The silver IRA is experiencing unexpected demand. While the demand may be unexpected, it is definitely justified. The underlying asset has been wrongly ignored by a large number of investors. While the typical investments have withered and let inflation steal away the significance of their gains, silver has performed spectacularly.
If you are looking to achieve a certain quality of life during your retirement, then you should shift the focus of your funds from the typical stock indexes and pick up as much silver as you can right now. A silver IRA could provide the most solid foundation possible for your retirement.
If you do not have an individual retirement account already, you need to begin speaking with custodians. These are the business entities that oversee them and each custodian may have different regulations surrounding their accounts. Each of them also has to follow legalities put in place by the IRS.
They can benefit you in several ways. Anyone can set aside money and invest it in the stock market like IRA custodians do with your contributions, offering you varying tax advantages.
For example, the Traditional IRA set up permits you to contribute $5,000 per year. These funds are not taxed because they are not considered income by the IRS. This gives you the pleasure of avoiding taxes now and only paying taxes on what you withdraw when you retire.
The Advantages During Inflation
As great as they are, many investors have been disappointed by the performance of their underlying investments in the last decade. The problem is inflation. More complacent investors may be thrilled to see that the stock market is way up over its lows in 2009. However, when you take inflation into account, you can see that many stock indexes are not keeping pace with the devaluation of the US dollar.
This is hard for some people to hear and believe. Nevertheless, the numbers prove the point. Silver was worth just $4 an ounce in 2001. Since then, it has climbed steadily until values have reached above $32 at present. That is an 800% performance.
With silver investments in your IRA, you know that your wealth is safe. While others complacently watch the wealth erode as they rely on stocks, you can rest assured that you have seen the real silver lining in the inflation cloud. The only real question on your mind should involve which silver investments to make with your IRA contributions.
Possible Silver Investments
There are numerous ways to invest in silver with your individual retirement account. Not long ago, any precious metal investments were limited to silver and gold American Eagle coins that the US Mint produces every year. Now, IRAs are permitted to offer their clients a wide range of silver investments, including both physical silver and less direct investments in this precious metal.
• Physical Silver
Silver can be purchased in two primary forms: bars and coins. Some people prefer coins because they are very liquid on the market. Others favor bars for their efficiency.
If you want to buy silver coins with your retirement funds, then your best option may be the American Silver Eagle. The US Mint strikes these millions of these coins in one-ounce size every year. They are respected around the world for their physical integrity and their value. While they sell at a price well above spot value, they are treasured because it is so easy to convert them into cash whenever necessary since there is always an interested buyer.
Silver bars are larger than coins and require more money to acquire. They are also not as liquid as coins. However, they sell much closer to the spot price of silver because there is little design involved in their production. As investments, they are efficient because of this quality.
The major drawback to buying physical silver is the need to maintain and store these assets. Once you make a purchase, there may be numerous additional fees for shipping the silver. There will always be fees for maintenance and storage. These obviously detract from any possible gains and also erode your investment.
• Silver Stocks
This is why some investors prefer to invest in silver mining companies. A business stock can advance even if the underlying asset is stagnant or in retreat. Yet the stock is still responsive to surges in silver value.
The most popular silver investment right now may the ETF. Jim Rogers, an internationally-known commodities investor, swears by them. These funds allow you to buy and sell their shares as easily as if they were stocks. Yet their value is tied directly the value of their silver assets.
How to Get a Silver IRA
If these investments sound exciting to you, it is time to contact a precious metals IRA custodian. Review the presentations for their accounts and find one that will offer you as many options as possible for the least amount of fees. If you already have one, ask your custodian about these investments. It is easy to switch custodians with an IRA transfer when you learn that your present custodian cannot offer what you need.
Now that interest in silver has finally taken off, people are frantically looking for the best place to buy silver. Anyone who has been in the precious metals market for some time knows that there are good dealers and bad dealers.
Some silver vendors are known for selling silver-plated or other lesser quality coins to newcomers. It is important to find a quality silver vendor in order to ensure that your investment is worth the money that you spend on it.
There are several key qualities that you should seek in a silver vendor.
• Product Authenticity
Many people are fooled into buying precious metals of poor quality when they see ads on TV for special commemorative coins. Some of these may be the real deal but you are advised to stay away from them in general.
