Is Silver a Good Investment? It Can Act as a Hedge Against Inflation - Cabot Wealth Network

Is Silver a Good Investment? It Can Act as a Hedge Against Inflation

Is silver a good investment? Given its store of value and multitude of industrial uses, there's often a place for silver in portfolios.

Is silver a good investment? It certainly makes for a beautiful watch. And no one can argue that winning silver in the Olympics isn’t nice. For investors, however, the question isn’t about wearing or winning silver; it’s about whether or not it will bring you a return on your investment. 

There are a variety of reasons that investing in silver can be the right move for some investors, and there are various ways of investing in silver.

One of the first to consider is that silver can act as a hedge against inflation, especially in a dollar-based portfolio. This is the case because if the dollar gets weaker, then the value of precious metals tends to go up. 

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Is silver a good investment? Consider investing in silver coins or bullion

The nice thing about silver is that it holds value as a currency in its physical form. In situations where the markets are uncertain, and investors believe a crash is coming, silver is highly desirable. Bullion and silver coins become targeted investment in those cases. 

Owning physical silver in coins or bullion has some additional value. First, silver has a long-term use in the monetary system. Silver also has a myriad of applications from an industrial standpoint, further solidifying its tangible value. Being a hard asset means there is no counterparty risk. No contract or promise needs to be fulfilled when the physical asset is in your possession. Silver is a viable commodity throughout the world, so its value remains regardless of location. 

Furthermore, owning physical silver has no default risk. This is not the case with the majority of other investments. 

Silver ETFs can work for investors when the markets are stable

If a person wants to invest in silver but doesn’t want to bother with coins or bullion,  investing in a silver ETF may be the … silver lining (sorry – couldn’t resist). Silver ETFs are typically made of top silver mining companies and are diversified with their holdings. For instance, an ETF like Global X Silver Miners ETF (SIL) includes silver mining companies from all over the world.

Other silver investments can be worthy buys if the mining stocks have strong balance sheets with low or manageable debt. It is even better when these companies have established mines with a historical record of producing. You will always want to ensure that your mining stock investments involve an experienced management team familiar with mining industry success. Well-financed mining companies with experience and a record of success will be your best investment opportunities.

Is silver a good investment? Industrial use continues to grow 

Silver is more ubiquitous than you might realize. Look around your house and you’ll likely find it in any number of items. The industrial markets involve the majority of silver’s usage. Silver is a highly conductive metal, making it valuable to use in many electronics, cell phones, batteries, solar panels, and biocides. Then, of course, there are the jewelry and silverware markers, where silver is also very popular. 

Is silver a good investment? This unique metal has a lot of intrinsic value, from industrial use to monetary inclusion. Due to its versatility, there is no other precious metal quite like it.

Do you think it is better to invest in silver in its physical form, or invest in industries that are using silver to produce goods?

Nancy Zambell

Learn from Expert Analyst Nancy Zambell

Nancy Zambell has spent 30 years educating and helping individual investors navigate the minefields of the financial industry. As a lecturer and educator, Nancy has led seminars for individual investors at the National Association of Investors, Investment Expo and the Money Show. She has also taught finance, economics and banking at the college level, and has been quoted extensively in The Wall Street Journal, Investor’s Business Daily, USA Today, and BusinessWeek. Now let her give you the tools and resources, including a monthly magazine, for gaining the peace-of-mind to live comfortably now and in retirement in her Cabot Money Club.

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*This post has been updated from a version originally published in 2021.

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