Your Questions About How To Invest In Silver

Lisa asks…

How can I invest in Silver?

Okay, I would prefer people who actually have investing experience or personnal knowledge to answer this. I was wanting to buy some silver so I researched how to tell what the prices will do in the future. I read that things like wars, debt, and scandals will drive prices up. Bailouts confidence in the dollar drive them down. Well, what about things like the market crash back in 08? Would that drive it down?

John answers:

The crash back in ’08-’09 was very bad for silver – it lost 40% or so of its value.

First off, there is tons of garbage on the Internet about silver. There are lots of people on the Internet who are selling silver and they have posted all kinds of quasi-truths about what is going to drive up the price of silver. People post on YA all the time about crazy predictions like silver is going over $300/oz, etc..

Some facts:

a) Silver has been on a dive for about 900 years.

If you bought an ounce of silver 900 years ago and held it in a vault, you have lost a ton of buying power. You could have bought far more, say, apples 900 years ago with your ounce of silver than you can now. If you bought equities 900 years ago, your buying power doubled every 10 years and the only things that keep you from owning the world are estate taxes and such. If you are buying silver now, you are surely not buying long-term but making a market timing bet (or betting that something that has been happening for 900 years reached a bottom a few years back). Do you think that you can time markets well?

B) Silver is not gold

Lots of the stuff that you read on the Internet is really about gold but then they replace “gold” with “silver”. Both gold and silver have been losing their status as money over the last 900 years but gold retains lots more standing than silver. Central banks are big buyers of gold and govts have an interest in high gold prices. More powerful govts like the US and Germany own thousands of tons of gold and want its price to remain high. To the best of my knowledge, no govt owns significant amounts of silver. Silver has value because of jewelry and minor industrial uses not because it is a store of value.

C) Silver currently has a decent positive correlation to equities

There are tons of places that will tell you that silver should go up if equities go down. People post on YA all the time about why is their silver going down when equities went down. Right now, silver is being traded as another source of risk and when people go running for the hills, they are buying US Treasury debt and dollars and selling silver. I personally doubt this is going to change soon.

D) Silver is a hedge against inflation which is much less likely than silver bugs would have you believe

The crises that we have going on in the world right now are just not inflationary. Precious metal hawkers point out the actions of central banks like quantitative easing and say “Look that’s inflationary – you need to guard against inflation”. Well, that’s just lying – the central banks are being expansionary to keep us from falling into a deflationary spiral. They are out of bullets and we are slipping toward the abyss. Deflation is very bad for silver.

E) Silver used as barter in the apocalypse is not an investment strategy

This is a child’s fantasy that social institutions will break down and we will end up using old dimes to buy bread. I personally have planned for ths by building myself a police V-8 interceptor just like Mad Max’s car and stockpiled gasoline. I will roam the wasteland and steal all their silver. But this fantasy does not influence my investing.

Anyway, if you want to buy silver the best way is almost certainly through an ETF like SLV. There are lots of people on the Internet who will tell you that this is terrible, that you are buying paper claims to silver and that these paper claims can easily collapse under some conspiracy theory or other about how people want to deprive you of your silver. This all comes from people hawking physical silver over the Internet and is not to be believed. If you have lots of money and want to trade silver, silver futures contracts are better. If you want to store it in a safe deposit box so nobody knows about your wealth, gold is better.

Edit: Along comes revsuzanne – someone who has bought into all the internet idiocy and passes it off as the truth. Sure silver should be $100/oz but people are “manipulating” it. There must be some conspiracy going on to deprive him of the gain that is rightfully his. Revsuzanne when are you going to take me up on the offer to sell you options on all these things you believe? I’ll in throw in free silver $100 calls. Revsuzanne is building himself a silly unbalanced portfolio with enormous transactions costs. It’s just childish kid-stuff.

Richard asks…

Where is best place to invest in silver/gold?

I want to start investing in silver mainly and possibly gold. I have no idea what to buy or where to buy it from.

I live in the UK , does anyone know how this sort of thing works?

John answers:

Open an international trading account with RBS. Buy SLV (Silver ETF) or GLD (Gold ETF) for US trading £20 per trade. They are listed in US market. They are not shares but ETF commodities are traded like shares. I reckon that you might see gold price at $1450-1470 soon where you buy/enter and leave for 3-5 years.

John asks…

I wanna invest in silver how do I start and tell me what to buy and what I shouldnt buy?

John answers:

You should buy the ETF SLV and not buy physical metal which is strictly for amateurs. If you are an amateur and you like looking at shiny things, buy silver bars and coins.

You might want to reconsider the plan as I think silver is just a crazy volatile go nowhere non-investment.

Edit: Yeah, I think you should listen to MrSilver recommending silver while it’s dropped 40% and preaching some end of the world idiocy. Or you can listen to the Ph.D./CFA hedge fund guy telling you how to invest like a professional not a stupid kid. MrSilver is a moron.

Since MrSilver brought it up, a financial plan that says when it hits the fan you list your assets on eBay is a child’s plan. You want to pay low spreads and have good liquidity in your investments. (Personally, I trade commodities only through futures contracts which really is the best way but not for novices). It would be nice if there was an adult’s YA and a kid’s YA so MrSilver could spout his nonsense in the kid’s section.

Daniel asks…

Can someone explain the basics of silver investing?

Hey everyone! I am new to the world of investing and I decided to start investing in silver. I know how to follow prices and about the gamble it is, but I need to learn the basics. For example terms, where to buy silver, and where to sell it. Anything you think I should know, could you please tell me?

Thanks!

John answers:

Buy low, sell high…those are the basics. I’m gonna buy in September personally…but that’s just because I get my money then….right now I’m trying to sell what I have.
Http://www.kitco.com/charts/livesilver.html is a great place to check prices(both historic and current)

go with the rounds(like maple leaves, sunshine, american eagles etc)….but watch out, they are generally way over priced. I deal a lot in old american quarters and half dollars…sometimes the morgan dollars or liberties…but yeah, it’s honestly up to you…the old quarters, halves, and dollars 1964 and before are 90% silver and can still be found in circulation(although rare). Good luck with the silver investing!

Charles asks…

I want to invest in silver, but I don’t know how to start or what type of silver I should buy?

I have done a little research lately on our economy and am more than a little worried about where we are headed. So Iv’e done research on silver (Since gold is too expensive) and believe I should invest to buy physical forms of silver. But thats about the extent of my knowledge and I need to know what types of silver are more profitable to invest in.

Should I buy coins, plates or scrap jewelry? Or is there another form I should buy that is more lucrative and will increase in value.

If I buy plates, am I looking for a 99.99% plate of silver, or does another percentage work (I guess what I’m asking is that does silver have a carat system as well)?

Also, if I intent to buy scrap silver, is investing in a silver testing kit worth the trouble, or should I buy some other forms of detecting fake silver?

Also, any tried and true websites that can be trusted for buying silver? Or is there any popular physical locations I can visit to buy silver at near the San Diego, CA area?

Thanks so much for the help 🙂

John answers:

Investing in gold and silver is a great way to guard against longterm decreases in cash value, (Inflation), the best items to buy is BULLION, its available from Metal brokers and sells for close to current market value.
Next you can buy Coins and collectables, they may or may not be as valuable (sometime more valuable), but this is a bit dicey, req more research.
DON’T buy Jewellery or Scraps, these normally have the least silver/gold value.
Also when buying metal, remember that shortterm volitility is not a big issue, although always have risk management in place as well.

Another idea is to trade spot metal prices, this may help you as you put money together for buying the metals.
Best to learn a little about trading markets to minimise risks.

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