You should only be interested in vendors that sell legal tender silver coins that are minted by national governments or silver bars from reputable companies.
An excellent example of a trustworthy silver coin to buy is the American Silver Eagle. This coin is produced by the US government and has the full backing of that entity. Silver bars should be from companies such as Johnson Matthey or Credit Suisse.
• Adherence to Spot Price
It can be a little shocking for new investors in precious metals to see the prices of the assets that they intend to buy. They are never set according to spot value. Silver coins, in particular, are known for their tendency to sell for prices well above spot.
This discrepancy is due to the cost of designing and striking coins. This has to be accounted for somehow. Even the comparatively simpler silver bars will still sell at prices slightly above spot. The best silver dealer will sell quality products at prices as close to spot values as possible.
It is much easier to look for silver to buy when the vendor offers a wide variety of products. This means more than just a range of silver coins from various countries. In addition, the ideal vendor will have bars from various producers to sell as well.
• Investment Options
Many silver dealers will do more than ship your silver to you in a box. They offer investment opportunities as well. You do not have to limit yourself to purchases of physical silver. Such vendors will also explain to you how to use physical silver in an IRA and avoid taxation until retirement.
• Other Accessories
Whenever you visit the website of your silver vendor, you should feel informed. If the dealer leaves you in the dark and feeling ignorant, you are in the wrong place. The website should offer chances to look at price charts, testimonials and have a page dedicated to frequently answered questions.
Do your homework regarding the reputation of the company. Check with organizations such as the Better Business Bureau, the Business Consumer Alliance or TrustLink. There are a number of ways to check up on the companies. You want a company with a good track record. It also helps to hear from others who have used their services. Check out their websites. If they promise to deliver a free gold kit or information packet, take them up on the offer and see if they deliver. Are they professional when they interact with you?
Three of the Best Places to Buy Silver Today
This company is one of our top picks and has an amazing selection on its home page. In addition to silver, they offer investments in gold as well as other options. Since you are looking for silver, it is the breadth of silver investments that really makes Regal Assets one of the best places to buy silver.
They offer silver bullion coins from a number of countries, specializing in the American Silver Eagle. However, they also make available older, out-of-circulation coins such as the Morgan Dollar and the Peace Dollar.
Regal Asset’s additional accessories on the site make it most attractive compared to many other silver vendors. They have detailed price charts on silver and other precious metal prices.
Impressively, they already have resources ready for palladium investors. Their pages on the latest news and the explanations of precious metal values are exceptional as well. They are an A+ rated Better Business Bureau company. They have information on their site and offer a very helpful silver and gold investing guide.
Visit the Regal Assets site for more information.
• Provident Metals
At Provident, they really have a wide selection of silver coins. In addition to the standard US silver coins; there are older coins and a page for foreign coins. You can learn more about the possibilities in a silver IRA at this site after you read up on IRA basics.
Provident Metal goes beyond simply selling silver. They also seek to help their clients deal with other likely results of the failure of world currencies. This makes sense because this concern is what has spurred many people to seek silver investment in the first place. The last tab on the home page of this site displays several additional web pages about survival, food storage and emergency supplies.
News is always a critical element in profitable investments for precious metals. At APMEX, you can get daily reports on silver and gold as well. Their selection of silver investments is more limited than those offered by some other dealers. However, if you want coins, they sell the American Silver Eagle for a price incredibly close to spot value.
There are many silver vendors out there. These are just some of the best available. No matter who you contact for your next silver investment, they should adhere to same of the same standards on which these excellent examples rely. There is no point in taking risks with your silver investment.
The number of potential investments in an IRA has increased since this investment arrangement was developed for the public in the 1980s. This has certainly widened the gap between IRAs and 401ks as far as public preference goes. More investment options are almost always more attractive to people when compared to schemes that restrict choices.
However, each IRA custodian is free to set certain limits on the kind of investment options allowed under its supervision. A brief description of the types of financial instruments available with a variety of IRA custodians follows. Do not assume that any one custodian will allow all of these options simultaneously.
These are the classic investment options. A stock is also known as a share. That term is used because each stock is literally a piece of ownership in a publicly-traded business.
