Advantages and Disadvantages of Buying Silver Bars in 2019

Silver has been an integral part of human activity for thousands of years. Although gold gets all the attention as one of the original stores of value, it’s silver that everyday people used for exchange for thousands of years. Its history as money isn’t even that far in the past: the last U.S. coin that contained silver was minted in 1964.

Today, the metal’s role in the global market has changed. The metal has become more of a commodity thanks to its widespread use in solar panels, computers, smartphones, and medicines, but like gold, it has also become an investment vehicle. If you don’t own it already, you may want to know if silver is a good investment for you. It’s time for you to learn about buying silver as an investment and whether or not it belongs in your portfolio.

Advantages of Buying Silver

#1 Silver Bars Are Safe

Silver is a safe investment. Compared to fiat currencies, its much better at retaining its value. It’s also a fear-driven investment. Volatile stock markets send investors on the hunt for alternatives. Its responsiveness to a crisis makes it an essential part of a diversified portfolio.

#2 Silver Is Undervalued

Silver is a great bargain right now with a lot of growth potential. Investors use the silver-gold ratio to determine how well-valued each metal is in the moment, rather than comparing it to past dollar values. That’s because the two metals have had such a historically close relationship.

Right now, the silver-gold ratio stands around 85, i.e., one ounce of gold would net you 85 ounces of silver. That’s a historically high ratio, not seen since 1995. However, in both 1984 and 2011, the gold ratio went below 40. Both of these occurred at the peaks of precious metals bull markets. The metal could prove a big opportunity for making money.

Disadvantages of Buying Silver

#1 Storage Costs

Unlike other investments like stocks or treasuries, owning bullion can be a little more expensive. You need a way to store bars and coins. That may be a safe in your home, precious metals storage at the bank or allocated storage from a third-party. Many dealers provide storage services like these.

If you’re storing silver at home, you have to mitigate the risk of theft or damage with insurance. Your standard home insurance policy likely has strict limits on gold and silver bullion coverage. Insurance costs will also be built into any off-site storage solution.

Nevertheless, the absence of third-party risk in silver may make the carrying costs worth it.

#2 The Volatile Downside of Silver

Silver’s volatility is a double-edged sword. In a precious metals bull market, undervalued silver has a higher upside than gold. Silver prices will grow faster than gold and deliver a better return if you exit at the right time. Volatility can also cause prices to fall faster at the end of a bull market, and it is notoriously difficult to time commodity markets.

Weigh the advantages and disadvantages about owning silver. It has a place in any diversified portfolio.