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Silver Investing for Beginners

Silver Investing for Beginners

Given the volatility of the stock market, you may be wondering how to invest in precious metals, such as silver. The bursting of the housing bubble taught all of us that it is prudent to diversify your investments. 

Most financial advisors now advise their clients not only to hold stocks and bonds, but also to consider alternative investments such as purchasing metals. Even though silver has been considered a good investment for hundreds of years, many investors still do not include it in their portfolio. 

This is partially because many do not know much about silver or are unsure how to invest in it. Assuming that you too are new to the world of investing in silver, let this article serve as your introductory guide.

The Current Silver Market: A Good Time for Investment

Traditionally, precious metals do well when the stock market is volatile. When the stock market crashed in 2007, investors began to view precious metals, such as silver and gold, as a better investment options. 

The price of silver subsequently rose by 14% because investors believed that they could get a better return on their buck. If you think that stocks will continue to perform poorly, then investing in silver may be a good idea, especially given the silver market.

Currently, more silver is being produced than ever before. It is also being used faster than it is being mined. So, while the supply has risen, the demand has risen even more. This supply and demand pattern means that the price of silver has increased. In fact, the price of silver is now at its all time high! 

This is excellent new for silver investors, since it means that their holding of silver is valued at a price higher than what they paid for it. Many financial analysts predict that this trend will continue, which means that investor’s holding of silver will continue to rise in value.

While this is excellent news for seasoned, silver investors, it seems to be bad news for those who have never invested in silver before, but would like to. You can make the most on your investment when you buy silver cheap. 

However, as the price of silver continues to rise, it becomes a less attractive, new investment, since your return on it would have been higher had you invested earlier. You should therefore consider purchasing silver as soon as you can so that you do not miss a good investment opportunity.

How to Purchase Silver

You may be wondering how you can purchase silver so that you do not miss your window of opportunity. Given the demand for silver, you make this investment at a number of different places. Though, many say that it is best to make your silver purchase through APMEX Silver and Gold, since American Precious Metals Exchange was created specifically to serve investor’s needs.

When to Sell Silver

The question of how long to hold on to silver, however, is a difficult one. Investing in precious metals, such as silver, is unlike investing in stocks. When you purchase silver, you do not own a piece of a company that will provide you with dividends. 

Instead, you actually own a whole piece of silver. In addition to this ownership, you are betting that one day, you will be able to sell your piece of metal at a price that is higher than what you originally paid. While this could prove to be a fruitful investment, the value of your silver will be wholly determined by the price others are willing to pay.

This makes silver a very speculative investment. It is difficult to accurately forecast the quantity of silver that will be mined over time, and even more difficult to predict the demand of silver in the future. 

With advancements in technology, those companies that once relied on silver may begin to use other metals, which would in turn lower the price of silver. You should therefore follow the silver market closely, paying attention to changes in the price of silver, its market availability and the demand for it.

The key to making sure that your investment in silver pays off is to having a diversified portfolio that can weather different market conditions. Then, you will not need to speculate about the silver market in the short run, but can buy and hold it and learn about where this market is heading in the long run. You can therefore make a more informed decision of when to sell this holding.

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