Monday, May 18, 2009

Silver Investment

Silver Investment is a wise choice these days with the declining stock of silver and less mining occurring.

Silver is heavily used in industry due to its excellent thermal conductivity and electrical properties and is also still heavily used in photography despite the advent of digital photography.

Less than 30 percent of all silver is used in jewelery and around 20 percent used for investment and the purchase of silver bullion. The rest is used in industry and photography and so more silver gets lost through use each year.

In addition, the return through scrap is less than five percent and the world silver stock piles are depleting faster than silver can be mined out of the ground.

Less than thirty percent of all silver mined comes from mines that produce silver exclusively. Most of the silver produced is obtained as a result of other mining activities and there are no new silver mines currently started.

So the demand for silver is not likely to decrease especially with world demand increasing.

Silver investment can take many forms including silver exchange traded funds (ETFs), stocks & shares and silver bullion.

Silver etfs (exchange traded funds)

Silver exchange traded funds are simply a fund based upon the price of silver futures. One is not actually investing in silver as one is unable to buy or sell actual silver. One is simply buying into a fund, much like any other fund. Silver etfs are supposed to be backed by silver but there have been questions about the authenticity of that claim.

Regardless of the whys and wherefores, however, it is not an actual investment in silver bullion.

Silver Stocks and Shares
Here one is investing not in the commodity but in the management of mining. Most silver mining companies actually mine other products and silver is largely a by-product of that mining. Many mining companies also diversify into other areas, buying and setting assets, mining claims and even other mining companies. So the value of your stock in such companies is dependent more upon the management of that company than the actual silver value mined, if any, from the ground.

Investing in stock and shares of mining companies may be an interesting exercise, but it is not actually investing in silver.

Silver Bullion
Here we are looking at Silver investment in actual silver. One can buy silver coins, such as US Silver Eagles, Canadian Maple Leafs or even Chinese Pandas and many other silver coins. This is actual investment in silver. Of the actual silver investments, this is probably the most expensive. Such silver coins have a high production cost resulting in a high premium and which is inevitably passed to the buyer. Silver rounds and bullion bars present a better buy as the premium is lower due to less manufacturing costs involved.

Silver in Account
This is possibly the best and easiest way to invest in silver. Here there are no problems of shipping and storage or insurance or security issues to worry about. One simply opens an account at GoldMoney and then funds the account on a regular basis. For a nominal premium and storage fee, one can have silver deposited into ones account. The actual silver resides in bank vaults in either London or Zurich and is insured by Lloyds of London. It is also audited on a regular basis. Here the silver in your account is not represented by anything but is actually silver bullion in your name and legally owned by you. It is also possible to redeem silver from your account although this would probably defeat the ongoing benefits of having the account. the same applies to gold incidentally. One can also take delivery of ones gold in 1000 gold bullion bars if required.

Last Word on Silver Investment

Whatever method of silver investment you decide will depend on the benefits of each type of investment and whether you just want to play with the price of silver or are seriously investing for the long term.

In any event, silver investment is sure to be beneficial in the coming future years.

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