The Top Five Reasons to Invest In Silver

Business - Investments

By: Kidgas     17-Sep-2010

Browsing Business Lists

Introduction:

The price of silver has been strong recently and is now trading over $20 per ounce. The bull market in precious metals has been going strong for many years, but there are several reasons why every investor should own some silver bullion.

Silver Maintains Purchasing Power

Silver is a real asset and serves as a currency as well as an industrial metal. Because it can act like a currency, its value is determined relative to other currencies so that as the dollar weakens, the price of silver increases and as the dollar strengthens, the price of silver will decrease. Thus, silver is an inflation hedge when the dollar is losing value.

Silver Cannot Be Created

Silver has to be mined out of the ground. It is impossible to create silver out of thin air or printed on pieces of paper with various colors of ink. Silver is not simply a computer entry but is real and tangible. You can touch it and hold it in your hand.

Silver Cannot Declare Bankruptcy

Silver will always have some sort of intrinsic value. Unlike companies, silver cannot go bankrupt. The stocks of bankrupt companies becomes worthless and an investor will lose everything. This cannot possibly happen with silver since it is a real asset that will always have some sort of value.

Silver Is Tradable

Since silver has an intrinsic value and trades like a currency, it is possible to know how much local currency can be received in exchange for an ounce or bar of silver. It can then be traded for that currency which can be used to purchase goods.

Silver Does Not Correlate to Stocks

Over longer periods of time (3-5 years), silver's correlation to the S&P 500 is only about 20-25%. This provides the silver investor with a decent level of diversification and can provide for investment gains when the stock market is down as it has been during the first decade of the 2000's.




Final Thoughts

Precious metals can be a great way to diversify an investment portfolio because they protect an investor from inflation by maintaining purchasing power. They also have little correlation to paper assets such as stocks and cannot declare bankruptcy. It is always important to have a portion of your investments in precious metals such as silver.


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Comments

  • SilverSaver 12/31/2010

    Flag This Comment

    Crash JP Morgan Buy Silver, a way to fight the enemy of the American People..
    http://tinyurl.com/2abxczq

  • DreamsInBloom 12/3/2010

    Flag This Comment

    I have a friend who collects silver coins and has taught me a little bit about silver. So I appreciate your info here and on Hubpages about silver as well.

  • UponRequest 9/30/2010

    Flag This Comment

    Good info on investing in silver. I tend to just invest in silver jewelry :)

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