Investing In Silver (the Forex Way)

Many investors wonder how to invest in silver in the most appropriate way since silver has traditionally held up well to inflation and has contributed to the offsetting of investors’ portfolios. When everything else goes wrong, silver becomes one of the best investment alternatives, just like gold. In today’s article, we will analyze the different options with which we can invest in silver since the possibilities to invest in this unique precious metal are very wide.

Silver As A Refuge

It has usually been associated with silver as an active refuge, but it is much more than that, it is a natural element that has a multitude of uses in different fields, ranging from industry to luxury. Historically, gold has played a role closely linked to the monetary field. This historical fact is due to its properties, of which the five most important are the following: its scarcity, its durability or resistance, its divisibility, its homogeneity, and its difficult falsification.

Differences Between Gold and Silver

The main difference between gold and silver for investors is that silver has a much more industrial use than gold, therefore silver in relation to gold has to be more valued as a raw material. We do not want to claim that silver is a commodity per se, but in relation to gold, it is, on the other hand, if we compare it with steel, this valuation would change.

Because of this industrial attribute, there have been large discrepancies between the value of silver and gold. Gold has covered inflation, is an international currency, is relatively not very volatile, and is the stock of value par excellence. Silver however has great industrial use, has not covered inflation, and is quite more volatile than gold. For these qualities, it seems that having gold in the portfolio is more interesting than silver, but this also has good qualities, and depending on the period, silver has been a better investment than gold, as has happened recently. From the minimums of the pandemic to the maximums of the post-quarantine rally, silver was revalorized by more than 100%, while gold did so by around 30%.

Risks of Silver Trading

The risks of investing in silver are not as limited as those of gold, but arguably, the main risk of investing in silver is mainly opportunity cost, because, if we invest in it is waiting for a recession and finally comes an expansive cycle, while the entire stock market goes up your silver investment will fall or fall flat. Another risk is deflationary pressure, since if a crisis comes, where silver is supposed to act better but is linked to a very strong deflationary trend, silver might not behave at all well, because this makes it better with inflationary tensions. Finally, there is a certain cyclical risk, since silver, when used industrially, can have a cyclical component depending on the economic cycle or industry in particular where silver is needed.