Once you buy stock in a company, you agree to share in that company’s financial destiny. If the business underlying the stock falters or fails, you will suffer as your stock price falls.
If the business succeeds, then you will profit. That is why investors take such great pains to study the fundamental health of the businesses in which they invest.
As an IRA investor you have one significant advantage over typical investors when it comes to owning stocks. You can afford to have much more patience.
Since you are planning your retirement, you do not need the stock to start churning out profits right away for you. You only need to hope that the business improves over the course of decades.
This is a much more likely proposition than immediate profits. Retirement investments in stocks can improve their likelihood of long-term success when purchased through index funds described below.
Many retirement portfolios and IRAs are chock full of bonds. This tendency increases as the holders of these accounts become older. Bonds are considered to be much safer than stocks but are hampered in their ability to produce gains.
A bond is a form of debt. Many bond holders may find the tables reversed for them when they buy these financial instruments. With bonds, the issuer is basically asking prospective buyers for a loan.
In the case of federal bonds, the US government issues them because it needs immediate money to fund itself. When it offers these bonds, it basically goes into debt, asking the public to buy them in exchange for an interest rate that will yield payouts over the course of 10 years or more.
When a bond reaches its maturity date, the government stops paying interest and returns the principal to the buyer. State and local governments can also issue bonds, as can large corporations. Interest rates will vary between these entities but they are usually low when compared to the profits that stocks can return.
A commodity is a welcome relief to some investors who tire of the abstract nature of their ownership in stocks and bonds. This class of investment involves physical materials that are used in both industry and in human consumption.
Commodities are mostly raw goods that are either grown or extracted from the ground. Examples include aluminum, wheat and natural gas.
Since many commodity investments are fast-paced and temporary, an IRA will usually invest in them through index funds as described below. However, precious metals form one class of commodity that an increasing number of IRAs buy and hold.
Interest in precious metals IRA options has risen considerably because these commodities act as superior hedges against inflation.
Because there is so much interest in precious metals in IRAs, the number of options for investing in them with these retirement accounts has increased considerably. With an IRA, clients can buy both coins and bars made from precious metals such as silver, gold and platinum. In addition, they can buy stocks and mutual funds that use precious metals as their underlying assets.
• Index Funds
Investing in single stocks can be risky because it may lose a lot of proportional value. On the other hand, there is a general advance in the whole stock market, even though this advance is punctuated by setbacks and even general losses in recessions such as that begun a few years ago. Nevertheless, the market as a whole generally moves forward.
Investors noticed this occurrence a long time ago and formed special investment schemes known as index funds. These funds pool monetary resources from their investors and buy a wide variety of financial instruments.
Sometimes these underlying assets are all from the same market sector. The diversification of funds allows investors to profit from a general advance in stock prices while lessening the impact of any one asset’s failures. These are very popular forms of IRA investments.
• Exchange-Traded Funds
These are similar to mutual funds or index funds except they offer investors a little more liberty and some tax advantages. Unlike most index funds, you do not have to wait until the close of a business to buy and sell shares in these funds. You can trade ETF shares all day long just as if they were stocks.
ETFs merit mention here in particular because they have become a popular but indirect way of investing in commodities such as precious metals. The latter, in particular, can be troublesome investments when bought directly in physical quantities such as coins and bars. These solid assets must be stored and maintained. This costs money and detracts from possible gains.
With an ETF, on the other hand, you buy into a fund which owns and maintains the precious metals for you. When you need to liquidate some holdings, your ETF shares will share liquidity with most stocks and commodities but you will not need to worry about any physical items. In an IRA, they offer a very safe way to invest in precious metals for the long-term.
• Alternative Investments
Many people are not aware that their custodians offer a very wide array of investment options that even go beyond exotic things such as silver and gold. You can invest in herds of cattle, art and even real estate. However, as with precious metals, there are additional costs that may have to be covered by your IRA funds. Using real estate as an example, you must be able to purchase the real estate outright and also pay certain fees and charges up front.
Given that an IRA has such excellent tax advantages, it only makes sense for everyone who has any long-term investment plans to own one. IRAs are restricted to contributions of about $5,000 yearly so they should not be your only retirement investments. However, these investment schemes can provide solid and dependable bases for retirement plans and other investment portfolios.
