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Friday, April 29, 2011

Why Invest in Silver?

Similar to gold, silver is a precious metal that finds great use as a safe investment to hedge against inflation and economic turmoil. Silver is often known as the poor man's gold. You can invest in bullion coins just like gold and in multiple other ways. Know that you have found a winner in silver. But before you plunge in, take a few minutes to evaluate the advantages and disadvantages of silver investing:

Also Read:
A quick look at why gold is a great investment!

Advantages
  • Returns. Mine silver, that is currently in circulation is scarce than gold, though silver is almost 17 times more abundant in the earth’s crust. Less than a year’s production of silver is currently over the ground. In terms of returns, silver has always outperformed gold. Looking at the last twenty years, the returns on silver have been almost three times that of gold.
  • Demand. The demand for silver is not driven by adverse economic conditions industrial use. Currently, almost half of the silver’s total demand comes from industry. Most of such silver cannot be extracted and reused due to high costs and practical difficulties.
  • Affordability. Silver is a much more affordable precious metal than others. The gold to silver ratio, which currently stands at around 31, indicates that current gold price is 31 times that of silver.
  • Liquidity. Like gold, silver is a highly liquid investment that can be easily traded in various forms all over the world.
  • Alternatives. There are a number of alternative forms of investment in silver that can be chosen as per requirements. This includes bullion coins, collector’s coins, bars, silver rounds, jewelry, junk silver, scrape, mutual funds, Exchange Traded Funds (ETFs), futures, options, certificates, and silver accounts.
9 best ways to invest in silver!

Disadvantages
  • Bulk. An equivalent monetary amount of investment in silver is much heavier and requires more storage space than gold, adding to transportation, insurance, and storage costs for silver.
  • Maintenance. Silver gets oxidized readily when comes in contact with air. Some of the premium that is paid at the time of buying a piece of silver is related to its appearance. Therefore, your tarnished holding may not fetch much premium.
  • Taxation. Unlike gold, silver is subject to taxation in nearly all of the nations. This may include capital gains tax or as value added tax on the processed metal. The tax rates in some countries are as high as 20%.
  • Instrument-specific drawbacks. Different forms of silver investments suffer from different sets of disadvantages. For instance, silver futures are subject to inherent riskiness of the metal and markets.

Eurion Constellation is a research and consulting firm serving businesses in U.S., Europe and India. The research services have a global reach with focus on industry / market / economic research, financial analysis, equity research, company valuations and report writing. The consulting wing in India focusses on the startup and SME sectors. Please feel free to get in touch for any business requirements. Visit http://www.eurionconstellation.com

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