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Silver is definitely a material for our future – whether it is used as a raw material for industry and medical technology or as an investment to secure its own assets. So far, investors have always preferred gold, but more and more investors are turning to silver coins, silver bars or securities to diversify their assets.
Silver, like gold, is considered extremely stable in value and promises great profit potential. But what should you consider when buying silver? Does it make sense to buy silver? What are the pitfalls? We will explore these questions in this article.
Investing in silver as an individual is generally a good idea for many different reasons. Firstly, we should go through the obvious: there is almost no other investment opportunity that offers you as much protection of your assets, even in times of low interest rates and global turmoil, as silver. Unlike shares, securities and currencies, silver is not valuable. It is therefore not surprising that silver has been a constant in our financial history for thousands of years.
Silver therefore offers value-oriented investors an ideal option to diversify their own portfolio and expand it with a long-term, hedging investment.
From a long-term perspective, the price of silver has moved upwards over the past decades. There have been fluctuations, of course, but the trend, like gold, is in one direction. “However, ‘little man’s gold’ has the crucial advantage of being significantly cheaper. You cannot put the same amount of gold and silver in relation to each other, which is why private investors in particular are best suited to cheaper silver investments.
Silver is only available in limited quantities globally – so once mined, no new silver will be able to enter into circulation. Experts say this could be the case within the next 15-20 years at our current rate of use. A development that will be reflected in the value of your investment.
Do you want to know more about what silver is being used other than for investment? Click here!
Tips for your investmentThe price is usually defined by the balance between supply and demand. Since about 50% of silver is used in various industries, the price of silver is dependent on economic developments. The risk of fluctuations is therefore given.
The less you buy, the more you pay
Two coins of the same denomination cost more than the common denomination in one coin, as it is more expensive to mint twice. However, more coins provide more flexibility. So you should assess what you weigh more.
Silver coins are classified by their weight in pure silver. Silver, like gold, is weighed in units of troy ounces. One troy ounce (oz) is equivalent to approximately 31.2 grams. The usual coin sizes are therefore 1 oz, 2 oz, 5 oz and 10 oz and 1 kg.
Usually the fineness of a silver coin is 999/1000 or 999.9/1000, but coins with a lower fineness of 925/1000 and 900/1000 are also known on the market. It should be noted that coins with a higher fineness can be more easily resold internationally than coins with a lower silver content.
Experts advise investors to carefully consider how high a possible investment can be estimated before buying. It is also important to convert a constant investment amount into coins at regular intervals rather than rushing in and buying when the price of silver is low. However, if your financial situation allows it, you can make additional off-schedule purchases at any time.
Silver offers an interested investor many options. There is no general answer as to which of these is best. Ultimately, each investor decides for himself which type of silver is best suited to his needs.
The majority of investors prefer physical silver, because silver stocks or investment funds, just like other stocks, are associated with higher risks for the investor. So if you focus more on protecting your assets, classic silver bars or investment coins are more suitable for your purpose.
Silver bars have no individual collectible value and are only valued according to their silver content. Their compact shape makes them stackable and thus facilitates space-saving storage. Silver ingots can be traded internationally and easily processed if necessary. Common sizes include silver bars weighing 100 g, 250 g, 500 g, 1 kg, 1 ounce and 100 ounces.
Despite a certain mint surcharge, silver coins are generally a bit cheaper than silver bars. They are usually more historically significant and offer a visual touch that a “boring” bar cannot compete with. They therefore offer the possibility of emotional attachment to your investment, more flexible settlement and entry at lower prices.
If you don’t want the expense of buying a silver bar or coin, a third option is exchange-traded investments such as Exchange Traded Commodities (ETCs). Here you can also participate in the rising value of the silver price without having to buy silver yourself. However, this is one of the main disadvantages: you are never the owner of the deposited silver and if the company goes bankrupt, your money will go with it.
First-time investors are often confronted with this question and the almost infinite choice of silver coins at the beginning. Basically, these can be divided into two broad categories: investment coins and collectible coins.
Want to see the full range of Tavex silver coins? Click here!
In comparison to collectible coins, investment coins are defined by the fact that they are minted in large quantities. This means that these coins can be produced cheaply and sold at a low premium.
Another price guarantee is large denominations, as the larger the denomination, the lower the minting and distribution costs. The most famous investment coins include Maple Leaf silver, American Eagle silver or Vienna Philharmonic silver. A possible collector’s value here will rarely exceed the actual material value. This is different with pure collector coins, where not only the pure silver content counts, but to the same extent rarity and motifs.
If you intend to buy silver coins solely for investment purposes, it is advisable to select the most famous and most successful investment coins. In addition, you should pay attention to easily convertible sizes. A 1 oz or 2 oz silver coin sells faster than a 1 kg heavyweight.
In addition to physical investments, silver offers some listed investment opportunities.
The ETCs (Exchange Traded Commodities) are effectively silver certificates that you can trade on the stock exchange like shares. Here the provider buys silver shares with their investors’ money and keeps them in a high-security depository.
In this way, you participate in silver market prices without having to buy and store physical silver yourself. However, you are not the owner of the silver at any time. ETCs are therefore debt instruments, through which the invested funds do not represent specific assets. This means that your investment is less secure in the event of bankruptcy. Moreover, in case of profit, a final withholding tax of 25% plus solidarity surcharge is levied, as is customary for shares.
In addition, there is the possibility of investing in companies that explore sites with high silver contents or mine them themselves. The success of shares in these silver mines or associated companies usually depends on the price of silver. However, such an investment is very risky, as these companies have virtually no other source of income than the silver finds. So if they find large amounts, profits can skyrocket. If they don’t find anything, you as an investor are threatened with a total loss in the worst case scenario.
The silver market sometimes fluctuates wildly, which is why you should consider silver stocks carefully. They will probably never offer the same security as a physical investment.
A costly investment must be handled seriously and safely. So before you buy, take the necessary time to check the reliability of the dealer. Coin dealers in particular are plentiful and unfortunately there are also black sheep among them.
As a rule, reputable precious metal dealers can be recognised by a few characteristics:
Sometimes banks also offer their customers the opportunity to buy coins. However, it should be noted that banks often charge higher prices than specialised coin sellers. In principle, the rule of thumb also applies that you will mainly get better conditions in online trading. An online shop does not have to bear the costs of running its own shop, which is why these do not fall on the selling prices in the form of mark-ups. Also pay attention to any transport and insurance charges.
When buying silver in Sweden, there are some tax aspects to consider. Here are some important points to keep in mind:
It is important to note that tax legislation can change over time, so it is a good idea to check the latest tax rules and consult a tax expert to get up-to-date information before making your purchase. For example, VAT on gold was removed in 2000.
If you plan to sell your coins one day, proper storage should not be a taboo subject for you. Investment coins are very sensitive to damage that reduces their value. Therefore, the first tip is not to remove your coins from their original packaging after purchase. As a rule, you will receive the coins in capsules or bags that guarantee dust- and scratch-free storage. This means that you can also stack the coins without problems and thus save space in your depot.
If you have not received a coin capsule from your retailer, you can always buy a suitable container from us at Tavex!