The government finds it alarming when consumers fail to arrange retirement savings plans for themselves. They encourage forward thinking because an impoverished old person will have to rely on the state, and could very easily fall between the cracks.
She will be more likely to suffer from poor health and improper nutrition, while housing could be an issue. Charitable housing for the elderly is typically hard to find as the waiting lists are long. The best answer to stave off this kind of situation is for the consumer to invest in a retirement plan such as an IRA or 401k.
When someone plans for the future, he can not only prevent hardship, but also enjoy the freedom which comes with having a steady income. Holidays, home improvements, and fun are all possible. Plan to be comfortable in your old age by partaking in either a 401k or an IRA.
A 401k is an employee instigated retirement savings plan. It is directly linked to your job and might not be optional. Many companies simply sign their regular, permanent employees onto the plan as soon as they have completed their probationary period.
What is an IRA?
An IRA is an individual retirement arrangement. Each client is responsible for setting one up on her own, but an IRA manager looks after it on the client’s behalf. Anyone who does not have access to a 401k is encouraged to start one of these.
Limits to Payment
When you open a retirement savings plan, there are certain restrictions to keep in mind. One of them is taxation. There will be taxes charged, but the rules for each sort of plan differ.
There is also a cap on how much money can go into an account yearly. The older you are, the more you can put into either one, but the limits are higher in 401k than they are for payments into an IRA.
Where matching payments are concerned, these only apply to a 401k since they are made by an employer.
Some withdrawals are permitted, though a penalty might be charged. Also, companies are specific about what the money can be removed for and how much. Home improvements and emergency medical bills are just two examples of why consumers might take out a portion of their retirement savings.
Changing from One Plan to Another
How tied down are you to your current employment plan? Limitations are determined by the company that manages your 401k. Typically, there are few limits to what you can do with an IRA. You can change the institution which holds it according to your preferences. A 401k is usually transferable only upon termination of employment. At this point, you can either:
• Move the 401k to an IRA, or
• If you are hired by someone else, transfer 401k proceeds to the new employer’s plan
Investing in Silver and other Precious Metals for your Future
One of the most popular ways to create a safety net for your future finances is to invest in precious metals. Many consumers think instantly of gold, which is a relatively safe bet and continues to be more valuable than the U.S. dollar.
Although it does not earn money quickly, investment over several years will yield a steady and startling return. When the market is unpredictable, silver and a few other metals become reliable investments too, though consumers are often surprised when they learn that gold is not their only option.
It is worth considering silver for your IRA. Its value is more varied than that of gold because it has industrial uses not open to gold. Also, new gold resources are becoming harder to find. Silver can be purchased in similar ways to gold: as bullion, collectible coins, stocks, and ETFs.
An ETF is a share which is managed by a broker. As for bullion, it is essential to buy your metal (whether it is silver or gold) from the right country. Only certain nations create bullion to approved standards of purity.
Regulations permit consumers to invest in approved sources of silver or gold to fund their IRAs. An IRA has to be set up for the process, so even if you already have an IRA, when you want to add metals, go to your account manager and fill out new paperwork.
He will show you where to find your gold, silver, palladium, etc. For instance, a country’s coins are listed as possible investments if the purity of their metal is up to investment standards. Coins of note come from countries such as Australia, Canada, and the United States.
The choice of which coins to buy is entirely between a consumer and her account manager. Financial pages in major newspapers and on the internet show the small changes in daily rates of exchange for the specific coins available for trade.
A 401k is more complicated in a sense because the account holder is really the company, not the consumer. His access to the account is limited until he retires, unless he is able to roll it over into an IRA. In the meantime, he can find out if the company in charge of his 401k makes gold or silver investments.
It is possible to make recommendations for precious metal investments, but there are no guarantees that recommendations will be taken up by investors. Employers have more control however. They might choose investors according to employee demand.
The Safety of Your Retirement Money
Regardless of the type of pension plan you have (or which you set up for employees), it is essential to research the investment management team thoroughly. There are some who have taken advantage of consumer interest in precious metals and are not behaving in their best interests.
