If you’re new to precious metal investing, silver can seem like a bit of a mystery. Everybody talks about gold and how it can protect you in a time of a crisis. But what about silver? Should you buy it? How much of it should you own? How does it stack up to gold?
You can buy a wide range of bullion products at Global Bullion Suppliers and we like to make sure our buyers know what they’re getting.
Who Should Buy Silver?
One of the most frequently asked questions from new bullion investors is which metal they should put their money into. The answer depends on your risk tolerance, how much money you have available to spend, and your portfolio.
#1 Risk Tolerance
Whereas gold is seen as a reliable safe haven in a crisis, silver is a slightly more speculative investment and has higher volatility than its more valuable cousin. Volatility is the measure of price changes in a period of time, or how rapidly prices rise and fall. Increased volatility can mean that prices both rise faster and fall faster, making it harder to rely on as a safe haven for your investments.
That doesn’t mean there’s no place for it in your portfolio. If an asset has a good outlook for long-term gains and you enjoy higher risk tolerance, you don’t need to be as worried about volatility. Investors with a high risk tolerance tend to be younger, have smaller portfolios, have more earning years left in their career, and have more potential earning growth. While personal preference also plays into your risk tolerance, the more time you have between now and spending your investments, the more risk you can safely assume.
With prices currently around $20 CAD, silver is by far the more affordable of your two options. For the average retail investor, it’s much more accessible. Why is this important? You can still buy fractions of an ounce of gold, so if you can only invest $100 a month instead of $1000, why does it matter which one you buy? The answer is that you typically save money by buying higher weights of either metal. Putting more ounces in a single transaction can save you on premiums. It’s an effective way to save when you buy silver bullion in Canada.
#3 Your Portfolio
Over-exposure to any one asset always increases your risks. Any negative trends in that sector will impact your net worth more heavily than if you had put your eggs into more baskets. You need a counter-balance to high-risk stocks and bonds whose returns are vulnerable to rising inflation. Precious metals provide the diversity your portfolio needs, and splitting your investments between the two can further spread out your risk and opportunities.
So who should own silver? Anyone can benefit from including this metal in their portfolio, but if you’re a risk-tolerant investor with less funds to invest whose portfolio mostly consists of stocks, you have a lot of reasons to buy silver bullion.
How Much Silver Should You Own?
Any investor looking for both protection from major pullbacks in stocks and a big growth opportunity should look at silver before gold. Analysts consider silver to be undervalued compared to its more expensive counterpart, a conclusion drawn from looking at the gold/silver ratio.
In total, 10% of your portfolio should be in precious metals to sufficiently protect yourself against stock pullbacks, high inflation, and financial crises. That’s enough to provide a bulwark against crashing values in other markets without interfering with the growth potential provided by riskier financial products like equities.
Then you should consider how to divide that between the two most popular metals. The real amount of money you’re investing (rather than a percentage) can help you determine how to it should breakdown.
- $2,000 and less: Investments this size can be 100% silver to take advantage of growth potential and volume discounts.
- Up to $10,000: Depending your goals, anywhere from a 50/50 to 70/30 (silver to gold) split helps you take advantage of both security and long-term growth potential.
- Up to $100,000 and beyond: As you go beyond the $10,000 mark, storage becomes an issue and it makes sense to favour gold. As more and more of your wealth goes into precious metals, you can put more value into a single ounce.
Affordable Ways to Buy Silver
What are the best ways to get great deals on silver bullion in Canada? Know your way around the different forms in which you can buy precious metals. Refiners, mints, and suppliers place different premiums on coins, bars, and other forms that reflect their manufacturing costs, liquidity, and desirability.
The highest premiums are usually placed on minted coins produced by government mints. Coins tend to be of a higher quality, featuring unique designs and often security features that rounds and bars may lack.
Bars will give you high-purity bullion at a lower cost. The manufacturing costs are lower, so premiums are lower. Bars also come in higher weights, another way to reduce your per-ounce costs.
For those looking for a really cheap way to enter the market, you can buy junk silver in assorted bags. Junk silver refers to coins that have bullion content but no numismatic or collectible value. They are old circulated coins with silver content beyond their face value. Bullion content varies, but many Canadian coins are 80% silver.
Junk silver is an affordable way to own real precious metals while paying a low premium, and it makes a great entry point for anyone interested in investing in bullion.
There are many ways to invest in precious metals. Global Bullion Suppliers will help you get started at introducing bullion into your portfolio. Protect yourself from the unexpected; buy silver to prepare for stock market pullbacks, high inflation, and economic crises. It’s easy to get started.Book your FREE Bullion Consultation Today