Some people say that silver is a poor man’s gold. However, some investors will look at that statement as a misnomer and look for the best silver stocks, because there is its intrinsic value in silver that some investors prefer over gold.
Investors interested in the resource sector should not forget about silver in favor of gold because the best silver stocks have a lot of value as well.
Understand why investors include the best silver stocks in to their portfolio
Silver is a multi-faceted precious metal. It’s used monetarily in the form of silver coins or bullion. Jewelers use it to make necklaces, rings, and other forms of jewelry. There is an aesthetic appeal to silver, which benefits those who prefer its look over gold or can’t afford the same amount of gold as they could silver.
Another facet of silver is that it has significantly more industrial use than gold. Silver is used throughout so many industries, and is used in medical supplies, batteries, solar panels, and utensils, among many other uses. Silver is incredibly malleable, making it a diverse metal. As technologies advance, one can safely assume that silver will be used for even more industrial purposes, especially when heat and electrical conduction is part of the technology.
All of these uses lead silver to get “used up” more than gold. The majority of gold that has ever been mined still exists in a minimally altered state. That’s not the case with silver. The amount of silver used for monetary purposes will continue to decline, leading to higher prices in the future.
It is also important to realize that central banks do not hold silver as they do gold. This means that they cannot suppress silver’s price by injecting a lot of it into the market.
Consider the best silver stocks to invest in
There is some variety to the best silver stocks available. Many investors will target silver mining stocks because they afford the opportunity of more significant returns. Investors who want to invest in silver mining can also use an exchange traded fund (ETF). Investing in a silver mining ETF provides exposure to more than one silver mining company, offering diversification along the way. The Global X Silver Miners ETF (SIL) is a good example, as investors who buy this ETF gain exposure to over 40 international mining companies.
Recognize the characteristics of the best silver stocks
The best silver stocks focus on silver mining as opposed to silver bullion. These resource sector stocks often perform better than commodity-based bullion investments.
They also come from well-financed companies and have established mines already in production. These mines exist in politically and environmentally stable locations. The top companies have low amounts of debt, a strong balance sheet, and management that is experienced and successful in mining development. Focus your money on mines with a history of producing instead of speculative junior mines without any significant production.
Know the volatility of silver before getting involved
Silver is more volatile than gold, so keep that in mind if you plan on investing in silver. The resource sector is generally volatile, with a lot of speculation. If you are a risk-averse investor, be sure to only invest a modest amount into the resource section of your portfolio.
Would you invest in silver over gold? What draws you to silver investing?