This is true of professionals in any industry: there are always con artists or slightly shady dealers. They might be completely legal in their dealings but not entirely ethical. It is the onus of investment clients to do their own research so that the money they set aside for the future is in the best hands possible.
Self-directed investing is becoming more popular. The traditional method of investment for the average person usually involved going through a broker. This finance professional did much more than simply give advice in former times. He or she would essentially dictate what to do with investment funds.
However, as time passed and the investing public became more educated, brokers were relegated to the roles of advisers. By the time the Internet age dawned, many people felt knowledgeable enough and comfortable enough to begin calling the shots with their own investments.
At the present time, many people simply manage their investments through online software that gives them access to the markets and conducts transactions for them. Self-directed investing has opened many opportunities to people who may not have been aware of all that they could do before they became independent.
Why People Become Self-Directed Investors
Brokers are professionals with a great deal of knowledge and often with a lot of experience backing their advice. However, they tend to make very conservative suggestions to their clients. This is probably a good thing for most investors.
However, when an investor has acquired some experience and has begun to make his or her own judgments about the viability of certain assets, tension can develop between client and broker. Eventually, for some people, it makes sense that they become self-directed investors.
Becoming self-directed also opens a lot of doors for these investors. They can invest in some of the riskier but higher-potential financial instruments that their brokers may have discouraged.
Freeing themselves from a broker also gives these self-directed investors a faster reaction time when it comes to buying and selling. They can take advantage of investments that require quick trades in order to generate profits.
Opportunities in Self-Directed Investing
There are many different opportunities for self-directed investors that they may never have known before they cut themselves loose. Without any restraint, they can grab any of these investments that they want.
However, they should remember that there are risks with all of these opportunities. Careless actions by self-directed investors may make these newly independent agents long for the days when they had someone to watch over their financial moves.
This is an often overlooked investment opportunity. This omission is unfortunate because property is the biggest wealth-builder in the world. The sub-prime mortgage crisis gave a bad name to land-owning. While it ruined many average homeowners, large landowners generate tons of income through rents.
Therefore, the important thing in self-directed investing in land is finding property that will generate income. Think of it like owning dividend stocks. With enough such investments, you can turn these income streams into the primary source for your quality of life.
• Precious Metals
While certain gold investments have gained respect over the last decade, brokers can still give you a weird look when you inquire about this or any other precious metal. Unrestrained by the furrowed brows of their brokers, self-directed investors can freely peruse the various precious metal investments available in the markets and on the Internet. This is a large category that is very popular with the self-directed investment population.
The first distinction to make with these investments is between the different types of precious metals. Many people are dazzled by the stories of the performance of gold in the last decade. A closer look at this section of the market reveals that all precious metals have done well, though they have been outshone by the luster of gold. The primary investment assets are gold, silver and platinum.
You can acquire each of these metals in more than one form. Coins are very popular assets because they have a high liquidity and they are often backed in their value by national governments with high reliability.
In the United States, the most easily available form of precious metal investment is the American Eagle coin. The US government makes these and other coins in silver, gold and platinum. Other countries that produce similar coins are Canada, China, Mexico, Australia and others.
These coins come in many sizes and are easily liquidated in the international markets. However, they also cost much more than the bullion price because of the design and minting factor involved in their production. This is a draw for some investors and a turn off for others.
Some investors prefer bars of precious metals because they are more efficient purchases. They sell for prices much closer to the spot value. If you can afford a lot of them, you will notice that they stack very nicely in a safety deposit box.
• Alternative Investments
This is a broad category. It includes a lot of investments whose values are hard to gauge and whose possibilities for gain are even more difficult to discern. However, this area is a real opportunity for investors who have skill sets and knowledge of things outside of investment.
For example, and art lover might want to invest money in art. This is a particularly popular way to make a hedge against inflation. Art can and does advance in value without much relation to inflation. However, each type of alternative investment is best suited to investors who have a certain amount of knowledge about that subject.
Other focuses of alternative investments include things such as antiques, coin collections, wine, stamps and even film production. In fact, venture capitalism is also a type of alternative investment. These investments appear risky but knowledgeable people can make a lot of money using their judgment in these areas.
This is a very risky type of investment that can turn into a significant income stream. It also has certain tax advantages because the US government is eager to encourage people to take these risks and stimulate further exploration for oil fields.
