiums paid by sellers. Additionally, high demand can lead to faster premiums, making physical silver bullion less attractive and more expensive.
