It is often considered a good idea for investors to hold precious metals such as gold or silver in their portfolios to hedge against inflation risk and provide investors with the diversification that is simply holding equities does not provide. Silver is often considered to be a good alternative to gold; In contrast, gold is considered more precious and valuable, silver is more often undervalued and is consumable in many industrial processes, including photography, solar panels, which makes the metal’s scarcity a real issue for silver supply in the future.
While many investors agree that holding silver is important for investors, there is a real question regarding the best way to hold silver. An investor can purchase silver coins or silver bullion, but it can be expensive to store these, and there is always a risk of theft. Further, silver coins can sometimes trade for less than their silver content and must be melted down to achieve a fair value on the metal.
Alternatively, investors can invest in silver through silver mining companies. Doing so can be risky as the fate of the investment is often correlated to how productive the mine is, how efficient the company and its management are, and what investors think will happen to silver prices in the future, which can be painful to deal with if you are ready to dispose of a silver investment and don’t want to do so at a discount.
Bridging the gap between these options is silver ETFs that purchase silver bullion and store it on your behalf, taking many physical storage concerns and headaches out of your hands. A small management fee is often attached to silver ETFs, but many find this added cost will save time and effort in the long run and is well worth it.