Instead of investing in oil company stocks, investors may actually invest in a specific oil or gas rig under construction. Their investment goes directly toward the creation of the rig. If the rig ever strikes oil, the investor will see large checks arriving every month.
These can turn investors in to very rich people overnight. However, oil rigs can also fail to ever produce a drop of oil. In this case, the investor loses all of the money thrown into the rig and gets very little back except some tax breaks.
• Penny Stocks
These low-priced stocks are attractive to some capable investors because they have so much upside. While a lot of new investors are excited by stocks that have $300 price tags, experienced traders know that it can be very difficult for these stocks to make significant gains for average investors.
If you only have $50,000 to invest and you put it all into a $500 stock, then you can only buy 100 shares. Even if that stock gains a whole $10 per share, then you still only get $1,000 from it.
If you were to sell the stock, it might not even be worth the fees. For that stock to make larger gains, it may take a very long time. Stocks with such high values are sometimes perceived as having peaked.
In the meantime, that $50,000 could buy 100,000 shares of a 50 cent stock. It is not nearly as difficult for that stock to gain another 50 cents. When that happens, you double your money. It will be worth the commissions and fees to sell that stock and walk away with nearly $50,000 in profit.
Every day people choose to take over the course of their own investments and become self-directed investors. For you to decide if this route is for you, you must determine how much time and energy you have to dedicate to investing. This is not the right choice for you if your day is already full of work and family obligations.
However, if you have the will and the knowledge, you can start taking control of your investments part-time. You do not necessarily have to be the best trader in the world to handle this.
In some cases, it may be your skills in other areas that drive you to take charge of your portfolio. Consider art aficionados who use their money to buy precious art.
You have to remember, though, that there are significant risks to this departure from the oversight of your broker. You will only have yourself to blame if you make a mistake and lose money.
Nevertheless, if you are truly motivated and eager, this could be a very rewarding move for more than financial reasons. It is very fulfilling to take your investments into your own hands. After all, no one cares more about your investments than you do.
Silver investment may be the new focus of investors in the precious metals market. It often takes second place to gold, its more lustrous cousin, but silver still remains a precious metal and one with unique qualities. Furthermore, at this point in history, silver is situated to make significant gains in the near future.
People have appreciated silver for thousands of years. It has functioned as jewelry and as currency for almost just as long. Only since the nations of the world left their metallic standards for currency during the 20th century, has silver become primarily an investment target.
Nevertheless, silver has often been ignored when people make precious metals investments. If not actually ignored, it becomes an afterthought or a token piece of diversification that is made disinterestedly.
In the last decade, gold has taken so much of the spotlight that silver has been forgotten by most, but not all, investors. Some shrewd traders have noticed that silver’s performance has not only matched that of gold, it has actually outperformed its more well-known cousin in terms of price per ounce.
This may sound shocking to those who are only familiar with gold’s more than 500% gains since the turn of the century. Yet a quick look at silver’s price performance will show that you could have made more investing in silver than you could have investing in gold.
At around the same time that gold was down at $270 per ounce, silver was worth an amazingly low $4 per ounce. Since that time period over a decade ago, gold climbed as high as $1,900 before receding back to the $1,700 range where it is now. That gives gold an impressive exponential expansion to six times its original value.
When you do the math for silver, however, you see an even more impressive growth. Gold’s allegedly lesser partner has climbed from $4 to $32 in the same period. That is eight times as much as its previous value.
The key thing to remember about investment in an asset is that the actual price tag on the asset does not matter. What matters is the opportunity for gain.
There is usually much more profit possible in owning a $5 stock than in owning a $500 stock. The lower-priced stock could move up to $10 in value, given a set of very possible occurrences. This would create a 100% return for the owner of that stock and double his money.
The chances of the $500 doubling your money are much lower. A lot of precious metal investors are starting to see the same possibility in silver and gold, especially now that gold’s charge toward higher values seems to have stalled.
This excellent performance on the part of silver has inspired new interest. However, some people are wondering if silver may not have reached its peak in the lower $30′s. After such impressive gains, though, there is still reason to believe that silver can gain significantly more.
