The precious metal, Silver, remains an attractive option for many investors in 2024. With economic uncertainty still lingering, just 9-months after the Silicon Valley Bank collapse, some investors view silver and other precious metals as the best way to invest, hedge inflation risks, or simply diversify their portfolios.
Owning Physical Silver
Some investors still like owning physical silver; such as coins, bars or bullion. This gives them the satisfaction of possessing real silver, while also providing financial upside if silver prices rise. While theft and storage are risks, many dealers allow online purchases today and will ship directly to your home.
“You can purchase silver through local dealers and pawn shops or online dealers such as APMEX or JM Bullion,” notes one analyst. “More specialized dealers allow you to purchase whole bars, rather than just coins.”
Investors should be wary of overpaying when buying physical silver. Checking spot prices is wise to ensure a fair valuation. Those interested in collectible coins, may pay more for the collectability, rather than the actual amount of silver in the item.
Using Silver Futures
For sophisticated investors, trading silver futures contracts provides exposure to silver prices without directly owning physical silver. These futures offer leverage, meaning you can control a large position with little upfront capital. But that also increases risks substantially.
“Futures are risky, and they’re more suitable for sophisticated traders,” another analyst remarks. “You’ll usually need a large account balance to get started, too. Finally, only some online brokers offer futures trading.”
If silver futures move favorably, the leveraged bets can produce large profits quickly. However, futures traders can just as easily lose significant sums if the market turns against them. Maintaining futures positions also requires putting up more capital if prices decline significantly.
Buying Silver ETFs
A safer and more accessible way to invest in silver is through exchange-traded funds (ETFs) that hold physical silver. You don’t take possession but can still benefit if silver prices rise. Selling shares in silver ETFs is easy since they trade daily like stocks.
“An ETF that owns physical silver will deliver the return of silver prices minus the ETF’s expense ratio,” the analyst explains. “ETFs offer another advantage, too. You’ll be able to sell your funds at what’s likely the best price, and you can do so on any day the stock market is open.”
Two popular choices are the iShares Silver Trust ETF(NYSEARCA: SLV) and the Abrdn Standard Physical Silver Shares ETF (NYSEARCA: SIVR). These provide direct exposure to physical silver holdings. More aggressive traders can also use ETFs with silver futures exposure to make short-term directional bets.
Investing in Silver Mining Stocks
Beyond owning silver directly, investors can participate in the silver market by buying shares of companies that mine the metal. When silver prices rise, silver mining firms generate higher earnings. They also have the potential to increase production over time as they explore for more resources.
Research is vital when selecting individual silver mining stocks to understand operational risks and financial positions. Risks include production problems, political issues in certain countries and volatile stock prices.
Using Silver Miner ETFs
Rather than picking individual mining stocks, investors can buy diversified exposure through ETFs holding companies in the silver mining industry. The largest such ETFs are Global X Silver Miners ETF (NYSEARCA:SIL), iShares MSCI Global Silver Miners ETF (BATS: SLVP) and ETFMG Prime Junior Silver Miners ETF (NYSEARCA: SILJ).
While sector volatility can still be high, these ETFs provide broad exposure to offset the risks of individual miners underperforming. They allow investors to benefit from rising silver prices and increased production capabilities across numerous leading mining firms.
Silver Stock Performance
With economic uncertainty lingering in early 2024 on the heels of Silicon Valley Bank’s failure, silver prices have climbed back near 2023 highs. The latest silver futures quoted a price of $22.90 per ounce, a +0.12% surge.
Investor interest in silver and other precious metals often rises when financial conditions appear shaky or inflation is elevated. Whether the latest silver price levels present a buying opportunity or are due for a pullback depends on one’s market outlook. But silver always remains on the radar for investors looking to diversify.
Thoughts Going Forward
Is Silver a Good Investment in 2024?
Many investors add some silver exposure to their portfolios as an inflation hedge or market diversifier, similar to gold. However, silver is still an attractive investment as 2024 gets underway.
Unlike stocks and bonds, silver and other commodities do not directly produce earnings or cash flows. Gains rely exclusively on selling the precious metal for a higher price than purchased. However, silver tends to be less correlated with the stock market and provides an alternative asset to hedge risks when conditions get rocky.
Of course, silver investing has downsides too. The metal is volatile itself and doesn’t generate dividends or interest. Safety risks also exist when owning physical silver. As with any investment, thorough research is warranted before jumping aboard silver, regardless of how you are purchasing the commodity, in 2024. But at reasonable allocation sizes, it can serve strategic purposes for most investor portfolios going forward.
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