Silver vs. Gold
Historically, the prices of silver and gold have maintained a certain relationship. Gold has always been more highly valued, unless you take into account certain rare situations in history in when gold was less appreciated than silver.
Discounting those instances, silver has usually maintained a value equivalent to anywhere from about 1% to 10% the value of gold. The average and most common ratio has usually had silver’s value at about 5% that of gold. Silver tends to return to this range when volatility in one precious metal or the other terminates.
Understanding this tendency in the relationship between silver and gold prices naturally sparks some interest in investors. Right now, at $32, an ounce of silver is worth less than 2% of the same amount of gold.
Gold has shown several signs of stagnation which may be due to having peaked in price potential. Uncertainty about the future, especially the fiscal cliff, may also be controlling gold prices temporarily. This may be the time for the price of silver to regain its traditional ratio with that of gold.
If this realignment of prices occurs, then silver could easily double its value.
This is not a game for short-term investors, though. This is the kind of scenario in which you can place some money in silver with confidence and expect it to grow with confidence in the next few years.
This pace may be accelerated, however, if the markets suffer severe setbacks. Then, it is anybody’s guess just how fast silver may gain value in the face of hyperinflation or extreme turmoil in the global economy. No matter what happens, it looks like silver will be a winner.
Types of Silver Investment
There are many different ways to take advantage of silver’s propensity for gains right now. Naturally, many investors are thinking of buying physical silver. However, there are risks as well as benefits in such purchases. Fortunately, investors can also invest less directly in silver by purchasing silver stocks or utilizing other avenues of investment.
You can buy physical silver in two forms: coins or bars. Several nations mint their own silver coins every year and sell them to the public. You can buy silver bars, in varying sizes, through a number of institutions and companies.
The US Mint produces American Silver Eagles in copious numbers every year. They make them in only one size, the one troy ounce coin.
The face value on this coin says $1 and it functions as legal tender in the United States. However, the real value is much higher and it presently costs much more than $30 to buy one of these coins.
Direct purchases from the mint can only be done in shipment sizes of many thousands at a time. If you want to make smaller purchases, you should find a distributor who buys them from the government and resells them. Most IRAs will even allow these coins as retirement investments.
Several other countries produce silver coins every year. Among them are the Chinese Silver Panda, the Canadian Silver Maple Leaf and the Mexican Silver Libertad. Each is known for a high purity level in its silver and excellent quality in its coins.
Silver bars are usually larger than coins but they are more efficient. When you buy silver coins, you have to pay considerably more than the spot price because the coins are designed and manufactured. This adds to their cost. Silver bars require much less work to produce and are therefore cheaper by the ounce.
There is one drawback to investing in physical silver. When you buy these quantities, you become responsible for their care. This is very different than investing in a stock, which is essentially an intangible product that cannot be damaged or lost. It costs money to ship and store these coins and bars. These costs can chip away at any gains that you might make from advancing prices.
Some people avoid these fees by investing in silver less directly. Stocks issued by silver mining companies present excellent opportunities because they are tied to the price of silver indirectly but also allow traders to use their researching skills to make judgments about their investments.
You are free of worry about maintenance costs with stocks and you can make money even if silver does not make gains. A company’s stock may move ahead for several reasons that have little to do with the value of its products. Even when the price of silver retreats or stands still, a silver stock may make significant gains.
• Silver ETFs
Exchange-traded funds that are based in silver may be the some of the best investments in the world right now. Jim Rogers, the world famous commodities investor who called the sub-prime mortgage failure before it was on anybody else’s radar, certainly agrees with this analysis.
He has invested large amounts in silver ETFs and has spoken openly about the advantages provided by these funds. They trade like stocks and do not encumber their owners with maintenance worries. Yet they are tied very closely to the price performance of the underlying asset.
Silver seems like a winner in any future scenario that you can imagine.
The fiscal cliff in the US budget has many people worried and is causing widespread suppression of prices that is counter-intuitive. Usually, things such as precious metals can be counted on for advancing prices in such situations.
However, the general concern spreading through markets has, for the moment, caused many people to back away from investment altogether. Nevertheless, it seems likely that solid assets will be valuable no matter how things turn out. Even if the US manages the fiscal cliff properly, people will still want to have silver to preserve their wealth.